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The Trading Pit Prohibited Trading Strategies: What Gets You Banned (HFT & Arbitrage)

Written by Paul

Published on

December 16, 2025

You're about to run your EA, place a hedge trade, or scalp tick-by-tick on The Trading Pit, and you need to know: will this strategy get your account terminated without a refund?

Here's what will kill your account instantly: High-Frequency Trading (HFT), any form of arbitrage (latency, reverse, hedge), Martingale strategies, Grid trading, copy trading signals that aren't yours, hedging between multiple accounts, and using emulators. If your EA performs any of these actions, The Trading Pit will deny your payout, block your upgrade to funded, and keep your challenge fee—no appeal, no refund.

The critical detail most traders miss: scalping is allowed on Futures accounts but requires a 1-minute minimum hold time on CFD Classic accounts. Hedging is legal within a single account for risk management but illegal across multiple accounts. This article breaks down every prohibited strategy with exact definitions, shows you where the line is between legal and banned trading, and gives you the specific EA restrictions that determine whether you get paid or terminated. As of December 2025, these are The Trading Pit's current prohibited strategy rules.

Key Takeaways: Your Instant Prohibited Strategies Answer

HFT banned on all accounts — high-frequency trading strategies will terminate your account and forfeit challenge fees with no refund.
All arbitrage prohibited — latency arbitrage, reverse arbitrage, and hedging arbitrage across price differences or markets = instant termination.
Martingale and Grid strategies banned — any strategy that doubles position size after losses or uses layered pending orders is prohibited.
Copy trading restrictions — you can use EAs, but they cannot copy signals from external sources (only your own strategy).
Inter-account hedging prohibited — buying on one account while selling on another account = banned; hedging within one account = allowed.
CFD Classic scalping restriction — must hold trades minimum 1 minute; Futures accounts have no minimum hold time.
Consequences are permanent — violations result in denied payouts, no funded account upgrade, and non-refundable challenge fees.

In-Depth: The Trading Pit's Banned Strategies Explained

High-Frequency Trading (HFT): Automatic Termination

Definition: Trading strategies that execute dozens or hundreds of orders per minute, typically holding positions for seconds or less, often exploiting microsecond price differences.

Why it's banned:

The Trading Pit uses broker infrastructure (GBE Brokers, FXFlat for CFDs; Rithmic for Futures) that isn't designed for institutional HFT speeds. HFT creates execution issues, server load, and exploits pricing inefficiencies that prop firms consider unfair advantages.

What counts as HFT:

Executing 50+ trades per hour consistently
Average hold times under 10 seconds
Ping/latency-optimized strategies designed to front-run order flow
Co-location setups or ultra-low-latency VPS near exchange servers specifically for speed advantage

What does NOT count as HFT:

Active scalping with 2-5 minute hold times = allowed on Futures
20-30 trades per day with 1-3 minute holds = allowed (this is normal scalping, not HFT)
Using a standard VPS for stable connection = allowed (not the same as latency arbitrage)

Real example of HFT violation:

You run an EA on NQ futures that enters and exits within 3-5 seconds, making 200 trades in a 4-hour session. Average hold time: 4 seconds. The Trading Pit's monitoring system flags this as HFT. Your account is terminated at the end of the day—even if you're up $5,000.

Result: Challenge denied, no refund, no funded account.

Arbitrage: Three Types, All Banned

1. Latency Arbitrage

Definition: Exploiting the delay between a price update on one broker/exchange and the update on The Trading Pit's platform.

How it works (and why it's banned):

Your EA monitors prices on Exchange A (real-time CME data) and your TTP account (which has 50-200ms delay). When Exchange A shows ES at 4852.00 but your TTP platform still shows 4850.00, your EA buys on TTP at the "old" price, knowing it will update to 4852.00 seconds later. You lock in risk-free profit from the price lag.

The Trading Pit's position: This exploits their technology limitations, not your trading skill. Instant ban.

2. Reverse Arbitrage

Definition: Taking opposite positions on correlated instruments to exploit pricing discrepancies.

Example:

You notice EUR/USD and GBP/USD have a historical correlation. When EUR/USD spikes but GBP/USD lags, you buy GBP/USD and short EUR/USD simultaneously, expecting convergence.

Why it's banned: This is essentially betting on broker pricing errors or feed delays, not market direction.

3. Hedging Arbitrage

Definition: Trading price differences between multiple markets for the same asset to profit from imbalances.

Example:

ES futures are trading at 4850.00 on CME but your TTP CFD account shows SPX at a price equivalent to 4848.00. You buy the CFD and short ES on another platform, locking in the 2-point spread.

Why it's banned: You're not taking directional risk—you're exploiting platform pricing differences. The Trading Pit considers this a technology exploit, not trading skill.

Critical clarification: Hedging within one account for risk management (e.g., buying ES and selling NQ based on your market view) is allowed. Hedging to exploit price differences = banned.

Martingale Strategies: Explicitly Prohibited

Definition: Doubling your position size after each losing trade to recover losses with one winner.

Classic Martingale example:

Trade 1: Long 1 lot EUR/USD, lose $100
Trade 2: Long 2 lots EUR/USD, lose $200
Trade 3: Long 4 lots EUR/USD, lose $400
Trade 4: Long 8 lots EUR/USD, WIN $800 (covers all prior losses + $100 profit)

Why it's banned:

Martingale strategies blow up accounts catastrophically. One bad streak requires exponential position sizing that breaches drawdown limits. The Trading Pit prohibits this because it's gambling, not risk-managed trading.

What counts as Martingale:

Doubling position size after losses
Averaging down with increasing lot sizes
"Recovery" EAs that scale into losing positions

What does NOT count as Martingale:

Fixed position sizing (always trading 1 lot per setup)
Scaling into winners (adding to profitable positions)
Reducing size after losses (the opposite of Martingale)

Consequences: If your EA uses Martingale logic, The Trading Pit will deny your payout even if you pass the challenge. They review trading patterns before funding, and Martingale is an automatic disqualification.

Grid Strategies: Also Banned

Definition: Placing multiple pending orders at set intervals above and below the current price, creating a "grid" of entries.

Classic Grid example:

Current price: EUR/USD 1.0800

You place:

Buy stop at 1.0810
Buy stop at 1.0820
Buy stop at 1.0830
Sell stop at 1.0790
Sell stop at 1.0780
Sell stop at 1.0770

The idea: Profit from ranging markets by catching moves in both directions.

Why it's banned:

Grid strategies often blow up during trending markets (all your buy stops get hit in an uptrend, leaving you massively long at the top). The Trading Pit considers this high-risk gambling that doesn't demonstrate trading skill.

Similar to Martingale: Grid strategies frequently combine with averaging down and position size scaling, which exacerbates risk.

Consequences: Same as Martingale—denied payout, no refund.

Copy Trading: Only Your Signals Allowed

What's allowed:

Your own EA executing your personal strategy
Manual trading based on your own analysis
Using indicators (RSI, MACD, moving averages, etc.)

What's banned:

Copying signals from Telegram, Discord, or paid signal services
Social trading where your EA mirrors another trader's positions
Trade copiers connecting your TTP account to someone else's trades

How The Trading Pit detects this:

If 50 traders all enter long EUR/USD at the exact same second with identical lot sizes, it's obvious they're copying signals. The Trading Pit reviews trade timing patterns and terminates accounts that show synchronized entries with external signal sources.

Critical distinction: You can use an EA that executes a published strategy (e.g., "RSI oversold + moving average crossover"). You cannot use an EA that copies live signals from someone else's account or a signal provider.

Hedging Rules: Allowed Within Account, Banned Across Accounts

Allowed (legal hedging for risk management):

Scenario 1: You're long 3 ES contracts. Market starts reversing. You short 1 ES contract to partially hedge your exposure while you assess the situation.

Scenario 2: You're trading a basket strategy. You're long NQ and short ES based on relative strength divergence. Both positions are in the same TTP account.

Result: Perfectly legal. This is risk management and directional trading based on your market view.

Banned (inter-account hedging arbitrage):

Scenario 1: You have two TTP accounts. You buy ES on Account A and simultaneously sell ES on Account B. One account will win, one will lose, but you guarantee one funded account.

Scenario 2: You buy EUR/USD on your TTP CFD account and simultaneously sell EUR/USD on a Futures account to lock in a risk-free position while passing the challenge.

Result: Both accounts terminated. The Trading Pit monitors for correlated opposite positions across multiple accounts under the same trader.

How they detect it:

IP address matching, similar trading times, exact opposite positions, correlated P&L curves. If Account A's profit graph is the inverse of Account B's, it's obvious.

Scalping Rules: Futures vs. CFD Classic

Futures accounts (Prime and Classic):

Scalping fully allowed with no minimum hold time.

You can enter and exit within 5 seconds, 100 times per day, as long as it's not classified as HFT (which requires extreme frequency and sub-second holds).

Practical guideline: Hold trades for at least 30-60 seconds to stay clearly under the HFT threshold.

CFD Classic accounts:

1-minute minimum hold time required.

If you open a trade at 10:00:00 AM, you cannot close it before 10:01:00 AM. Violating this repeatedly will flag your account.

CFD Prime accounts:

The input data doesn't specify a minimum hold time for CFD Prime. Based on the restriction only applying to CFD Classic, scalping appears to be allowed on CFD Prime without the 1-minute rule, but confirm with The Trading Pit support before running a sub-1-minute scalping strategy.

Why the 1-minute rule exists on CFD Classic:

CFD pricing relies on broker feeds (GBE Brokers, FXFlat) that experience more slippage and spread widening than futures. Ultra-short scalping on CFDs can exploit temporary spread compression or feed glitches. The 1-minute minimum prevents this.

Expert Advisor (EA) Restrictions Summary

Your EA is allowed IF it:

Executes your own strategy (not copying external signals)
Holds trades for 1+ minute on CFD Classic
Does not use HFT logic (sub-10-second average holds)
Does not perform any arbitrage (latency, reverse, hedging)
Does not use Martingale or Grid strategies
Respects news trading restrictions ($100K/$200K CFD accounts)
Does not use emulators (virtual machines that mask true execution environment)

Your EA is banned IF it:

Copies signals from Telegram, Discord, or signal services
Scalps under 1 minute on CFD Classic
Uses HFT execution speeds (50+ trades/hour with sub-10-second holds)
Performs any form of arbitrage
Doubles position size after losses (Martingale)
Places grid orders
Uses emulators to hide execution environment
Opens trades during 2-minute news windows on restricted CFD accounts

Consequences for EA violations:

The Trading Pit will not upgrade you to funded, will not process payouts, and will not refund your challenge fee.

Emulators: Why They're Banned

What's an emulator in trading context:

Software that simulates a different trading environment or masks the true location/setup of your EA. Examples include virtual machines configured to hide VPS details or software that spoofs execution timestamps.

Why traders use emulators (and why it's banned):

Some traders use emulators to hide latency arbitrage setups or to run multiple instances of banned EAs without detection. The Trading Pit bans emulators because they're primarily used to circumvent detection systems.

What's allowed:

Standard VPS (Virtual Private Server) for stable EA hosting = allowed
Normal trading platforms (MT5, Rithmic, Quantower) = allowed

What's banned:

Emulation software designed to mask your execution environment
Virtual machines specifically configured to hide arbitrage or HFT setups

The Critical Comparison: Allowed vs. Prohibited Strategies

<div style="width:100%;overflow-x:auto;-webkit-overflow-scrolling:touch;"><table style="border-collapse:collapse;width:100%;min-width:600px;border:1px solid #e5e5e5;border-radius:8px;"><thead style="background:#f9f9f9;"><tr><th style="border:1px solid #e5e5e5;padding:10px;text-align:left;min-width:200px;">Strategy Type</th><th style="border:1px solid #e5e5e5;padding:10px;text-align:center;min-width:150px;">Futures</th><th style="border:1px solid #e5e5e5;padding:10px;text-align:center;min-width:150px;">CFD Prime</th><th style="border:1px solid #e5e5e5;padding:10px;text-align:center;min-width:150px;">CFD Classic</th></tr></thead><tbody><tr><td style="border:1px solid #e5e5e5;padding:10px;">Scalping (no minimum hold time)</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">✅ Allowed</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">✅ Allowed</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td></tr><tr><td style="border:1px solid #e5e5e5;padding:10px;">Scalping (1+ minute holds)</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">✅ Allowed</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">✅ Allowed</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">✅ Allowed</td></tr><tr><td style="border:1px solid #e5e5e5;padding:10px;">High-Frequency Trading (HFT)</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td></tr><tr><td style="border:1px solid #e5e5e5;padding:10px;">Arbitrage (any type)</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td></tr><tr><td style="border:1px solid #e5e5e5;padding:10px;">Martingale / Grid strategies</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td></tr><tr><td style="border:1px solid #e5e5e5;padding:10px;">Hedging within same account</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">✅ Allowed</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">✅ Allowed</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">✅ Allowed</td></tr><tr><td style="border:1px solid #e5e5e5;padding:10px;">Hedging across multiple accounts</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td></tr><tr><td style="border:1px solid #e5e5e5;padding:10px;">Copy trading (external signals)</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td></tr><tr><td style="border:1px solid #e5e5e5;padding:10px;">Expert Advisors (your own strategy)</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">✅ Allowed</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">✅ Allowed</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">✅ Allowed*</td></tr><tr><td style="border:1px solid #e5e5e5;padding:10px;">VPS usage</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">✅ Allowed</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">✅ Allowed</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">✅ Allowed</td></tr><tr><td style="border:1px solid #e5e5e5;padding:10px;">Emulators</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td><td style="border:1px solid #e5e5e5;padding:10px;text-align:center;">❌ Banned</td></tr></tbody></table></div>

*CFD Classic EAs must respect 1-minute minimum hold time

Violation Consequences by Strategy Type

Why This Matters for Your Trading: How to Stay Compliant and Get Funded

If You're Running an EA: Pre-Launch Checklist

Before activating your EA on a Trading Pit account, verify it does NOT:

1. Execute trades faster than 1 trade per minute on average

Calculate: Total trades ÷ Total hours traded. If you're averaging 60+ trades/hour consistently, you're approaching HFT territory.

Safe zone: 20-30 trades per day with 2-5 minute average holds.

2. Copy external signals

Check your EA's code or description. If it connects to external APIs, Telegram bots, or signal services, it's banned.

Safe zone: EA uses only technical indicators (RSI, MACD, Bollinger Bands) based on price data.

3. Use Martingale or Grid logic

Review your position sizing. If lot size increases after losses or if the EA places multiple pending orders at fixed intervals, it's banned.

Safe zone: Fixed lot sizing (always 1 lot per trade) or risk-based sizing (1% of account per trade).

4. Perform any form of arbitrage

If your EA monitors price feeds from multiple sources or exploits latency differences, it's banned.

Safe zone: EA only uses data from The Trading Pit's platform, no external price comparisons.

5. Violate minimum hold times

On CFD Classic, ensure your EA holds trades for at least 61 seconds (1 minute + 1-second buffer).

Safe zone: Code a minimum 90-second hold time to avoid accidental violations.

6. Trade during news blackouts

On $100K/$200K CFD accounts, ensure your EA does not open trades or trigger pending orders within 2 minutes before/after high-impact news.

Safe zone: Add a news filter to your EA using The Trading Pit's Economic Calendar API or manually disable the EA during major releases.

If You're a Manual Scalper: Hold Time Guidelines

Futures accounts:

You can scalp freely, but stay above 30-second average holds to clearly differentiate from HFT.

Best practice:

Enter based on your setup
Hold for at least 1-2 minutes
Exit based on target or stop, not arbitrary time

CFD Classic accounts:

Set a timer. Do not close any trade before 1:00 elapsed.

Practical tip: Use your platform's trade history timestamp. If you opened at 10:23:47, don't close before 10:24:47.

If You Run Multiple Accounts: Hedging Rules

What you CAN do:

Open two separate accounts and trade them independently with different strategies
Have one account long NQ and another long ES (both directional, not hedged)
Trade the same instrument on both accounts in the same direction (both long ES)

What you CANNOT do:

Open long ES on Account A and short ES on Account B simultaneously
Use one account to "hedge" the other's risk
Coordinate entries where one account's profit guarantees the other's loss

How to avoid detection:

Don't hedge across accounts, period. The Trading Pit's monitoring system will catch inverse P&L curves even if you space out the entries by hours.

If you're hedging within one account for risk management: Perfectly legal. Just make sure both positions are part of your directional strategy, not an attempt to game the challenge by guaranteeing one account passes.

If You're Trading Correlated Pairs: The Arbitrage Line

Legal correlation trading:

You analyze EUR/USD and GBP/USD. You believe both will rise based on USD weakness. You buy both pairs on the same account based on your fundamental/technical analysis.

Result: Allowed. You're taking directional risk on both positions based on your market view.

Illegal arbitrage:

You notice EUR/USD spiked but GBP/USD hasn't moved yet. You buy GBP/USD expecting it to "catch up" to EUR/USD's move, effectively betting on a pricing lag rather than market direction.

Result: Banned. You're exploiting temporary price discrepancies (hedging arbitrage), not trading based on market analysis.

The distinction: Are you taking directional risk, or are you betting on price convergence? Directional = legal. Convergence/arbitrage = banned.

Strategy Modifications to Stay Compliant

If your strategy is close to prohibited:

Problem: You scalp with 30-second average holds on CFD Classic.
Solution: Switch to a Futures account (Prime or Classic) where scalping has no minimum hold time.

Problem: Your EA averages down by doubling position size after losses.
Solution: Reprogram to use fixed lot sizing or reduce (not increase) size after losses.

Problem: You trade multiple accounts and occasionally place opposite positions.
Solution: Only trade one account at a time, or ensure all accounts trade in the same direction on the same instrument.

Problem: Your EA executes 100 trades per day with 60-second holds.
Solution: Increase minimum hold time to 2-3 minutes, reducing total trades to 30-40/day.

Frequently Asked Questions (FAQ)

Q: I passed my challenge using a Grid EA. Will The Trading Pit find out before funding me?

A: Yes. The Trading Pit reviews all trading activity before approving funded accounts. If they detect Grid or Martingale logic in your trading patterns (multiple layered pending orders, position size scaling after losses), they will deny your funded upgrade and keep your challenge fee. You will not get a refund.

Q: Can I use a scalping EA on CFD Classic if it holds trades for exactly 60 seconds?

A: Technically yes, but build in a buffer. Set your EA to hold for 90 seconds minimum. If your code targets 60 seconds exactly, clock drift or execution delays could cause some trades to close at 59 seconds, flagging violations. Give yourself margin for error.

Q: Is hedging with correlation strategies (e.g., long EUR/USD, short USD/CHF) considered arbitrage?

A: No, as long as you're taking directional risk based on your market analysis. If you're trading correlated pairs because you believe USD will weaken (directional view), that's legal. If you're trading them to exploit a temporary pricing lag between the pairs (arbitrage), that's banned. The key is intent: directional trading = legal, price discrepancy exploitation = banned.

Q: What if my VPS has faster connectivity to the broker than most traders—is that considered latency arbitrage?

A: No, using a standard VPS for stable connectivity is allowed. Latency arbitrage specifically refers to exploiting price feed delays by monitoring external data sources and trading on "stale" prices before they update on your TTP platform. Simply having a fast VPS isn't arbitrage—it's smart infrastructure.

Q: Can The Trading Pit see my EA's code, or do they only analyze trading patterns?

A: They analyze trading patterns (frequency, hold times, position sizing, entry timing). They do not have access to your EA's source code. However, if your trading behavior matches known prohibited patterns (HFT, Martingale, arbitrage), they will terminate your account regardless of whether they've seen the code.

Q: If I accidentally violate the 1-minute hold time on CFD Classic once or twice, will I get banned immediately?

A: The input data suggests The Trading Pit focuses on patterns, not single violations. One or two accidental sub-1-minute closes likely won't terminate your account, but repeated violations will. If you're consistently closing trades at 50-58 seconds, expect termination. If you accidentally close one trade at 55 seconds but all others are 2+ minutes, you're probably safe—but don't make it a habit.