Trading with instant funding offers a chance to start trading without using your own money, but there are important rules to follow. These rules help ensure that the trading environment stays fair and protects both the trader and the funding provider. In this article, we'll go over the key rules you need to know before you start trading with instant funding.

Prohibited Strategies :-

Martingale Strategy :

The Martingale strategy involves doubling your position size after a loss, hoping that the next trade will recover your losses and make a profit. While this might sound like a good idea, it can be very risky. If the market moves against you, you could end up with huge losses. That's why this strategy is not allowed when trading with instant funding.

Grid Trading :

Grid trading means placing buy and sell orders at regular intervals around a set price. This strategy aims to profit from market fluctuations. Although it can work in some market conditions, it also comes with risks, especially if the market trends strongly in one direction. Because of these risks, grid trading is not allowed with instant funding.

High-Frequency Trading (HFT) :

High-Frequency Trading (HFT) involves making a large number of trades very quickly to profit from small price changes. From February 8, HFT is defined as holding trades for 5 seconds or less. This kind of trading is prohibited because it requires extremely fast execution and can lead to problems with liquidity and market impact.

Prohibited Practices :-

Gambling :

Trading should not be treated like gambling. This means you should not risk a large portion of your account on a few trades or use too much leverage. For example, using over 50% of your margin on opening trades can be considered gambling and might lead to your account being reset. Instead, trading should be based on a solid strategy and not on risky bets.

Major News Trading :

Major news trading involves making trades around significant news events, such as economic reports or interest rate decisions. There's a rule that restricts trading within an 8-minute window—starting four minutes before and ending four minutes after the news event. Any profit made during this period might be removed from your account, and in some cases, your account might be reset. However, this rule doesn’t apply if you hold a trade before and after the window. It also doesn’t affect swing trading accounts or certain phases of challenges.

Copy Trading Between Accounts Not Owned by the Same Individual :

Copy trading is when one account mirrors the trades of another. It’s allowed between your own accounts or with other types of accounts like prop firms and retail brokers. However, you can't copy trades between accounts owned by different individuals. This rule helps prevent misuse and manipulation of trading systems.

Usage of Public Third-Party Expert Advisors (EAs) : 

Expert Advisors (EAs) are automated systems that can trade based on preset rules. While using these can be useful, public third-party EAs are generally not allowed unless they are provided by Instant Funding. This rule is in place to avoid the use of unverified or potentially harmful software that might exploit the system.

Exploiting Inefficiencies of Trading Platforms :

Using strategies that exploit inefficiencies in trading platforms, like latency arbitrage or gap trading, is not allowed. These methods involve taking advantage of delays or discrepancies in data feeds and can lead to unfair trading practices. Such exploitation can result in severe consequences, including account termination.

Smart Drawdown Rules :-

Initial Drawdown :

The initial drawdown starts at -10%, meaning that if your account balance falls by 10%, it might be at risk of termination. Understanding this limit is crucial because it sets the maximum allowable loss before action is taken.

Drawdown Adjustment :

If you gain 5% on your balance, the drawdown limit is adjusted to -5% of your starting balance. This adjustment helps protect your gains while still allowing some room for risk. Managing this drawdown effectively is important for keeping your account safe.

Post-Adjustment Rules :

After the drawdown is adjusted, it remains at -5%. This rule ensures that even as your account grows, you are still protected from excessive losses. It’s important to monitor this limit and stay within it to avoid problems.

Scaling Impact on Drawdown :

When you scale up your account, the drawdown limit updates to -5% of the new scaled balance, excluding any profits. This means that as your account size increases, the drawdown limit adjusts accordingly to help manage risk.

Holding Positions Over the Weekend :-

Holding trades over the weekend is generally not allowed with instant funding, except for those using a swing account. This restriction helps manage the risk of unexpected market events that can occur when the markets are closed. It's important to adhere to this rule to avoid potential issues.

Scaling Plan :-

For Accounts with Smart Drawdown :

If you have a smart drawdown account, you can scale up your account once you achieve a minimum gain of 10%. You can scale by using 5% of the account’s starting balance, and your account size can double each time you scale. The maximum allocation is $2,500,000, though you can request an increase if needed.

For Accounts with Static Drawdown :

For static drawdown accounts, scaling can be done after achieving a 10% gain over 90 days. You need to contact support to scale your account. Scaling is limited to +25% of your account size once every 90 days, and the maximum allocation is 100% of the starting balance.

Inactivity Rule :-

If you don’t trade at all within a 60-day period, your account will be considered inactive and may be terminated. To avoid this, make sure to trade regularly. If your account is terminated due to inactivity, you may need to open a new account and follow the rules carefully.

Conclusion

Trading with instant funding offers many opportunities but requires you to follow specific rules. Understanding and adhering to these rules helps ensure that you can trade successfully and avoid common pitfalls. By avoiding prohibited strategies and practices, managing your drawdown, and adhering to scaling and inactivity rules, you can maintain a healthy trading account and achieve long-term success.