Prop Firms Warn About Trading Tricks By Some Groups

Prop trading firms are speaking out about unfair tricks used by some traders. These traders work in groups to earn money unfairly using special methods called arbitrage. Firms have shared their concerns publicly, saying these actions harm the trading system and other traders.

James Glyde, who leads PipFarm, explained the problem in a post on X. He said some groups force firms to compensate them, even after being caught cheating, to prevent negative attention. According to him, this creates a tough situation for trading companies.

Prop Firms End Unfair Trading Activities

ATFunded, a prop trading firm linked to CFDs broker ATFX, found and stopped some unfair trading recently. The firm said it closed the accounts involved in group trading and gave back the fees paid by these traders.

This kind of trading, called arbitrage, is popular because traders do not risk their own money. They spend a small amount to get live accounts with two firms. Then, they place opposite trades using both accounts. One account always wins, allowing the trader to earn money.

To succeed, traders need to pass several challenges to unlock live accounts. For one successful attempt, they must complete eight phase-one challenges to get two live accounts. After that, traders use these accounts to trade in opposite directions. Even if one account loses, the other earns enough to cover the loss and provide a profit.

These traders do not need to learn trading strategies. Instead, they follow simple methods that involve placing hedge bets. This ensures one account earns money while the other loses. Most of these tricks are organized by groups, and traders usually pay a fee to join.

Educational videos on platforms like YouTube have explained these methods, which has worsened the issue. Alpha Capital Group, another prop trading firm, blocked 150 accounts last year for group trading and breaking the rules. Karma, a different trading company, also stopped its services because of liquidity issues caused by traders using similar tricks.

Experts Share Concerns About Arbitrage

Joshua Dentrinos, an expert in the trading world, said these problems have been around for a long time. He explained that the issue is growing because the groups using these tricks are now more organized.

Dentrinos said these groups are very clever. Some borrow other people’s identities, while others use their social media fame to avoid getting caught. He added that firms need to act quickly to stop such activities before they harm the system.

According to Dentrinos, preventing these groups is not easy, especially when they have a lot of followers. However, he believes firms can improve their systems and catch these activities early.

Prop trading firms are working hard to fight these unfair tricks. They are looking for better ways to protect their platforms and ensure fair trading for everyone. As the trading world changes, firms hope to stay ahead of the problems and support honest traders.