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TopStep Trader Strategies in NinjaTrader 8 (and Tradestation)

Posted by David Bean on

I was recently asked about the TopStep Trader combine in several emails. It's a competition that I had not heard about until recently. The parameters for the competition are very strict and the odds of getting "funded" and staying "funded" long term are very challenging and are "stacked" against you. Most good trading systems have at least a 5k per contract drawdown over time. A 5K drawdown would break the combine rules.

If you want to participate in this type of competition, you need a strategy that has good profit potential with a cyclical drawdown so that you can "time it". A "seat of the pants" approach might work for timing by waiting for a series of losers. We can quantify, measure and automate a trading approach using Rule 13 of the Money Management Algorithms on Cobra III that waits for 3 consecutive losers to start, followed by stopping after 2 winners and then waiting for 3 consecutive losers once again before we start trading the strategy again. It is a cyclical approach of starting after 3 losers and stopping after 2 winners. 

If we take this approach, here is a summary of the hypothetical results:

The video below goes into more detail on the Cobra III E-mini Nasdaq strategy and the details for setting up the Money Management Algorithms.

The key to this type of approach is applying this to a strategy that is based on the principle of cutting losers quickly and letting profits run. A strategy that that has a reasonable stop loss, such as 30 points in the E-mini Nasdaq, and holds trades into the close will give us the opportunity to capture larger winners, especially during more volatile market conditions. Strategies that do not have profit targets and hold positions into the close with a tight stop loss, typically have less than 50% profitable trades. This creates more routine losing streaks than a strategy that has 75% winners.

This approach can be applied in Tradestation and MultiCharts as well. NinjaTrader 8 can connect directly to TopStep Trader.

The NinjaTrader Performance Summaries are shown below with the Cobra III E-mini Nasdaq strategy shown first, followed by Cobra III E-mini Nasdaq using the Money Management Algorithm.

 Cobra III E-mini Nasdaq

Cobra III E-mini Nasdaq with Rule 13 Money Management Algorithms


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