Help CenterWhat Are High-Risk, Gambling, and Exploitative Trading Practices?
Prohibited behaviours include, but are not limited to:
- Excessive Risk-Taking: Placing trades that expose a substantial portion of the account to risk.
- "All-In" Trading: Committing most or all of the available capital or margin on a single trade or across multiple trades when they are open at the same time.
- Improper Use of Leverage: Opening one or more one-directional trades that risk a significant portion of the account.
- Inconsistent Strategies: Trading without a clear or consistent approach, especially when switching strategies between accounts or phases.
- Account Rolling: Continuously buying and aggressively trading multiple challenges without discipline, often in an attempt to game the system.
- Binary Event Trading: Placing trades just before major news events (e.g., interest rate decisions or NFP releases) in hopes of profiting from short-term volatility.
These activities undermine proper risk management and the long-term growth potential we look for in traders.
Why Are These Practices Not Allowed?
These are designed to identify traders who can manage risk reliably, not those who gamble or attempt to exploit short-term statistical anomalies. These rules help us:
- Safeguard the capital allocated in funded accounts.
- Maintain fairness and consistency across all traders.
- Promote real, sustainable trading habits that lead to long-term success.
Example of High-Risk Trading (Excessive Risk-Taking, "All-In" Trading, Improper Use of Leverage)
- What it means: A large portion of capital is tied up in trades.
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Why it's risky: This approach reflects aggressive position sizing with little room for error. Without adequate risk buffers, even a minor market fluctuation can lead to significant losses, triggering margin calls or stop-outs and ultimately jeopardizing the entire account.
The below is a simplified example provided purely for demonstration purposes. Figures may vary depending on instrument pricing, broker margin requirements, and other variables. It should not be taken as an exhaustive list of risk thresholds or prohibited behaviours. All trading activity is reviewed in context during evaluations.
Let’s say a trader has a $100,000 USD account with 1:30 leverage and they open 25 lots on USDJPY
- Leverage: 1:30
- Total equity: $100,000
- Notional size per standard lot of USDJPY: $100,000
- 25 lots = 25 × $100,000 = $2,500,000 notional value
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Required margin = Notional value ÷ Leverage = $2,500,000 ÷ 30 = $83,333.33
- Margin utilisation = $83,333.33 ÷ $100,000 = 83.3%
This means over 83% of the trader's available capital is being used to support the open positions. Such levels of exposure are considered high-risk as it commits a significant portion of the account’s available capital to open positions. Such trading behaviour aligns with what we classify as “Excessive Risk-Taking , All-In trading and Improper Use of Leverage”, which is not permitted under TradingCult’s trading rules due to the elevated risk and lack of proper risk management.
What Happens If These Rules Are Violated?
If an account is found to be engaging in any of the prohibited methods, TradingCult reserves the right to terminate the account immediately. Following a review, any profits, ongoing trades, or pending payouts may be forfeited.
Important Note on Multi-Phase Evaluations (e.g., 2X Evaluation)
If prohibited trading practices are identified in any phase of a multi-phase evaluation, the entire challenge will be failed and any funded account granted will be breached. This applies regardless of whether the breach occurs in Phase 1, Phase 2, or during the funded stage.
Our Message to Traders
Our mission is to reward those who trade responsibly. By adhering to disciplined strategies and respecting our risk management rules, you not only protect your account, you also increase your chances of long-term growth and consistent funding.