Revised July 2023:
Since writing the article below years ago, Topstep has had several changes to their program as far as rules, payouts, time to pass and more (all for the better I might add). I’m leaving up this post as the original content, but just know that currently the rules have changed around pretty much everything mentioned. Topstep has become far more forgiving with its rules. You should visit Topstep and read what the current rules for the evaluation are, once funded, and current pricing.
Revised May 24, 2021:
Originally the 20 second rule was only in the Pro accounts. Now it is in all levels of evaluation and the Pro account (Step 1, Step 2, Pro account). It is not in the funded account, BUT Michael Patak, the founder of Topstep has said they don’t want short term scalpers flat out (see below). Basically if you do short term trades, Topstep isn’t for you.
Topstep recently introduced a new rule regarding winning trades having to be longer than 20 seconds. It freaked out Topstep traders a little bit. In the end I don’t think its the end of the world, but with Topstep already being the rules-heavy leader of the prop firms, this is just another rule to make life a bit tougher.
It’s Was Only The Pro Account – Now It’s Step 1, Step 2 and Pro Account
First things first, Topstep has the most levels to their program. Step 1 and Step 2 are the evaluation phase. Once you pass Step 2, you have the option to going directly to Funded, OR, you can take an intermediary step called the Pro Account which has its own pros and cons. Quicker set up, still trading on sim, if you fail you go back to Step 2 instead of Step 1.
The 20 Second Rule applies to traders in Step 1, Step 2 and the Pro Account level. All traders will see the statistic though on their dashboard, and that’s where the confusion came in.
Michael Patak basically said we don’t want short term scalpers on Facebook. Post from May 24, 2021:
What Is The 20 Second Rule?
What the rule represents is that at least 50% or more of a traders winning trades need to be over 20 seconds. Simple as that. No short term quick turn scalping.
Why Is There A New Topstep 20 Second Rule?
Topstep was having issues with people using algo trading systems and taking advantage of the sim trading rules. When trading in Step 1, Step 2 and the Pro Account, you are on a simulator. The market information is real, but you aren’t actually placing real trades in the market obviously. People were taking advantage of the favourable fills you get on a sim and gaming the system essentially, doing high frequency trading to get lots of small wins and pass the Pro Account.
The problem is that while the Pro Account is on a simulator, it represents real money. Any money you make in the Pro Account gets rolled over to the Funded Account. So someone could take advantage of sim rules and turn it into real money, at Topstep expense.
Topstep will somewhat admit to this, they try to pass off the new rule as protecting the trader. They say that since the sim does give very favourable fills that someone who is doing under 20 second trades will not succeed in the real market. They also put out some stats I’m somewhat sure they made up themselves about 90% of traders who scalp fail long term.
Should You Care?
Probably not. At first people were mad there was yet another rule, as Topstep already is a little on the heavy side with rules and steps to get funded. At the end of the day, make more than 50% of your trades greater than 20 seconds and you are fine.
If your strategy relies on quick fill scalping under 20 seconds, there’s no real way around it. Look to another program if it isn’t going to work with your trading strategy.
Conclusion
At the end of the day this rule probably won’t impact most people. If you love Topstep and don’t want to deal with this, just skip the Pro Account since that’s the only place it applies. You are welcome to do under 20 second scalps in a funded account which is real market data.
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Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.
Hypothetical Performance Disclosure:
Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.
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