The ability to assess a firm using its PT:DD (Profit Target to Drawdown) ratio is crucial for futures prop trading. This important indicator highlights how proprietary traders balance risk and reward in the futures market. The firm's approach to risk can be understood by looking at the link between a trader's established profit target and the allowable drawdown prior to a stop-out being triggered. Based on their PT:DD ratios, we rank the top 5 futures prop trading firms for 100K accounts in this blog.
Significance of PT:DD Ratio in Prop Trading Firms
A crucial tool for assessing the risk and reward dynamics of proprietary traders navigating the futures market is the PT:DD (Profit Target to Drawdown) ratio in futures prop trading. This ratio sheds light on how a trader's profit target (PT) and the permitted drawdown (DD) prior to a stop-out are related. A trader with a greater PT:DD ratio is more likely to adopt a cautious approach and strive for significant returns for each unit of risk taken. On the other hand, a smaller percentage can indicate a bolder strategy. This ratio provides futures prop businesses with insight into a trader's ability to manage risk and match their risk tolerance with the firm's guidelines. It represents striking a balance between protecting the firm's resources and making a profit.
#1 Apex Trader Funding [Ratio: 1:0.50]
Apex Trader Funding, based in the United States, has a PT:DD ratio of 1:0.50 and 1:0.31 for regular and static drawdown accounts, respectively. The firm has solidified its presence over 4 years in the prop trading arena. A standout feature of the firm is its trader-friendly 90% profit split. Apex Trader Funding sets a profit target of $6,000 and $3,000 respectively for regular and static accounts and operates via Rithmic and Tradovate platforms. Notably, the firm has no daily loss limit, offering the opportunity to pass the challenge in one day, providing traders with flexibility in their day-to-day operations. However, traders must remain mindful of the $3,000 total drawdown limit and $625 for static 100k accounts, which serve as a safety net for the account's long-term stability. Additionally, Apex Trader Funding has established an attractive payout cycle, allowing traders to access their profits every 8 trading days.
#2 My Funded Futures [Ratio: 1:0.58]
My Funded Futures offers a variety of evaluation plans, including Milestone, Expert, and Starter. Our main focus will be on the Starter plan, with its PT:DD ratio of 1:0.58. My Funded Futures partners with a liquidity provider for brokerage services.
This US-based prop trading firm, with only a few years in business, offers traders a wide range of platforms, including NinjaTrader, Tradovate, and Volumetrica. My Funded Futures allows trading in a variety of instruments, including futures assets across CME, CBOT, COMEX, and NYMEX.
The firm offers a generous 90% profit split with a clear profit target of $6,000. They have a soft breach policy if you reach the daily loss limit, granting traders flexibility in their daily trading and helping avoid overtrading. However, traders must remain vigilant due to the $3,500 total drawdown limit, which acts as a safety net for the account's health.
Additionally, traders can anticipate their profits every five winning days, ensuring a consistent payout schedule.
#3 Topstep [Ratio: 1:0.50]
Topstep, operating from the United States, presents a PT:DD ratio of 1:0.50 for their 100K account, along with a competitive 90% profit split. With a presence in the industry over 12 years, the firm sets a profit target of $6,000, providing traders with a clear financial milestone. Topstep places a strong emphasis on controlled trading, enforcing a daily loss limit of $2,000, with the assurance that breaching this limit does not compromise the overall account integrity. The maximum total drawdown is restricted to $3,000, ensuring the long-term sustainability of accounts. Topstep partners with brokers like NinjaTrader Brokerage and Quantower and offers platforms such as NinjaTrader, Quantower and TopstepX for trading. The firm supports trading in CBOT, NYMEX, COMEX, and CME Group futures.
Once traders are funded, Topstep offers flexible access to their earnings. Traders just need to ensure five winning days to be eligible for payouts.
#4 Elite Trader Funding [Ratio: 1:0.70]
Elite Trader Funding is a prop trading firm based in the United States. This prop firm offers multiple plans suitable for different traders' perspectives and trading styles. Topping the list is the Diamond Hands program, which showcases a PT:DD ratio of 1:0.70 on a $100K account.
One standout feature of this firm is its competitive 90% profit split arrangement. Elite Trader Funding sets a clear profit target for traders at $5,000 and requires 10 trading days to qualify for a payout. The maximum daily loss is capped at $1,500, with the assurance that this limit does not compromise the overall account integrity. Additionally, traders need to be mindful of the maximum total drawdown, set at $3,500.
With years of experience in the industry, Elite Trader Funding focuses on markets like CBOT, COMEX, CME Group, and NYMEX. They operate through various platforms, including NinjaTrader, Tradovate, TradingView, and Rithmic.
#5 Earn2Trade [Ratio: 1:0.58]
Completing our list, Earn2Trade is a prop firm based in the United States that boasts a PT:DD ratio of 1:0.58 on their $100K account. The firm partners with brokers like Phillip Capital, EdgeClear, and Advantage Futures and maintains an 80% profit split.
Earn2Trade sets a concrete profit target of $6,000 and adheres to well-defined risk management policies. A maximum daily loss limit of $2,200 is in place, with the assurance that breaching this limit does not jeopardize the overall account integrity. Furthermore, a total drawdown limit of $3,500 promotes disciplined trading practices.
With many years of experience in the industry, Earn2Trade provides platforms such as NinjaTrader, Finamark, and Overcharts. They offer trading in all CME group futures assets. Traders at Earn2Trade can anticipate their earnings every seven days, ensuring a consistent weekly payout cycle.
Summary
The PT:DD ratio serves as a barometer for understanding the risk-reward dynamics of futures prop trading firms. As our analysis reveals, the firms on our list showcase a mix of cautious and daring approaches to trading, with each offering unique features, profit splits, and pay-out schedules. In essence, the higher the PT:DD ratio, the more favorable it is for traders. It's evident that futures prop trading is diverse in opportunities. Whether you're a seasoned trader or just dipping your toes into the futures market, understanding the PT:DD ratio can be instrumental in aligning with a firm that resonates with your risk tolerance.
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