Which strategies are prohibited at BrightFunded?

Please refer to the dedicated article we have created for this rule for a clearer and more comprehensive understanding:
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Article - How the Hedging Rule Works?

Example: Imagine a trader notices a momentary delay in the price feed from the prop firm’s trading platform due to a technical issue. Spotting this lag, the trader might execute trades based on outdated information, aiming to profit from the difference between the delayed data and the actual market price.

If the trader buys a currency pair at a price displayed on the delayed feed, which is significantly lower than the current market rate, they could profit from the discrepancy once the price updates. Exploiting this error gives them an unfair advantage, allowing them to pass trading challenges or meet performance targets dishonestly.

Such actions undermine the fairness and integrity of the trading evaluation process, as they do not reflect the trader's genuine skill or strategy. Therefore, exploiting service errors is prohibited to ensure that all participants are assessed based on their ability to make decisions with accurate and timely market information.

Example: Suppose a trader has access to a delayed or external data feed that updates market information more slowly than the data provided by the prop firm. If this trader uses this slower data feed to make trading decisions, they might execute trades based on outdated or less accurate information compared to other traders who are using the data provided by BrightFunded. By doing so, they could exploit the time difference to execute trades at prices that no longer reflect the current market conditions.

This discrepancy can give the trader an unfair advantage by allowing them to react to market conditions with a lag, potentially benefiting from price movements that other traders might not see in real-time. This practice can help the trader meet performance targets or pass trading challenges in a manner that does not reflect their true trading skill or adherence to the firm's rules.

Example: At BrightFunded, manipulating trading conditions through practices such as executing trades with the intent to skew results is strictly prohibited. One example of such manipulation is the simultaneous placement of opposing trades across different accounts.

Consider a trader who holds two accounts with BrightFunded. They buy 10 lots of BTC/USD in Account A while simultaneously selling 10 lots of BTC/USD in Account B. Although this may seem like a risk management technique, it can be used to unfairly influence trading challenges or performance metrics.

This practice is banned because it can artificially fulfill performance targets or pass trading evaluations without demonstrating actual trading skill or strategy. By maintaining opposing positions in multiple accounts, a trader may appear to be managing risk while avoiding genuine market exposure. Such behavior compromises the integrity of the trading evaluation process and is considered unfair.

In summary, engaging in trades that manipulate market conditions or using multiple accounts to create contradictory positions is prohibited.

Trading in a manner that contradicts the provider’s and platform’s terms is prohibited to ensure that all traders operate under the same conditions and are evaluated based on their ability to adhere to established rules and guidelines.

Example: A trader employs an advanced algorithmic trading system engineered for extremely rapid order execution, surpassing the speed achievable by human traders. This system can place and cancel trades within milliseconds, taking advantage of minute price changes that most traders cannot detect.

Utilizing such a high-speed trading mechanism can give the trader a significant advantage by exploiting market inefficiencies or executing trades at a pace and volume that others cannot match. This may result in passing trading evaluations or achieving performance goals in ways that do not reflect genuine trading expertise or fair competition.

Similarly, leveraging artificial intelligence to analyze vast quantities of data and make trading decisions can also provide an unfair edge if it enables the trader to identify market patterns or irregularities that other participants might miss.

For additional information regarding this rule, please refer to the following article, which provides a detailed explanation.
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​Trading News Article.

Engaging in practices that deviate from standard market practices can lead to unfair advantages and financial harm to the provider. Such practices include overleveraging, overexposure, one-sided bets, and account rolling. These actions are prohibited to ensure fair trading and to prevent traders from exploiting the system unfairly.
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With an account offering a leverage ratio of 1:100, a trader can control $100,000 worth of positions with just $1,000 in their account. By consistently using maximum leverage, they can engage in $100,000 trades.

This approach magnifies both potential profits and losses. For instance, a 1% favorable market move can quickly yield substantial gains. Conversely, a 1% adverse move can lead to significant losses, potentially depleting the account balance.

Using only 50% to 80% of the available leverage would manage risk more effectively and demonstrate more prudent trading practices. However, consistently maximizing leverage may achieve impressive short-term results, potentially passing trading challenges in a manner that does not accurately reflect true skill or responsible risk management.
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Taking multiple positions in the same currency pair, such as buying EUR/USD across several accounts with large volumes, can lead to significant losses if the market moves against this pair. Overexposing to a single asset or market movement creates misleading performance metrics, helping pass evaluations in a manner that does not show proper risk management.
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One-sided bets occur when a trader continuously adds to a position in a single direction (either all long or all short), often ignoring market signals that suggest the trade might be going against them. This behavior is risky because it concentrates the trader's exposure to a single market movement.
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Closing trades in one account before the evaluation period ends and opening a new account to avoid scrutiny of poor performance or high risk in the original account, known as account rolling, enables resetting metrics and starting over. This can unfairly help pass evaluations by evading the assessment of trading consistency and risk management.

These practices are prohibited to uphold the integrity of the trading process, ensuring that all traders are assessed based on their actual skills and adherence to established trading standards. Prohibiting these actions maintains a level playing field and promotes fair competition among all participants.

Grid Trading

Employing a grid trading technique involves placing buy and sell orders at predetermined intervals above and below the current market price to create a grid of orders. This method can be profitable in sideways markets but may incur significant losses in trending conditions. Leveraging this strategy might achieve short-term gains that enable passing evaluations without showcasing real trading expertise or effective risk management.

High-Frequency Trading (HFT)

Utilizing an HFT algorithm capable of executing numerous trades in milliseconds, capitalizing on minute price fluctuations, can yield considerable profits quickly, allowing meeting performance benchmarks unfairly. Such sophisticated technology is inaccessible to most traders, creating an uneven playing field.

Tick Scalping

Engaging in tick scalping involves making numerous trades aimed at capturing tiny price movements within seconds. This approach results in a high trade volume and quick profits but does not demonstrate the ability to manage longer-term positions or adapt to changing market conditions.

Arbitrage

Using arbitrage strategies to exploit price differences between various markets or instruments involves purchasing an asset in one market and selling it simultaneously in another where the price is marginally higher. Although arbitrage can be profitable, it relies on exploiting market inefficiencies rather than demonstrating true trading skill.