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Prohibited Trading- The Details

Read more to find out about our prohibited trading strategies

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Written by Seun
Updated over 2 months ago

Prohibited Trading Strategies

In the event of abusing our platform; the use of trading strategies that do not accurately reflect real market conditions. Such strategies are prohibited and will result in an immediate breach of our Terms of Service, without prior warning. Specifically, any approach that generates consistent, risk-free profits solely within the Challenge Accounts is strictly forbidden. Traders are expected to treat their Challenge Accounts with the same level of care and professionalism as they would their personal account.

Any attempts to exploit the Challenge phase, including the use of manipulative strategies, will result in the termination of the trader’s account, whether in the Challenge phase or the funded phase. Additionally, the use of Account Management and or Copy Trading services is prohibited, and any form of violation of this policy will lead to the termination of such accounts, along with a permanent ban from all services provided by Leveled Up Traders


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Example Strategies That Violate Our Terms of Service:

High-Frequency Trading:

High-Frequency Trading (HFT) is a trading strategy that uses advanced algorithms and ultra-fast communication systems to execute a high volume of trades in milliseconds or seconds. The strategy aims to take advantage of small price movements and market inefficiencies. While HFT can offer the potential for quick profits, it also carries significant risks and can negatively impact market dynamics.


Latency Trading:

Latency trading involves capitalizing on delayed market data or exploiting lags in trade execution to guarantee profits. At LeveledUpTraders, this practice is strictly banned due to its unethical nature and its breach of fair-trading standards in the financial markets.

Also, Latency trading raises significant concerns about equity and openness in the financial markets. It introduces a level of unfairness that can damage market integrity, diminishing trust among participants.

In this practice, traders exploit delays in trade execution to take advantage of price differences between a delayed transaction and the current market price. By executing a series of trades in rapid succession, they can create artificial market movements, influencing prices and potentially distorting the natural balance of supply and demand. Such actions, driven by the intent to exploit timing discrepancies, challenge the foundational principles of equity and openness that are essential for a healthy and reliable trading environment.


Copy Trading From Others:

At Leveled Up Traders, we offer the opportunity for traders to engage in copy trading across different accounts, whether from another Leveled Up Traders account, a prop firm, or a retail broker, as long as the accounts are owned by the same individual. This means you’re free to copy trades from any account you personally own.

However, please note that copy trading between accounts that are not owned by the same individual—such as accounts belonging to relatives, family members, or friends—is not permitted.

For more details on how copy trading works, feel free to reach out to our chat agent! We're happy to help!


Hedging:

Hedging is a risk management approach where a trader takes opposite positions (buy and sell) on the same asset to help offset potential losses. For example, if the market moves against one position, the other might provide gains, reducing the overall risk.

At Leveled Up Traders, hedging is allowed exclusively within the same account. This means you can open both buy and sell orders on the same asset within your account to manage risk more effectively. However, hedging across multiple accounts is not permitted. If a trader takes on a risk that approaches or reaches the daily loss limit in a single trade, it may be flagged as an attempt to hedge across multiple platforms within Leveled Up Traders. This type of behavior is not viewed as a legitimate trading strategy and may lead to account termination.

Example of Allowed Hedging: You open a BUY position of 1 lot size of XAUUSD on Account A and simultaneously open a SELL position of 1 lot size of XAUUSD on Account A to hedge the position. This is allowed as long as both trades are placed within the same account.

Example of Prohibited Hedging: You open a buy position of 1 lot size of XAUUSD on Account A and simultaneously open a sell position of 1 lot size of XAUUSD on Account B to hedge across two different accounts. This is not allowed at Leveled Up Traders.

Multiple hedging: involves using various accounts to place opposite-direction trades on the same asset. The intention behind this strategy is typically to minimize market risk by taking advantage of price fluctuations. However, this approach is not considered a legitimate trading practice and is prohibited, as it needs to follow proper trading methods


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Tick Scalping:

Tick scalping is a trading strategy where traders seek to profit from minimal price fluctuations by executing a high volume of trades over a short period. At LeveledUpTraders, tick scalping is subject to restrictions due to its potential to disrupt market integrity and lead to manipulative trading practices. These limitations are implemented to uphold a fair, orderly, and transparent trading environment for all participants

Example: A tick scalper employs automated trading algorithms to capitalize on minute price movements in financial instruments. By executing trades at extremely high speeds, they can exploit even the smallest fluctuations, often front-running other market participants and gaining an unfair advantage. The rapid influx of orders and frequent cancellations can put significant pressure on market liquidity, making it difficult for other traders to execute their trades at fair prices. This can lead to distorted market conditions and undermine the integrity of the trading environment.


Grid Trading:

A popular strategy that involves placing multiple buy and sell orders at predetermined price levels above and below the current market price. The goal is to profit from market volatility by capturing small price movements as the market fluctuates up and down.

This strategy doesn't rely on market trends or fundamental analysis; instead, it aims to benefit from natural price swings by automatically executing trades when certain levels are reached

Example

Let’s say a trader sets up a grid on EUR/USD, a popular currency pair, with the following orders:

  • Buy orders: 1.1000, 1.0950, 1.0900

  • Sell orders: 1.1100, 1.1150, 1.1200

At the time of setup, EUR/USD is trading at 1.1000.

  • If the price rises to 1.1100, the trader’s sell order at 1.1100 is executed, making a profit of 100 pips.

  • If the price then falls to 1.0950, the buy order at 1.0950 is triggered, and if the price rises again, the trader may sell at 1.1100, profiting once more.


Reverse Arbitrage Trading

Reverse arbitrage involves manipulating the prices of assets on different exchanges to create artificial price discrepancies and then profiting from those differences. Unlike traditional arbitrage, where traders exploit genuine price differences, reverse arbitrage manipulates the market to distort prices temporarily for profit.


Group Trading:

This occurs when clients take the same exact trades on multiple accounts under different users. Usually, this shows as the same trades with similar or the same entry prices, times, and lot sizes across multiple accounts on the same assets.


Group Hedging:

In which the same user or different users work together buying an asset on one account and selling the same asset in another, ensuring that they will win either way the market goes, this trading idea is highly prohibited. Any account found to have exhibited this trading style will be terminated without a refund.


Account management:

In which traders use challenge passing services or have people other than themselves trading their accounts. Also, no one is allowed to trade an account other than the owner.



Martingale Strategy:

The Martingale strategy involves doubling the trade size after each loss to recover losses. This approach is prohibited at Leveled Up Traders as it doesn’t reflect real market conditions and poses significant risk to account balance.
Example: A trader doubles the position size after each loss in an attempt to recover from previous trades. This strategy is considered abusive and will result in account termination.

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