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so ive spent a lot of time / effort here waxing poetic over the various futures combines available to traders.
quick recap; a futures combine is basically when a backer (apex, leeloo, uprofit) fronts you cash to trade futures with.
the pitch is usually like, for $300 up front total, we give you $100k to trade with and you can trade up to 10 contracts at a time, that sort of thing.
all you have to do is demonstrate the ability to trade profitably/responsibly by earning a certain amount on a paper trading account ( cost: $150 subscription plus $100 per reset when you fail) and then purchase a live subscription ($150) which gives you access to your funded account.
and those numbers change of course, if you want to trade a 30 contract account, which they describe as a $300k account, you would be paying $700'ish a month for the subscription. so on, you get the idea.
this is a quick list of reasons why all that glitters is not gold.
1) a $100,000 funded account does not have $100,000 in it. all these accounts have something called a 'drawdown' limit. the drawdown is an amount of money you can lose before they lock the account and prevent you from trading on it. that drawdown number is, in fact, how much you are funded.
the drawdown on a $100k account is about $2100. meaning you can only lose $2100 before they lock the account (or $3000 across multiple days, something like that).
take a look at this mornings nasdaq ( NQ ) futures chart, these candles are 1 minute of market action;
that big red candle i drew a circle around...
if you were trading a _single_ NQ futures contract, and you bought that little dip at around 9:57am.. 4 minutes later at 10:01am you would be up around $600. and then that red candle would print and you would be down about $800.
but thats not how drawdowns work in reality. the drawdown counts how far down you are *from your peak profit*. so in reality, in a single fucking minute, you just hit $1400 of your $2100 drawdown.
if you were trading 2 contracts, you would have been liquidated like halfway through that shift, locked out of the account / prevented from further trading on it, period, full stop.
my point is this; despite flashing this big $100k number at you, they are actually funding you $2100, not $100k. a traditional responsible risk model for futures trading is never risk more than 5% of your bankroll, meaning on a $2000 bankroll you should never risk more than $100 on your stop-loss. NQ will shift $300 in seconds. literal seconds. its notorious for doing so.
and ES is definitely less unstable but $2100 is still an _extremely_ small bankroll to work with responsibly if youre not trading single contracts and focusing on really small scalps (eg 1-3 pt profit).
note: this is called a 'trailing drawdown'. a couple of other combines have drawdowns that dont trail your highest profit point. the drawdowns still exist but in a less immediately restrictive way, and the accounts have other 'gotchas' that compensate for this advantage generally, eg higher bars for passing, more restrictive / more expensive withdrawal fees, so on. we will get into this shit in a moment.
lets talk about the other psychological microaggressions that are going to be working against you.
2) you have to reach not one but two profit goal posts before you can even think about cashing out.
the first goal post is 'passing the gauntlet'. a 100k /10 contract account will typically want you to earn $3000 at least to demonstrate core competency and discipline, AND they want you to trade every single day for 10 trading days total. meaning you have to trade an absolute minimum of 2 weeks before you can 'graduate' your account, regardless of how much money youve made. also remember that its all imaginary money because its a paper trading account.
this isnt that terrible because you can switch to micro contracts which are worth 1/10th the value of a normal one, and just 'tickle' the account with a tick here or there once a day until you pass for funding. some combine providers tolerate this, some will insist a certain percent of your trades last over 10 seconds, which is an obvious attempt to prevent this exact behavior. microaggressions.
so no matter what you start trading 2 weeks away from funding but hey lets assume youre wired to just shrug this off. now you get funded. now you have to reach a SECOND profit goal before you can start withdrawing money. its called a 'cushion'. and that trailing drawdown stays on your ass until youre above the cushion, at best. so on a 100k account you have to earn $2500 before the drawdown goes away, but the second you drop under 2499 the drawdown is back on your ass. also, you have to trade five (5) weeks, every single day (25 trading days) before you can withdraw if youre on one of the major popular combines right now.
so from the day you start, you have to trade 2 weeks, make $3000, then trade 5 weeks, and make $2500 more before you can cash out.
and we arent done.
on a 10 contract account, you can only cash out $1000 minimum and $2000 max on your first cash out.
and your second cash out, which is now after 20 days of trading.
and your third cash out.
in fact, from the day you sign up, its going to be up to 5 months before they stop limiting your cashouts, depending on how close you are to the 2 days at the end of the month where you can request your cash out.
microaggressions.
3) most combines will give you your first X dollars in profit past the cushion without a withdraw fee. and after that? yeah they rake between 10 and 20% per request.
those numbers will weigh on you dawg. trust me.
4) apparently you lose a lot of the tax advantages to trading futures if you work through a combine.
grain of salt this, im not a CPA, and the laws change a lot but...
https://www.anthonycrudele.com/show/taxadvantages/
if you make $500,000 and your normal tax rate is say, 35%... the combine rakes you 10% (at least) for cashout and then the IRS takes their cut, leaving you with $292,000.
if you make $500,000 trading futures... $300k gets taxed at 15%, and $200 gets taxed at 35%. you take home $385,000.
so at the end of the day yeah you saved a lot of up front capital risk (maybe) by working through a combine, but between taxes and fees youre giving up about 24 cents on every dollar to do so.
again, you will be thinking about that shit. while fucking trading. trust me. thats a big, big ask my mellow, being profitable long term while ignoring those sorts of considerations.
a lot of people are reading this saying 'yeah but im willing to put up with all these little inconveniences and in 5 months i can cash out 10s of thousands of dollars. whats the big whoop?'
the big whoop is this; you might think youre the person who can do that, but you might not be. and finding out can be MUCH more expensive than funding a trading account with your own capital. no bullshit at this point i consider about 10% of trading to be 'getting into a profitable position' and 90% of trading to be 'dont blow up my account revenge trading because i got stopped out before the market reversed and i missed out on thousands of dollars because of it.'
when youre trading your own money, a loss is just a fucking loss. when youre trying to get funded or working on a live account, you have so many fucking things stacked up against you being able to cash out that every minor inconvenience feels less like a pebble in your shoe than a knife in your fucking heart.
yeah i mean, my point is this... in my opinion, combines arent great for learning how to trade and how to cultivate your mind game for trading. they are great opportunities to leapfrog into life changing money if you pursue them from a position of established profitability and strength. but at this point i dont think they are great ways to generate income for people (like me frankly) who are just getting their feet wet.
i might change my mind tomorrow, mind you. but i cant count how many times ive seen silverbacks in this futures trading scene give out this simple piece of advice; 'just fund your own account and trade up' and right now, im getting their point.
ymmv.
quick recap; a futures combine is basically when a backer (apex, leeloo, uprofit) fronts you cash to trade futures with.
the pitch is usually like, for $300 up front total, we give you $100k to trade with and you can trade up to 10 contracts at a time, that sort of thing.
all you have to do is demonstrate the ability to trade profitably/responsibly by earning a certain amount on a paper trading account ( cost: $150 subscription plus $100 per reset when you fail) and then purchase a live subscription ($150) which gives you access to your funded account.
and those numbers change of course, if you want to trade a 30 contract account, which they describe as a $300k account, you would be paying $700'ish a month for the subscription. so on, you get the idea.
this is a quick list of reasons why all that glitters is not gold.
1) a $100,000 funded account does not have $100,000 in it. all these accounts have something called a 'drawdown' limit. the drawdown is an amount of money you can lose before they lock the account and prevent you from trading on it. that drawdown number is, in fact, how much you are funded.
the drawdown on a $100k account is about $2100. meaning you can only lose $2100 before they lock the account (or $3000 across multiple days, something like that).
take a look at this mornings nasdaq ( NQ ) futures chart, these candles are 1 minute of market action;
that big red candle i drew a circle around...
if you were trading a _single_ NQ futures contract, and you bought that little dip at around 9:57am.. 4 minutes later at 10:01am you would be up around $600. and then that red candle would print and you would be down about $800.
but thats not how drawdowns work in reality. the drawdown counts how far down you are *from your peak profit*. so in reality, in a single fucking minute, you just hit $1400 of your $2100 drawdown.
if you were trading 2 contracts, you would have been liquidated like halfway through that shift, locked out of the account / prevented from further trading on it, period, full stop.
my point is this; despite flashing this big $100k number at you, they are actually funding you $2100, not $100k. a traditional responsible risk model for futures trading is never risk more than 5% of your bankroll, meaning on a $2000 bankroll you should never risk more than $100 on your stop-loss. NQ will shift $300 in seconds. literal seconds. its notorious for doing so.
and ES is definitely less unstable but $2100 is still an _extremely_ small bankroll to work with responsibly if youre not trading single contracts and focusing on really small scalps (eg 1-3 pt profit).
note: this is called a 'trailing drawdown'. a couple of other combines have drawdowns that dont trail your highest profit point. the drawdowns still exist but in a less immediately restrictive way, and the accounts have other 'gotchas' that compensate for this advantage generally, eg higher bars for passing, more restrictive / more expensive withdrawal fees, so on. we will get into this shit in a moment.
lets talk about the other psychological microaggressions that are going to be working against you.
2) you have to reach not one but two profit goal posts before you can even think about cashing out.
the first goal post is 'passing the gauntlet'. a 100k /10 contract account will typically want you to earn $3000 at least to demonstrate core competency and discipline, AND they want you to trade every single day for 10 trading days total. meaning you have to trade an absolute minimum of 2 weeks before you can 'graduate' your account, regardless of how much money youve made. also remember that its all imaginary money because its a paper trading account.
this isnt that terrible because you can switch to micro contracts which are worth 1/10th the value of a normal one, and just 'tickle' the account with a tick here or there once a day until you pass for funding. some combine providers tolerate this, some will insist a certain percent of your trades last over 10 seconds, which is an obvious attempt to prevent this exact behavior. microaggressions.
so no matter what you start trading 2 weeks away from funding but hey lets assume youre wired to just shrug this off. now you get funded. now you have to reach a SECOND profit goal before you can start withdrawing money. its called a 'cushion'. and that trailing drawdown stays on your ass until youre above the cushion, at best. so on a 100k account you have to earn $2500 before the drawdown goes away, but the second you drop under 2499 the drawdown is back on your ass. also, you have to trade five (5) weeks, every single day (25 trading days) before you can withdraw if youre on one of the major popular combines right now.
so from the day you start, you have to trade 2 weeks, make $3000, then trade 5 weeks, and make $2500 more before you can cash out.
and we arent done.
on a 10 contract account, you can only cash out $1000 minimum and $2000 max on your first cash out.
and your second cash out, which is now after 20 days of trading.
and your third cash out.
in fact, from the day you sign up, its going to be up to 5 months before they stop limiting your cashouts, depending on how close you are to the 2 days at the end of the month where you can request your cash out.
microaggressions.
3) most combines will give you your first X dollars in profit past the cushion without a withdraw fee. and after that? yeah they rake between 10 and 20% per request.
those numbers will weigh on you dawg. trust me.
4) apparently you lose a lot of the tax advantages to trading futures if you work through a combine.
grain of salt this, im not a CPA, and the laws change a lot but...
https://www.anthonycrudele.com/show/taxadvantages/
Capital Gains Advantages. While short-term capital gains from stocks or ETFs are taxed at your ordinary income tax rate, futures are taxed using the 60/40 rule: 60% are taxed at the long-term capital gains tax rate of 15%, while only 40% of your short-term capital gains are taxed at your ordinary income tax rate.
if you make $500,000 trading futures... $300k gets taxed at 15%, and $200 gets taxed at 35%. you take home $385,000.
so at the end of the day yeah you saved a lot of up front capital risk (maybe) by working through a combine, but between taxes and fees youre giving up about 24 cents on every dollar to do so.
again, you will be thinking about that shit. while fucking trading. trust me. thats a big, big ask my mellow, being profitable long term while ignoring those sorts of considerations.
a lot of people are reading this saying 'yeah but im willing to put up with all these little inconveniences and in 5 months i can cash out 10s of thousands of dollars. whats the big whoop?'
the big whoop is this; you might think youre the person who can do that, but you might not be. and finding out can be MUCH more expensive than funding a trading account with your own capital. no bullshit at this point i consider about 10% of trading to be 'getting into a profitable position' and 90% of trading to be 'dont blow up my account revenge trading because i got stopped out before the market reversed and i missed out on thousands of dollars because of it.'
when youre trading your own money, a loss is just a fucking loss. when youre trying to get funded or working on a live account, you have so many fucking things stacked up against you being able to cash out that every minor inconvenience feels less like a pebble in your shoe than a knife in your fucking heart.
yeah i mean, my point is this... in my opinion, combines arent great for learning how to trade and how to cultivate your mind game for trading. they are great opportunities to leapfrog into life changing money if you pursue them from a position of established profitability and strength. but at this point i dont think they are great ways to generate income for people (like me frankly) who are just getting their feet wet.
i might change my mind tomorrow, mind you. but i cant count how many times ive seen silverbacks in this futures trading scene give out this simple piece of advice; 'just fund your own account and trade up' and right now, im getting their point.
ymmv.
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