Overview
- Simulated trading accounts are intended to mimic the real market. Any transactions made within these accounts must adhere to the same rules and regulations as the real market. If this is not the case, individual transactions or entire accounts may be invalidated. For MyFlashFunding evaluation accounts, these positions will not be subject to a virtual profit split. This means that you will not be paid based on the simulated profits generated by these positions. Additionally, if you violate the Terms and Conditions of the Customer Agreement, your account may be terminated.
But what does a contradiction with the functioning of the real market mean?
- We aim to protect the company against practices that can achieve a risk-free virtual profit on regular demo accounts. As we all know, in the real market, risk-free virtual profits cannot be achieved and maintained on a consistent basis if they strategy used to achieve those profits is not one that can be replicated in the real market.
- If any of MyFlashFunding evaluations are completed in a way contradictory to the functioning of the real market, it does not reveal anything about the trader’s strategy being applicable in the real market.
NOTE: All Phase 1 & 2, as well as simulated Flash Funded Accounts, are routed through a simulated feed, therefore simulating real market conditions.
In this article, we will discuss practices that do not comply with the functioning of the real market.
1. The use of platform or data freezing
What Are The Effects Of Data Feed Freezing?
- Data feed freezing is a common problem that can occur in trading platforms. It happens when the platform is unable to keep up with the influx of data, such as during periods of high market volatility or when there is a large number of traders using the platform at the same time.
What Causes Data Feed To Freeze?
- There are a number of factors that can cause data feed freezing, including:
◦ Peak market activity: Data feed freezing is more likely to occur during periods of peak market activity, such as during major news events or when there is a lot of volatility in the market.
◦ Technical glitches: Data feed freezing can also be caused by technical glitches in the trading platform or the data feed provider.
◦ Trading platform overload: Data feed freezing can also occur if the trading platform is overloaded with too much data. This can happen when there is a large number of traders using the platform at the same time.
How Can Data Feed Freezing Be Taken Advantage Of?
- There are some trading platforms who often freeze the data feed. This may happen for only a few seconds, which is more than enough time to look at the data of another trading platform who is not freezing their data and tell you where the price is going. There are also trading platforms who freeze data on a more regular and systematic basis. It sounds good to be able to predict the movement of price, but this does not work on live accounts.
2. The use of delayed data feed
- This is very similar to the practice above, but a bit more complex. Each trading platform has a different data feed quality. Some are a few seconds slower than others. There are programs that are able to detect this delay and use this to take advantage of the market. Trading platforms are well aware of this practice and are doing everything they can to avoid this from happening.
- You may find this in their T&Cs. In order to simplify things, there are programs that will disguise this form of arbitrage, making it harder for the trading platforms to find out.
3. Trading on delayed charts
- Some trading platforms offer delayed charts for their demo accounts. This is common for stocks or other illiquid assets. This means that the charts show the price movements of the asset from 15 minutes ago. This allows traders to see where the price has been, but not where it is going. Traders can use this to their advantage by looking at another trading platform that offers real-time charts. This way, they can see where the price is going and then trade on the demo account accordingly. This is not possible on a live account, as the charts will show the real-time price movements. This practice is not compliant with the functioning of the real market. In the real market, traders do not have access to delayed charts. They must make their trading decisions based on the real-time price movements.
4. Trading at a time of significant macroeconomic reports
- This practice does not contradict real trading, but demo accounts can achieve better quotations and slippages compared to real live accounts.
- If you are a news trader, please note that our company will not tolerate any abuse of stop orders to enter or exit trade. When scalping news releases with a straddling method, slippage, latency, and liquidity issues occur.
5. Use of the guarantee of compliance with limit orders (including Take Profit and Stop Loss)
Many trading platforms praise offering their clients the guarantee of filling all pending orders at a fixed price. Keep in mind that pending orders are Take Profit and Stop Loss as well. This is only possible on demo accounts.
Here is an example of how this can be exploited on a demo account:
- The DAX is not traded overnight, between 10pm and 8am CET. During that time, the price of the DAX can change significantly, creating a gap.
- A trader opens both a long and a short position on the DAX at 21:58, with a stop loss of 10 points and a take profit of 50 points.
- The gap appears in the morning and is 80 points. The trading platform guarantees that the pending orders will be filled at the specified prices, so the long position is closed at -10 points and the short position is closed at +50 points. This results in a virtual profit of 40 points.
Please note that these are only some of the scenarios that we have come across that contradict the functioning of the real market. Traders will always attempt to come up with new ways to bypass the real market data. It is always in the trader’s best interest to avoid such practices to ensure the longevity of an account and for adequate risk management purposes.