Apex and their rules · InvestCEO with Kyle Henris

Apex and their rules

I read this on reddit today. I found it useful and thought some of you might find it useful. It builds off of what Kyle has taught and there's some good insights in here. I'm sharing to share, not because I agree with everything per se.

Apex's system is designed to prey on poor impulse control and undisciplined traders. People complain a lot about their rules, but if you really start to dissect them one by one, you should already be following most of them if you're managing risk properly. For 90% of traders, my comments apply to them, and for the 10% that don't, Apex just may not be the right prop firm for you. There's only one that I somewhat disagree with, but it makes sense from the company's perspective and prevents people from 'gaming the system'.

I'm saying this because I used to be like this and have spent $15K on account fees before reaching this payout. 300+ Evals (during sales) and 70 PA accounts. I started trading in groups of 5-10 accounts after my 10th PA account, so I probably only blew around 10 'batches' of accounts starting on account 11 if that makes sense...

For the example/info below, I'm assuming a $50K account.

$2,500 Trailing Drawdown: If you were trading with personal capital, you should not be risking more than 1% of your account per trade ($500). This would mean that you would theoretically need to have failed 5 consecutive trades to fail this requirement. The alternative scenario is that you had a trade run up for a bit and then it goes all the way back down to break even. To be generous, let's say the trade runs up $500 and then stops you out at break even. This would trigger $500 of your drawdown, but if you repeated this scenario another 10x, your drawdown would remain the same. To fail the account, you would now need 4 consecutive losing trades.

30% negative P&L Rule: Open trades should not exceed a 30% negative drawdown from the account’s profit balance ($750). Going back to my example above, the only way you fail this rule is if you have a single trade result in an open P&L that exceeds -$750. If you cap your risk at $500 a trade, you should never be able to hit this. I also set my daily loss limit on Tradeovate to lock me out at -700 for the day just to be safe. This also helps me from overtrading. 90% of the time I blow up a PA account, it's happened in one day chasing losses. Anecdotally, I haven't blown an account since enabling this...

5:1 Risk-Reward Ratio: Self explanatory... Yes, you may have a semi-viable start that exceeds a 5:1 R:R, but most people want 1:1+ R:R. How many traders are realistically risking $5 to win $1? It's still unclear if closing out a trade that started red at a slight profit can trigger this rule (open P&L down $200 but recovers to $25 profit which results in an 8:1 R:R to the system), but I've been told that it's based on averages. I had multiple instances of this and I was worried that this would cause a denied payout, but I didn't have issues in this instance. To prevent possible future issues, I now let my trade play out completely. Either hits TP or SL.

Contract Sizing & Consistency: I use 2 contracts on low volatility days and 1 contract on high volatility days. For a $50K account, you really shouldn't be going larger than this like I mentioned. Bouncing between 1 & 2 contracts doesn't trigger their sizing rule.

Apex allows 10 ES contracts on a $50K account, and this is designed to make you fail... For a $50K account, you should be trading 1-2 contracts MAX. Majority of my trades are 1 contract, but you could go even smaller with micros. If you stick to 1-2 contracts (as most beginners should), this rule shouldn't be an issue.

30% Consistency Rule: This is the only rule that I slightly disagree with, but I understand why it's implemented. It's to prevent a trader from cycling through PA accounts and trying to hit payout in a single trade. At the same time, this could also prevent you from leaving runners as the more profit you make in a single trade, the further the goal post moves in terms of profit needed to hit payout. If I make $2K in one trade, I'd need $6,666 in total profits to request a $2K payout. If you're not concerned about blowing up your account before reaching this profit target, it shouldn't be a concern as it would just take a few more days.

I still have a habit of overtrading and not knowing when to stop sometimes, so what I've done is set my daily profit limit to $500 before it locks me out. I'm usually targeting $300 - $400/day, but I'll allow myself a stretch goal of $500 if I do want to let a trade run a little.

Some other things, I only allow myself to take 2 trades per day. If my first trade is green, I'm done for the day. If the first trade is red, I'll allow myself one more. After one week of sticking to this, I can't even begin to tell you how good it feels to just take one trade and be done for the day.

Summary: $50K Account -Daily Loss Limit: $750 -Daily Profit Limit: $500 -Trade Size: 1-2 ES, 1 on high volatility, 2 on low volatility -2 Trades Max per day, 1 preferably

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