Are traders permitted to use bots or automated strategies at some of the leading proprietary trading firms?

Algorithmic Trading in Prop Firms: What You Need to Know (With Real Examples & Insights) Summary: If you're trying to figure out whether the best prop firms actually allow traders to use automated trading strategies—either bots or custom algorithms—you’ll find the answer here is more complicated than a simple yes or no. From reading endless forum debates to talking to recruiters and even stumbling through a couple of “are bots allowed?” mishaps myself, I’ll break down how leading firms approach algo trading, the compliance hurdles, and—crucially—how different countries regulate what even counts as “verified trade” in the first place. Expect examples from top firms, a few authentic screenshots, and a reality check on global scheme differences. What Problem Does This Article Solve? You want to know: can you join one of the top proprietary trading firms and use algorithms or bots, instead of manual click-trading? And if yes, how do you actually get started? I’ve tried to go “all in”—tested apps, spoken to funded traders, and even fallen on my face with compliance missteps—so everything below comes from hands-on, slightly messy experience, not just copy-pasting their marketing pages. First: What Is Algorithmic Trading at a Prop Firm? Let’s clarify. “Algorithmic” (or “automated”) trading is when a computer, not you, enters and exits trades by following pre-set rules, often coded in Python or via platforms like MetaTrader’s Expert Advisors (EA). You might picture a hedge fund’s fancy quant desk, but in the prop world, it’s often one-person operations running scripts. Some firms love this. Others, not so much—often for compliance, infrastructure, or even “fair play” reasons. Step-by-Step: How Leading Prop Firms Handle Automated Strategies I’ll split it into a few firm types, share screenshots, and inject some “how it actually went down” moments. 1. The “Algo-Friendly” Firms Take FTMO as a case everyone’s heard of. Their official FAQs state: “Algorithmic trading is allowed on FTMO accounts, including EAs, as long as it is in line with our trading objectives and terms.” — FTMO FAQ I messed this up once. Overzealous, I ran a crude scalping EA on my FTMO Challenge, got flagged for “toxic flow” after a couple hundred trades in a minute. Turns out, even when firms allow bots, hyper-frequency and arbitrage are often banned. Screenshot from FTMO’s FAQ highlighting conditions for algorithmic trading. 2. Strictly Manual Firms Some firms—especially those running internal funding on proprietary platforms—restrict algorithms for risk control. Example: Topstep for futures. Their guidelines state you must be present, able to execute and manage open positions, and generally “babysit” your entries. “Automated trading systems, black-box algorithms, or third-party trade copiers are not allowed in Topstep Combine accounts.” — Topstep Rulebook Had a friend who smuggled in an EA hoping no one would notice. Two days later, he’s locked out, “combining” nothing… shows how seriously enforcement can be. 3. Somewhere in Between—Conditional Algo Approvals Other firms use case-by-case reviews, vetting algos for risk and reputation. The5%ers (especially before late 2023) leaned this way: you could submit your bot trading plan, await approval, and might have to submit logs showing your strategy wasn’t exploiting API latency. They make it clear that copy trading or passing signals between accounts is often banned, even if EAs are OK for a single user. Which brings me to… Screenshots: Under-the-Hood—How Prop Firms Visualize Algo Use MetaTrader 4’s ‘AutoTrading’ toggle—a quick enable/disable switch; flagged by some firms during account assessment. Some firms (like MyFundedFutures) use custom dashboards tracking your login patterns, trade intervals, and any API-triggered entries. If you go 48 hours without a manual intervention, expect a warning email. Regulatory Side: “Verified Trade” Standards are Wildly Variable Here’s where things get unexpectedly global. Different countries and organizations interpret what “verified” or “legitimate” trading means, and this affects whether prop firms even want to deal with bots. Country/Region Regulation/Standard Legal Basis Supervising Authority USA Verified trading as defined by NFA/CFTC; bots permitted but must include full audit trail CFTC Rule 4.7(b), NFA Compliance Rule 2-49 CFTC, NFA EU MiFID II algorithmic trading rules; bots must notify regulator if executing direct market access MiFID II, Article 17 ESMA, Local NCA UK Requires pre-approval for “algo” strategies on regulated venues FCA Handbook MAR 5.3 Financial Conduct Authority (FCA) Singapore Algorithmic trading must register with MAS and provide kill-switch function SFA, MAS Notice SFA 04-N16 Monetary Authority of Singapore (MAS) For example, the ESMA (EU regulator) says: any bot executing with “direct access” needs to notify and provide controls; meanwhile, US NFA (see NFA Rule 2-49) focuses on record-keeping and “know your customer” diligence even for automated accounts. I called up a London-based compliance officer, who said: “We don’t touch algo traders unless their execution trail matches FCA standards—meaning, we need to see every signal’s origin, every intervention point, and full audit logs. Anything less, and the risk for the firm is just too high.” A True Story: Disputing Trade Validity Across Borders Let’s say you join a prop challenge in A country, get funded, then try trading from B country via VPN and bot. At one point last year, I ran a mean-reversion EA on a UK-based prop firm, from Asia, after passing the evaluation from the US. The firm’s compliance team asked for a “decision tree” showing manual overrides, per the UK FCA Handbook MAR 5.3 law. Meanwhile, my US broker only cared that my trading log could be independently verified—i.e., not “ghosting” trades between demo and real. In the end, the UK firm withheld payment until I clarified my actual location and bot permissions! This isn’t rare—see Elite Trader forums for similar run-ins; one poster shared a screenshot of payout being challenged due to “automated system without local intervention.” Practical: How I Actually Setup (and Screwed Up) Algo Trading on a Prop Firms Let me walk through my clunky process, mistakes included. Signed up at FTMO (algo friendly), downloaded their custom MetaTrader 4, read terms several times but missed the “no high-frequency spike apps” bit. Installed my homebrewed Python bot, which managed trade size, stop losses, etc. Let it run unsupervised for a day—which is a massive no-no given their guidelines. Within 12 hours, I got a warning email: “Your trade frequency and pattern suggest unapproved automation; please respond with strategy details.” Had to provide screenshots, trade logs, and a description showing it was my own creation (not a resold bot or black-hat arbitrage software). After manual review, they let me continue—with two conditions: keep frequency realistic (official source) and no latency-based trading. Contrast this with another try at Topstep—here, even the whiff of an EA running was grounds for account closure, no questions asked. Expert Take In a mock interview with James Park, an FX compliance consultant (paraphrasing his vibe): “Prop firms are walking a fine line between letting client innovation thrive and protecting their own reputation; one rogue bot can put a regulated firm under the microscope. That’s why many restrict or heavily monitor all forms of automation.” Conclusion and Next Steps In short? Yes—many top prop firms do let you use automated or algorithmic trading. But “allowed” does NOT mean “anything goes.” Most require you to follow strict rules: no high-frequency scalp bots, actual engagement from the trader, audit logs…and avoid cross-account copying at all costs. Regulatory environments also shape what “verified trade” even means, so crossing borders (physically or digitally, via VPN) gets tricky. If you want to run an algo at a prop firm: Read their full rules—not just the headlines. Keep logs, screenshots, and your source code handy for compliance. Stay in touch with support or compliance—be honest if using anything automated. If you’re aiming global, check European and US regional compliance for algorithms. Here’s my main reflection: The thrill of “set and forget bot” rarely matches the reality. You still have to manage risk, keep the firm’s risk officers happy, and maintain one foot in the real world. Which, all things considered, might be a good trade-off for staying funded and getting paid! If you have your own war stories, or need walk-throughs for a particular firm’s setup, drop me a line. I’m always happy to swap tales and share what really works.

Sea's answer to: Do prop firms allow algorithmic or automated trading?

Algorithmic Trading in Prop Firms: What You Need to Know (With Real Examples & Insights)

Summary:

If you're trying to figure out whether the best prop firms actually allow traders to use automated trading strategies—either bots or custom algorithms—you’ll find the answer here is more complicated than a simple yes or no. From reading endless forum debates to talking to recruiters and even stumbling through a couple of “are bots allowed?” mishaps myself, I’ll break down how leading firms approach algo trading, the compliance hurdles, and—crucially—how different countries regulate what even counts as “verified trade” in the first place. Expect examples from top firms, a few authentic screenshots, and a reality check on global scheme differences.

What Problem Does This Article Solve?

You want to know: can you join one of the top proprietary trading firms and use algorithms or bots, instead of manual click-trading? And if yes, how do you actually get started? I’ve tried to go “all in”—tested apps, spoken to funded traders, and even fallen on my face with compliance missteps—so everything below comes from hands-on, slightly messy experience, not just copy-pasting their marketing pages.

First: What Is Algorithmic Trading at a Prop Firm?

Let’s clarify. “Algorithmic” (or “automated”) trading is when a computer, not you, enters and exits trades by following pre-set rules, often coded in Python or via platforms like MetaTrader’s Expert Advisors (EA). You might picture a hedge fund’s fancy quant desk, but in the prop world, it’s often one-person operations running scripts.

Some firms love this. Others, not so much—often for compliance, infrastructure, or even “fair play” reasons.

Step-by-Step: How Leading Prop Firms Handle Automated Strategies

I’ll split it into a few firm types, share screenshots, and inject some “how it actually went down” moments.

1. The “Algo-Friendly” Firms

Take FTMO as a case everyone’s heard of. Their official FAQs state:

“Algorithmic trading is allowed on FTMO accounts, including EAs, as long as it is in line with our trading objectives and terms.” — FTMO FAQ

I messed this up once. Overzealous, I ran a crude scalping EA on my FTMO Challenge, got flagged for “toxic flow” after a couple hundred trades in a minute. Turns out, even when firms allow bots, hyper-frequency and arbitrage are often banned.

Screenshot from FTMO’s FAQ highlighting conditions for algorithmic trading.

2. Strictly Manual Firms

Some firms—especially those running internal funding on proprietary platforms—restrict algorithms for risk control. Example: Topstep for futures. Their guidelines state you must be present, able to execute and manage open positions, and generally “babysit” your entries.

“Automated trading systems, black-box algorithms, or third-party trade copiers are not allowed in Topstep Combine accounts.” — Topstep Rulebook

Had a friend who smuggled in an EA hoping no one would notice. Two days later, he’s locked out, “combining” nothing… shows how seriously enforcement can be.

3. Somewhere in Between—Conditional Algo Approvals

Other firms use case-by-case reviews, vetting algos for risk and reputation. The5%ers (especially before late 2023) leaned this way: you could submit your bot trading plan, await approval, and might have to submit logs showing your strategy wasn’t exploiting API latency. They make it clear that copy trading or passing signals between accounts is often banned, even if EAs are OK for a single user.

Which brings me to…

Screenshots: Under-the-Hood—How Prop Firms Visualize Algo Use

MetaTrader 4’s ‘AutoTrading’ toggle—a quick enable/disable switch; flagged by some firms during account assessment.

Some firms (like MyFundedFutures) use custom dashboards tracking your login patterns, trade intervals, and any API-triggered entries. If you go 48 hours without a manual intervention, expect a warning email.

Regulatory Side: “Verified Trade” Standards are Wildly Variable

Here’s where things get unexpectedly global. Different countries and organizations interpret what “verified” or “legitimate” trading means, and this affects whether prop firms even want to deal with bots.

Country/Region	Regulation/Standard	Legal Basis	Supervising Authority
USA	Verified trading as defined by NFA/CFTC; bots permitted but must include full audit trail	CFTC Rule 4.7(b), NFA Compliance Rule 2-49	CFTC, NFA
EU	MiFID II algorithmic trading rules; bots must notify regulator if executing direct market access	MiFID II, Article 17	ESMA, Local NCA
UK	Requires pre-approval for “algo” strategies on regulated venues	FCA Handbook MAR 5.3	Financial Conduct Authority (FCA)
Singapore	Algorithmic trading must register with MAS and provide kill-switch function	SFA, MAS Notice SFA 04-N16	Monetary Authority of Singapore (MAS)

For example, the ESMA (EU regulator) says: any bot executing with “direct access” needs to notify and provide controls; meanwhile, US NFA (see NFA Rule 2-49) focuses on record-keeping and “know your customer” diligence even for automated accounts.

I called up a London-based compliance officer, who said: “We don’t touch algo traders unless their execution trail matches FCA standards—meaning, we need to see every signal’s origin, every intervention point, and full audit logs. Anything less, and the risk for the firm is just too high.”

A True Story: Disputing Trade Validity Across Borders

Let’s say you join a prop challenge in A country, get funded, then try trading from B country via VPN and bot. At one point last year, I ran a mean-reversion EA on a UK-based prop firm, from Asia, after passing the evaluation from the US. The firm’s compliance team asked for a “decision tree” showing manual overrides, per the UK FCA Handbook MAR 5.3 law.

Meanwhile, my US broker only cared that my trading log could be independently verified—i.e., not “ghosting” trades between demo and real. In the end, the UK firm withheld payment until I clarified my actual location and bot permissions!

This isn’t rare—see Elite Trader forums for similar run-ins; one poster shared a screenshot of payout being challenged due to “automated system without local intervention.”

Practical: How I Actually Setup (and Screwed Up) Algo Trading on a Prop Firms

Let me walk through my clunky process, mistakes included.

Signed up at FTMO (algo friendly), downloaded their custom MetaTrader 4, read terms several times but missed the “no high-frequency spike apps” bit.
Installed my homebrewed Python bot, which managed trade size, stop losses, etc. Let it run unsupervised for a day—which is a massive no-no given their guidelines.
Within 12 hours, I got a warning email: “Your trade frequency and pattern suggest unapproved automation; please respond with strategy details.”
Had to provide screenshots, trade logs, and a description showing it was my own creation (not a resold bot or black-hat arbitrage software).
After manual review, they let me continue—with two conditions: keep frequency realistic (official source) and no latency-based trading.

Contrast this with another try at Topstep—here, even the whiff of an EA running was grounds for account closure, no questions asked.

Expert Take

In a mock interview with James Park, an FX compliance consultant (paraphrasing his vibe):

“Prop firms are walking a fine line between letting client innovation thrive and protecting their own reputation; one rogue bot can put a regulated firm under the microscope. That’s why many restrict or heavily monitor all forms of automation.”

Conclusion and Next Steps

In short? Yes—many top prop firms do let you use automated or algorithmic trading. But “allowed” does NOT mean “anything goes.” Most require you to follow strict rules: no high-frequency scalp bots, actual engagement from the trader, audit logs…and avoid cross-account copying at all costs. Regulatory environments also shape what “verified trade” even means, so crossing borders (physically or digitally, via VPN) gets tricky.

If you want to run an algo at a prop firm:

Read their full rules—not just the headlines.
Keep logs, screenshots, and your source code handy for compliance.
Stay in touch with support or compliance—be honest if using anything automated.
If you’re aiming global, check European and US regional compliance for algorithms.

Here’s my main reflection: The thrill of “set and forget bot” rarely matches the reality. You still have to manage risk, keep the firm’s risk officers happy, and maintain one foot in the real world. Which, all things considered, might be a good trade-off for staying funded and getting paid!

If you have your own war stories, or need walk-throughs for a particular firm’s setup, drop me a line. I’m always happy to swap tales and share what really works.