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What are the Restricted/Prohibited Trading Strategies at FundedNext?
What are the Restricted/Prohibited Trading Strategies at FundedNext?
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Written by FundedNext
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FundedNext strictly prohibits any form of cheating or exploitation of the platform, as it goes against our Terms of Service (TOS) agreed upon during registration. Traders are urged to thoroughly read our Terms of Service and understand the following guidelines to prevent unintended consequences.

Abuse of the System means that trading styles that do not reflect real market trading are not allowed and will result in a breach of our Terms of Service without any warning. Strategies that produce risk-free, consistent profits exclusively on Challenge accounts are strictly forbidden. Traders are expected to trade on their accounts as if they were FundedNext accounts. Utilizing strategies that exploit Challenge accounts will lead to the termination of a FundedNext Trader's account, whether in the evaluation phase or while a FundedNext account, "Pass Your Challenge," "Copy Trading Services," or "Signal Services" is also strictly prohibited, resulting in the denial of any FundedNext accounts and a permanent ban from all FundedNext services.

Example Strategies That Violate our Terms of Service:

High-Frequency Trading:

High-Frequency Trading (HFT) is a trading strategy characterized by the use of sophisticated computer algorithms and high-speed telecommunication networks to execute an excessive number of trades within milliseconds. This strategy aims to capitalize on minuscule price fluctuations and exploit market inefficiencies. While HFT may seem enticing due to its potential for rapid profit generation, it poses significant risks and can have detrimental effects on the market.

Here's why HFT is restricted on the FundedNext platform:

HFT trading can distort market prices and create artificial demand or supply. By executing a large volume of trades within milliseconds, HFT traders can create false impressions of market activity, influencing other participants' decisions and leading to market manipulation. Excessive trading volumes generated by high-frequency trading can disrupt market stability. The rapid influx and outflow of orders can create volatility, leading to erratic price fluctuations and increased market uncertainty, making it challenging for other traders to make informed decisions. Due to huge amounts of trades in a small period of time, the servers usually freeze and create consequences.

Example: An HFT trader places a series of buy orders within milliseconds, causing the price of a market to rise artificially. Other traders, observing the sudden surge, may be misled into buying at inflated prices, leading to potential losses when the market corrects itself. An HFT trader also executes a large number of rapid-fire trades within milliseconds, causing rapid price swings in a particular asset. The increased volatility and unpredictability make it difficult for other market participants to accurately assess market conditions and plan their trading strategies.

Latency Trading:

Latency trading refers to the practice of executing trades based on delayed market data or exploiting delays in the execution of trades to secure guaranteed profits. At FundedNext, latency trading is strictly prohibited due to its unethical nature and violation of fair trading practices in the financial markets.

Example: Latency trading goes against the principles of fair and transparent trading. It undermines the integrity of the financial markets by introducing an element of unfairness and eroding trust among market participants. A latency trader identifies a delay in trade execution and takes advantage of the price discrepancy between the delayed trade execution and the current market price. They execute a large volume of trades within seconds to capitalize on the price difference, creating artificial buying or selling pressure and manipulating the market. By knowingly engaging in such practices, they compromise the fairness and transparency that underpin a healthy trading ecosystem.

Copy Trading From Others:

FundedNext allows traders to engage in copy trading from another FundedNext account, prop firm, or retail broker, provided that the accounts are owned by the same individual. This means that you can copy trades from any account(s) that you own.

However, copy trading between multiple accounts not owned by the same individual, including those of relatives, family members, or friends, is strictly prohibited.

To get more details regarding copy-trading click here

Hedging or Group Hedging Across Various Accounts:

Hedging is allowed at FundedNext under the same account.

However, hedging using multiple accounts is not allowed as it does not reflect a proper trading strategy. For example, if you have two accounts, you are not allowed to place hedged entries between them.

Example: Let's say you have two trading accounts with us, Account A and Account B. You buy 1 lot of EUR/USD on Account A and simultaneously sells 1 lot of EUR/USD on Account B to hedge the position. This is not allowed.

Let's say you have two trading accounts with us, Account A and Account B. You buy 1 lot of EUR/USD on Account A and simultaneously sell 1 lot of EUR/USD on Account A to hedge the position. This is allowed.

Hedging or group hedging across multiple accounts refers to a trading tactic where a person or group opens multiple accounts and executes opposing trades on the same asset across all accounts. This strategy aims to capitalize on price fluctuations while minimizing market risk. However, it does not reflect genuine trading intelligence and is prohibited.

Any form of Arbitrage Trading:

Arbitrage trading refers to the practice of exploiting price discrepancies or time lags across different markets or platforms to generate risk-free profits. At FundedNext, any form of arbitrage trading is strictly prohibited due to its unethical nature and potential to disrupt fair market conditions.

Example: Arbitrage trading can distort market prices and hinder the efficient allocation of resources. By capitalizing on price discrepancies, arbitrage traders can cause prices to deviate from their true fundamental values, creating inconsistencies in market pricing. A trader engages in statistical arbitrage by simultaneously buying and selling related instruments based on historical price patterns. Their trading activity distorts the market pricing of these instruments, creating misalignments between the perceived value and their actual worth. Also, Large-scale arbitrage activities can trigger rapid price movements, creating artificial market fluctuations and destabilizing the normal price discovery process.

Tick Scalping:

Tick scalping refers to a trading strategy where traders aim to profit from small price fluctuations by executing a high volume of trades within a short time frame. At FundedNext, limitations have been imposed on tick scalping as a result of its capacity for market manipulation and disruptive trading practices.

Example: A tick scalper uses automated trading algorithms to scalp ticks on instruments. By executing trades at lightning speed, they can exploit even the smallest price movements, effectively front-running other market participants and gaining an unfair advantage. The rapid influx of orders and subsequent cancellations can strain market liquidity, making it challenging for other traders to execute their trades at fair prices.

Grid Trading:

Grid trading refers to a trading strategy where opposing buy and sell orders for the same financial instrument, with similar risk parameters. At FundedNext, grid trading is prohibited due to its potential for market manipulation, over-leveraging, market instability, and the pursuit of risk-free profits.

Example: A trader employs grid trading by simultaneously placing buy and sell orders on a particular currency pair with the intention to profit from price oscillations. By repeatedly executing these opposing orders, they can create the illusion of market activity, influencing other participants' trading decisions. A trader utilizes grid trading with aggressive leverage, opening numerous buy and sell positions on a volatile market. Despite the appearance of a controlled strategy, the accumulated exposure to price movements and the associated leverage can result in substantial losses if the market moves unfavorably.

One-sided Betting:

One-sided betting refers to a trading strategy where a trader consistently takes positions in a single direction without considering market conditions or conducting the proper analysis. At FundedNext, one-sided betting is restricted due to its speculative nature and potential for significant losses. One-sided betting engages by continuously selling or buying a commodity without considering fundamental news, economic indicators, or technical signals that suggest a potential price increase or decrease. This lack of analysis increases the likelihood of entering trades with unfavorable risk-reward ratios.

Example: A trader engages in one-sided betting by continuously buying a particular instrument without considering any potential negative factors or indications of an upcoming downturn in the market. This lack of diversification leaves them vulnerable to substantial losses if the instrument price unexpectedly declines.

Account Sharing:

Account sharing refers to the unauthorized practice of sharing or reselling FundedNext accounts with other individuals or entities. This behavior violates FundedNext's Terms of Service and is strictly prohibited. A zero-tolerance stance towards account sharing is maintained due to several reasons related to security, fairness, and compliance.

Hyperactivity in trading refers to an excessive level of trading activity by a trader, characterized by the frequent and rapid execution of trades within a short period. This also includes frequent modifications to orders, such as adjusting stop-loss or take-profit levels and updating limit orders.

Here's why hyperactivity is restricted on the FundedNext platform:

While trading is an essential aspect of our platform, excessive trading actions can lead to some challenges. The primary concern is the potential slowing down of the platform due to the overwhelming number of server messages/logs generated by numerous trades. This can result in delayed trade executions, which can be extremely frustrating for traders. In extreme cases, it might even freeze or crash the whole platform.

To ensure that all our traders have a smooth and reliable experience, we're taking measures to avoid hyperactivity. The industry defines an account as hyperactive if it surpasses 200 trades and 2,000 server messages in a single day. This count also includes messages associated with frequent modifications to orders, such as adjusting stop-loss or take-profit levels, and updating limit orders.

Consequences of Exceeding the Limit:

The FundedNext team will issue the first warning to adjust trading strategies when an account exceeds 2,000 messages for the initial occurrence. Subsequently, a second warning will be sent should the account exceed this message limit once more. If an account reaches this limit for the third time, it will be considered hyperactive, and the account will be breached. Furthermore, If an account generates 15,000 messages in a day, the account will be forcefully disabled to prevent further strain on the system.

Use of Platform or Data Freezing Due to Demo Server Errors:

The use of any unfair advantage, such as platform or data freezing due to demo server errors, is strictly prohibited. This ensures a level playing field for all traders and prevents misleading or deceiving practices. Traders found engaging in such behavior will be investigated, and appropriate actions, including the revocation of access to our demo servers, may be taken. In the event of server issues, traders are encouraged to report the problem to FundedNext's support team promptly.

Use of guarantee of profit with limit orders during low liquid market

The implementation of guaranteed adherence to limit orders is forbidden as it has the potential to bypass regulatory constraints and exploit the low-liquid market.

This exploitative behavior stems from the fact that trading occurs on a simulated platform. Utilizing such guaranteed compliance with limit orders, traders might evade the order executions that would have taken place in an actual market scenario, rendering this approach inconsistent with genuine financial market operations. As a result, this type of trading activity violates the Terms of Service established by FundedNext.

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