The Simulated Market at AquaFutures is designed to closely mirror live trading conditions, but there can still be some kind of a difference. We understand the unique challenges this creates for our platform, our funding partners, and most importantly, our traders. To maintain a fair, transparent, and balanced trading environment, we've put policies in place to prevent practices that could take advantage of the simulated setup or deviate from ethical trading standards.
Understanding Simulated trading environments
Some trading strategies can take advantage of the simulated fill algorithm, leading to strong performance during the evaluation phase but ultimately resulting in losses when moved to live environments. A small number of traders, either unknowingly or with intent to game the system, may use these strategies, which are strictly prohibited at AquaFutures.
1. Automated Trading Protocols
At AquaFutures (AF), we enforce rigorous guidelines to uphold a fair and transparent trading environment in automated trading:
Automated Scalping: AF limits the use of automated systems designed for ultra-high-frequency scalping, particularly systems that exceed 200 trades per day.
Automated Tools: AI, bots, and other fully automated trading mechanisms are strictly prohibited across all account types.
Semi-Automated Trading: Allowed only if traders actively monitor and manually manage trades, fully understanding the system’s purpose and limitations.
Automated Behavior: Fully hands-off, continuous, day-and-night trading or any type of complete automation is strictly forbidden.
2. Order Management and Market Conduct
AF prioritizes ethical trading practices and responsible order management to support a stable trading environment:
Order Placement: Placing multiple limit orders at the same price to manipulate order fills is strictly prohibited. This includes other placement practices such as layering, which is also prohibited.
Gapped or Illiquid Market Trading: Trading strategies aimed at exploiting isolated fills in low-liquidity or gapped markets are not permitted.
Slippage and Bracket Exploitation: Using tight brackets or taking advantage of the simulated market’s absence of slippage to gain favorable fills is forbidden.
Economic Data Trading: Trading during tier 1 economic data releases is restricted to maintain stability.
Compliance with CME Group: All trading activity must comply with CME Group rules and regulations.
Collaborative Trading: Coordinated trading with others to execute identical or opposing strategies across unconnected accounts is not allowed.
3. Policy Violations and Consequences
AF enforces strict consequences for policy violations to protect the integrity of our trading environment:
Termination: AF reserves the right to terminate agreements immediately if a trader violates policies.
Profit Confiscation: Profits obtained through prohibited trading practices will be confiscated.
Evaluation Review: All passed evaluations are subject to review. Traders found to be in breach of policies will not be funded and may be ineligible for refunds.
4. Understanding Scalping vs. Microscalping
At AquaFutures, we differentiate between scalping, which is an accepted trading strategy, and microscalping, which is prohibited.
Scalping involves holding trades for a short period, often a few minutes, and targeting small but reasonable profit margins, such as 5-10 points. It requires skill, focus, and a keen understanding of market dynamics, and it can be a viable approach in both simulated and live trading environments.
Microscalping, on the other hand, is an extremely aggressive subset of scalping. It typically involves holding trades for just a few seconds, executing an exceptionally high volume of trades, and aiming for minimal profit margins—often less than 5 points or even a fraction of a point.
Why Microscalping is Prohibited
Microscalping can exploit the simulated fill algorithms of trading evaluations. This behavior may result in inflated performance metrics during the evaluation phase but often fails to deliver sustainable results in live markets due to the reliance on conditions like minimal slippage and perfect execution. Key issues with microscalping include:
Fill Manipulation: Microscalping can take advantage of simulated environments where fills are less impacted by slippage or latency, creating an unrealistic expectation of profitability.
Market Integrity: The ultra-short durations and high frequency of trades can distort market behavior, making it difficult to maintain a fair trading environment.
Reliability: The strategy's success often hinges on perfect conditions that are rarely found in live trading environments, leading to inconsistent results.
By contrast, scalping, when conducted ethically and within reasonable limits, aligns with AquaFutures' standards and offers traders a legitimate path to profitability.
Examples of Scalping vs. Microscalping
Scalping: A trader holds a position for 3 minutes, targeting a profit margin of 8 points.
Microscalping: A trader executes and closes a position within 12 seconds, aiming for less than 1 point.
While scalping is a legitimate and widely accepted strategy, microscalping is strictly prohibited at AquaFutures to preserve the integrity of our trading environment.
5. Is Martingale Accepted?
Yes, AquaFutures allows the use of Martingale strategies, provided traders operate within the platform's margin requirements, contract limitations, and risk parameters. This ensures that the strategy is applied responsibly and does not create excessive risk for the trader or the trading environment. If you have concerns about using Martingale, our support team is available to assist.
If you have any questions on this topic, please feel free to reach out to our support team via Live Chat, submit a ticket on Discord, or email us at [email protected]. We’re here to help!