Permitted and Prohibited Strategies

Permitted Strategies

Dollar-Cost Averaging (DCA)

Definition: DCA means entering a position in multiple executions at varying price levels to achieve a blended average entry price.

• Fully permitted when used as part of a structured plan.
• Should align with reasonable position sizing and risk per trade.
• Must not be abused to chase losses or artificially extend drawdown capacity.
• Avoid exceeding your daily loss limit.

Scaling In and Out

Definition: Scaling involves adding to a position as it moves in your favor (scaling in) or closing portions as profits are realized (scaling out).

• Allowed on all accounts.
• Each additional entry must be risk-managed within your drawdown limit.
• Avoid aggressive scaling.

Example: A trader may scale into a $100,000 account position using three smaller entries (e.g., $15k → $10k → $5k).

Flipping

Definition: Flipping refers to quickly reversing direction (e.g., going long, then short) in response to market momentum.

• Permitted if done manually.
• Must comply with daily loss and good faith policies.
• Frequent flipping for latency exploitation or 'tick catching' is not permitted.

Prohibited: Hedging

Strategy Best Practices

• Stick to single-directional exposure per symbol or correlated asset.
• Document your risk and scaling logic if trading actively during high volatility.
• Do not replicate trades across multiple accounts simultaneously.
• Keep exposure below your designated thresholds.

Summary