More traders want to use algorithms and Expert Advisors on prop accounts. We examine which firms allow it and which strategies are absolutely prohibited.
The popularity of algorithmic trading (EAs, bots, automated systems) is growing faster than prop firm regulations can keep up. Result: many traders unknowingly violate rules or lose funded accounts using automation their firm considers prohibited.
Several categories of automated strategies are banned virtually everywhere:
Latency Arbitrage A strategy exploiting the speed difference in market data between a broker and a data feed provider. The trader (or bot) sees the price faster and executes trades before the spread is actually updated. All serious prop firms have detection systems for these patterns and close accounts immediately.
Reverse Arbitrage Deliberately opening positions at two related firms in a way that guarantees profit regardless of market direction. Firm A long, Firm B short - collecting the difference. Prohibited everywhere.
High-Frequency Trading (HFT) Strategies requiring thousands of transactions daily, operating at microseconds. Prop firm infrastructure isn't designed for this and their terms of service explicitly prohibit it.
Tick Scalping Opening and closing positions in fractions of a second, exploiting feed delays. Differs from normal scalping in that it's based on infrastructure flaws, not market analysis.
Coordinated/Mirror Trading Using one prop account as "master" and automatically copying trades to other accounts. Firms detect correlated patterns between different traders' accounts.
Trend-Following EAs Algorithms based on technical indicators (MA, RSI, MACD), analyzing trends and generating trading signals. Allowed at most firms, as long as they respect drawdown and consistency rules.
Price Action Bots Automation of price action strategies - candlestick pattern detection, support/resistance, breakouts. Standard practice, generally allowed.
Grid Trading (with restrictions) Grid systems may be allowed if they have properly set stop-losses at the account level. Many firms prohibit "stop-loss-free" grid systems because they can generate unlimited losses.
Automated Risk Management Scripts automatically closing positions when the daily loss limit is reached - generally allowed and often recommended.
| Firm | EAs Allowed | Latency Arb | News Trading |
|---|---|---|---|
| FTMO | Yes | Prohibited | Allowed with restrictions |
| FundedNext | Yes | Prohibited | Allowed |
| BrightFunded | Yes | Prohibited | Check terms |
| FxiFy | Yes | Prohibited | Check terms |
Important: Firm regulations change. Always check the current Terms of Service version before running a new system.
1. Read the firm's terms line by line Look for "Prohibited trading strategies" or "Allowed trading practices" sections. If anything is unclear - ask the firm's support in writing.
2. Run the EA on demo before live Test on the same firm's demo account (if available) or a practice account with identical parameters. Monitor daily drawdown for a minimum of 20 sessions.
3. Check correlation with your own accounts If you manage multiple prop accounts, ensure the EA doesn't open identical positions on all accounts simultaneously - that's a "mirror trading" signal.
4. Monitor regularly Automation doesn't exempt you from responsibility. Check the account daily - an EA may behave differently in market conditions you didn't anticipate during testing.
PropGate applies systematic risk management strategies that comply with all supported prop trading firm requirements. Our approach is based on price action and position management - without strategies prohibited by firm regulations.
Clients don't need to worry about whether the trading method violates firm rules - that's our responsibility.
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