Automated trading programs (also called bots or algorithms) execute trades based on pre-programmed rules without manual intervention. In futures prop trading, automated strategies typically run on platforms like NinjaTrader or through Rithmic/Tradovate-connected tools.
Why It Matters
- 1Some prop firms allow Expert Advisors while others strictly prohibit them.
- 2Firms that allow EAs give algorithmic traders access to funded capital, which can be a significant advantage for strategies that require fast execution or 24-hour monitoring.
- 3However, many firms ban EAs because they can be used for prohibited strategies like high-frequency trading, martingale, or grid trading.
- 4Always verify a firm's EA policy before purchasing an evaluation, as using a prohibited EA results in instant account termination.
Example
- 1You develop an EA that trades NQ futures based on a moving average crossover strategy.
- 2It automatically enters long when the 20-period MA crosses above the 50-period MA and exits when the reverse occurs.
- 3The EA executes 3-5 trades per day with fixed position sizing of 2 contracts and a 15-point stop-loss.
- 4You verify your firm allows EAs and deploy it on your $100,000 evaluation account.
Common Mistakes
- ✖Deploying an EA on a prop firm account without verifying the firm's automation policy
- ✖Not backtesting the EA's drawdown profile against the firm's specific drawdown rules
- ✖Using off-the-shelf EAs without understanding the underlying strategy or its risk parameters