Prop firms’ trading rules have been made more flexible in recent years, mainly due to an increase in competence. This is true both for the evaluation or challenge phase, as well as the management of a funded account. This trend of simplification is likely to continue, but one aspect that has been resisted so far is the use or Expert Advisors, or automatic trading systems, to execute transactions.
There are still many proprietary trading firms who refuse to use these algorithms. Prop firms that do allow EAs have varying restrictions. Some impose strict rules on what type of EAs the trader may use. Others require that you manually approve the EA that you wish to use.
You can compare the prop companies that I think are the best and see their main features. Next to these, you can quickly determine what kind of EAs the company allows or does not allow so that you can choose the one that fits your strategy best.
What are the best prop firms that allow EAs?
1- Topstep
Topstep accepts the use of EAs in all of its futures-funded accounts.
According to Topstep’s rules it is not allowed to use any EA or software whose purpose is to abuse, manipulate or provide an unfair advantage such as high frequency trading, simultaneous entry into opposite positions, accounts connected or maintained by third parties,…More info at https://www.topstep.com
2- The Funded Trader
The TFT has a policy for the use of EAs based on the type and size of the challenge.
Purchase Add-on to participate in the Standard Challenge.
Rapid Challenge: EAs are not permitted.
Royal Challenge: EAs are allowed.
Knight’s Challenge: EAs are allowed.
Dragon Challenge: EAs are allowed.
If you use publicly available or third-party EAs, be careful: the parameters of your EA must be unique. Otherwise, TFT systems may think that you are copying operations. Be careful if you use third party or publicly available EAs: the parameters of your EA must be unique as, if they are not, the TFT systems might understand that you do copy operations and this is not allowed.More info at https://thefundedtraderprogram.com
3- Funded Trading Plus
Funded Trading Plus, a prop company, accepts EAs and Algos for any of its trading accounts during the evaluation process (in 1 or 2 steps) or once the challenge is over. The Master program allows them to be used without any evaluation.
You can use any strategy except any practice considered as abuse of the live simulation environment such as arbitrage or grid trading.More info at https://www.fundedtradingplus.com
4- E8 Funding
E8 Funding allows you to use Algos, EAs (Expert Advisors), bots and indicators.
There is no limitation to your trading style as long as the strategy is unique (not an exact copy of other traders with this prop firm) and no HFT (high frequency EAs) and/or abuse of the market feed.More info at https://e8funding.com
5- The Trading Pit
Trading Pit allows the use of any EA, except for the following activities that are not permitted:
Tick scalping
Latency arbitrage trading.
Reverse arbitrage trading.
Hedge arbitrage trading.
Use emulators.
Copying third party trades.More info at https://www.thetradingpit.com
6- FTUK
FTUK permits the use of EAs for trading and risk management, as long as they are not based on prohibited uses.
Martingale.
Tick scalping
Hedge arbitrage trading.
Reverse arbitrage trading.
Latency arbitrage trading.More info at https://www.ftuk.com
How to Choose the Best Prop Firms for EAs?
Research is important when choosing the right company. You should consider the reputation of the company, its experience with its clients, and its history in the industry. Ask them all your questions and make sure you know the rules of trading, particularly as they relate to the use EAs.
Prop firms provide the capital needed to trade. Executing your trades with an expert advisor automatically, either as a way to pass a challenge or to maximize profits, is the best option to increase performance, manage risks properly, and maximise profits.
Trading multiple financial instruments at the same time with an EA can help you diversify your trading strategy.
Most of them do allow EAs, but I would recommend checking their websites to see if they have any restrictions or policies regarding the use of trading bots.
What is an EA?
An Expert Advisor is a computer program that automates market analysis, and executes trades automatically based on pre-defined parameters.
A Forex EA, for example, can be installed and programmed on the platform that you use to run your firm. MetaTrader 4, MetaTrader 5 and cTrader ,…) are all platforms that can be used to program and install a Forex EA.
EAs also allow for a great deal of emotional and psychological factors being eliminated from trading decisions. The software only follows a predefined set of rules. This means that emotions such as fear or greed will have no impact on the market entry and exit.
You can study the performance of your EA with other instruments ,…
More info: https://en.wikipedia.org/wiki/Algorithmic_trading
The benefits of prop firms that allows EAs
– Trading is free of emotions.
– Trading with the money from the prop firm allowing EAs does not risk your capital.
– It’s not necessary to monitor the market constantly.
– With a small account, you don’t have to use high-leverage.
Cons of Prop Firms with EAs
– You should ensure that your EA does not violate any of the complex trading rules of some prop firms. This could result in your account being cancelled.
– Prop firms often impose restrictions on EAs. Some firms prohibit the use of EAs, while others require approval before using them. Others restrict strategies like high frequency trading (HFT), tick scalping (Tick Scalping), arbitrage trading (Arbitrage Trading), hedging ,…
You don’t want to be surprised by the use of EAs at the prop company you plan to work with.