High-Frequency Trading:
High-Frequency Trading (HFT) is a trading strategy characterized by the use of sophisticated expert advisors and high-speed telecommunication networks to execute an excessive number of trades within milliseconds to seconds. 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 FXLIVECAPITAL platform:
HFT trading can distort market prices and create artificial demand or supply. By executing a large volume of trades within seconds, 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 short period of time, the servers usually freeze and create consequences.
Note: If a trader receives a warning for hyperactivity and later engages in HFT (or vice versa), this may result in a more severe penalty, including account suspension. Warnings are cumulative, and the system may immediately suspend accounts in cases of extreme or repeated Hyperactivity or HFT that causes major strain on our servers.
Quick Strike Method:
The Quick Strike Method is an ultra-fast trading strategy where traders exploit the financial market by capitalizing on brief market movements through a high volume of trades, typically holding positions for a very short time frame. Traders employing this strategy seek to exploit fleeting price fluctuations to secure small, immediate profits. Although the Quick Strike Method offers the potential for rapid financial gains, it also carries inherent risks.
While the allure of quick profits is enticing, the Quick Strike Method can exacerbate market volatility and contribute to artificial price movements. This heightened volatility may mislead other market participants, creating a distorted perception of market conditions. As a result, the Quick Strike Method poses challenges to maintaining platform integrity and fairness.
Here's why the Quick Strike Method is restricted on the FXLIVECAPITAL platform:
The Quick Strike Method is restricted on our platform due to its potential to disrupt market equilibrium and fairness. Characterized by rapid trading and ultra-short holding periods, it raises legal concerns due to its potential to manipulate markets, create unfair advantages, and undermine regulatory objectives. This strategy involves executing numerous trades in seconds, which can inflate trading volumes and mislead other traders, leading to volatile price fluctuations and market instability. In essence, while offering profit opportunities, its legality is questionable due to its potential adverse effects on market integrity and fairness.
Copy Trading From Others:
FXLIVECAPITAL allows traders to engage in copy trading from another FXLIVECAPITAL 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.
Hedging or Group Hedging Across Various Accounts:
Hedging is a risk management strategy where a trader opens two opposite trades (buy and sell) on the same asset to reduce potential losses. For example, if the market moves against one trade, the other trade may gain, minimizing overall risk.
At FXLIVECAPITAL, hedging is allowed only within the same account. This means traders can place both buy and sell orders on the same asset within one account to hedge their positions.
What is Not Allowed?
Hedging across multiple accounts is prohibited. This refers to placing opposite trades on different accounts for the same asset. Doing so is not considered a genuine trading strategy and can result in account termination.
Example of Allowed Hedging: 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 within the same account.
Example of Prohibited Hedging: You buy 1 lot of EUR/USD on Account A and simultaneously sell 1 lot of EUR/USD on Account B to hedge the position across two accounts. This is not allowed at FXLIVECAPITAL.
Group Hedging Across Various Accounts:
Hedging or group hedging across multiple accounts involves opening multiple accounts and placing opposite trades on the same asset across those accounts. The aim of this approach is to reduce market risk by taking advantage of price fluctuations. However, this strategy is not considered a legitimate trading practice and is prohibited as it does not reflect proper trading methodology.
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 FXLIVECAPITAL, 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 their 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.
Grid Trading:
Grid trading is a strategy where a trader places multiple buy and sell orders at different price levels above and below the current market price. The goal is to profit from price fluctuations as the market moves up and down, hitting various price points.
Why is Grid Trading prohibited at FXLIVECAPITAL?
Grid trading is prohibited because it can lead to market manipulation and create artificial activity. It also increases risk, as a large market movement in one direction can trigger many losses simultaneously. This strategy is not in line with FXLIVECAPITAL fair trading principles.
Example: A trader places multiple buy orders at $100, $105, and $110, and sell orders at $115, $120, and $125. If the market moves between these levels, the trader profits. However, if the market drops sharply below $100, all your buy orders will lose value, which can cause significant losses.
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 FXLIVECAPITAL, one-sided betting is restricted due to its speculative nature and potential for significant losses. One-sided betting involves continuously selling or buying any instrument 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/Device Sharing: Account sharing refers to the unauthorized practice of sharing or reselling FXLIVECAPITAL accounts with other individuals or entities. Sharing devices with other traders is strictly prohibited, regardless of the relationship. This behavior violates FXLIVECAPITAL Terms of Service and is strictly prohibited. A zero-tolerance stance towards account sharing or device sharing is maintained due to several reasons related to security, fairness, and compliance.