Drawdown Violation Detection and Reconciliation Process
At The Funded Trader, maintaining fairness through our rules and drawdown limits is essential to sustaining a balanced trading ecosystem. Sometimes, our live systems may not immediately detect drawdown violations, which may allow traders to continue trading temporarily. However, we perform a comprehensive daily reconciliation to ensure that violations are caught and addressed retroactively.
What Happens if a Violation Occurs?
If our system detects a violation of the daily drawdown or maximum drawdown limits, you will receive a notification via email. This email will contain a link to the Breach Details Dashboard, where you can review exactly when and how the breach occurred.
The Breach Details Dashboard
When a breach is detected, the Open Breach Details email will guide you to a dashboard that offers full transparency:
• Replay of Breach: Review the exact time, down to the millisecond, that the breach occurred.
• Equity and Balance Tracking: Visualize your account’s equity and balance movements, showing how close you were to breaching.
• Daily Drawdown Calculations: Detailed calculations showing your daily drawdown limits and where the violation occurred.
• Detailed Trade Breakdown: See every trade and how it contributed to your overall performance, including the exact moment a trade pushed your account into breach.
• Tick-by-Tick Replay: Visualize market conditions at the time of the violation to help you understand the context of the breach.
Prohibited Trading Strategies
In addition to monitoring drawdown violations, we also enforce strict rules against prohibited trading strategies, including but not limited to:
1. Order Layering Violations: Excessive or manipulative placement of orders to create artificial market depth.
2. High-Frequency Trading (HFT) Violations: Trading strategies that focus on exploiting technological advantages to front-run other traders.
3. Martingale Strategy Violations: A strategy that involves doubling down on losing trades to recover losses.
4. Grid Trading Violations: Placing multiple buy or sell stop orders to form a grid above or below the current price without logical market reasoning.
5. Latency Arbitrage Violations: Exploiting differences in market prices due to latency in data transmission.
When one of these strategies is detected, a violation is logged and treated similarly to a drawdown breach. You will be informed via email, where you can review the specific trades that triggered the violation. You can review this article for more details: Prohibited trading strategies that violate the TFT rules and Terms of Use
System Integrity and Rule Enforcement
We strive to ensure the integrity of the platform for all users, and enforcing these rules is part of that mission. Traders violating drawdown limits or engaging in prohibited strategies risk having their accounts breached and payouts forfeited. Our comprehensive detection systems aim to provide transparency, ensuring that traders fully understand the nature of their breach.
Why Do We Have This System?
This reconciliation and monitoring process is designed to ensure fairness and transparency while promoting sustainability on our platform. Enforcing drawdown limits and prohibiting certain trading strategies creates an environment where everyone follows the same rules, providing a balanced opportunity for all traders to succeed. Our goal is to ensure that traders who abide by the rules have a clear path toward payouts and long-term success.