Prop Number One allows traders to use Grid Trading strategies within their accounts, provided that such strategies are managed responsibly and do not violate the platform's fairness and integrity rules.
The maximum number of concurrent trades open on a single instrument in the same direction is 3.
Background and Objectives
The main objective of the Grid Trading rules is twofold:
Promote a healthy trading environment: Ensure that trading strategies are used ethically, without exploiting dynamics that may alter the equilibrium of the market.
Prevent fraudulent behavior: Prevent automated trading schemes from generating unfair advantages through abusive practices.
Requirements and Limitations
In order to use Grid Trading, the following criteria must be met:
Maximum Number of Trades: The maximum number of trades open simultaneously on a single instrument in the same direction is 3.
Limitations on Overlapping Positions: Traders must avoid excessive overlap between open positions to avoid practices similar to YOLO Trading.
Partial closures with positive results: Each partial closure of a position at a profit is considered a new, separate transaction, as it represents separate risk and profit management. This means that, even if they derive from the same initial position, partial closures are counted as individual transactions opened on the same instrument but closed at different times.
If the total number of trades (including partial closures) exceeds the maximum limit allowed, the system considers them to be a Grid Trading pattern for all intents and purposes.
Prohibited Activities
Prop Number One specifically prohibits certain activities that may compromise the fairness of the system, in particular:
Overly dense grids: Strategies that generate an excessive number of sequential orders may be considered an abuse of the platform.
Aggressive price averaging: Strategies that continue to open positions indefinitely to compensate for a loss without a clear risk management plan may be penalized.
Improper Use of Expert Advisors: Although traders can use Expert Advisors to manage grid strategies, each trader must ensure that their parameters are unique and not replicable between different accounts.
Multiple partial closures with positive results: Partial closures of the same position, if executed at different times and in rapid succession, are considered separate transactions for the purposes of calculating simultaneously open positions.
Abuse of this mechanism, aimed at circumventing the limits of the rule, will be treated as a violation of Grid Trading.
Control Mechanism and Sanctions
To detect any violations, Prop Number One uses an automated reporting system that:
Identifies overlapping or suspicious grid trading patterns.
Identify grid trading patterns with multiple partialisations.
Analyzes the correlation between trades of different accounts.
Manually reviews reported accounts.
If the violation is confirmed during the review:
Prop Number One reserves the right to immediately terminate all associated accounts.
Traders may receive a formal warning or face immediate platform closure, depending on the severity of the violation.
What happens if I am notified of improper use of Grid Trading?
You can consult the detailed parameters and consequences of the violation at this link: https://faq.propnumberone.com/en/articles/10626401-risk-controls-for-grid-trading
Impact and Benefits
The implementation of these rules guarantees:
Fairness in trading: Each trader operates independently and responsibly.
Platform Integrity: Rules prevent abuses related to automated grid strategies.
Transparent and Responsible Environment: Controls and sanctions ensure ethical trading practices are applied.
Prevention of partialisation abuse: Prevents multiple partial closures from being used as a tool to multiply positions or simulate hidden grid strategies.
Conclusion
Prop Number One’s Grid Trading Rules are designed to protect the fairness and integrity of the system, ensuring that traders can benefit from this strategy without compromising the market.
By operating independently and adhering to these criteria, each trader contributes to maintaining a healthy, transparent and competitive trading environment.