Do Prop Firms Allow Algorithmic or Automated Trading? Real-World Answers, Industry Insights, and My Own Experience

What Problem Are We Solving? Algo Trading at Prop Firms, Decoded

Here’s the deal: tons of traders want to automate their strategies. Maybe you have a simple moving average crossover bot, or you’re running a fancy AI model. But with the explosive growth of remote prop firms like FTMO, MyForexFunds, Topstep, and others, the rules are all over the place. Some say “no bots allowed,” others seem fine with it, and then there are hidden rules about “copy trading” or “third-party software.”

I’ve personally tested several of these prop firms—sometimes with embarrassing results. So instead of just quoting their FAQs, let me show you what it looks like when you try to run an EA (Expert Advisor) on MetaTrader, or plug your Python script into a prop account. But first, let’s get a sense of the landscape.

Step-by-Step: Prop Firms and Algo Trading—What Actually Happens

Step 1: What Do Leading Prop Firms Say?

Let’s start with the big names. Here’s what their official rules look like (as of June 2024):

• FTMO: They openly allow algorithmic trading, as long as it’s your own strategy and not a “replicated” system from someone else. Their FAQ says: “We do allow the use of EA (Expert Advisors), scripts, and custom indicators... provided that the trading is performed by you, and not copied from other traders.”
• Topstep: For futures, they permit automated strategies, but everything must comply with exchange rules and Topstep’s risk parameters. Their help section confirms: “You may use an automated trading strategy, but you are responsible for its performance.”
• MyForexFunds (before closure): They allowed EAs in some programs but had strict rules against “copy trading” or “grid/martingale” bots.
• The5ers: Permitted, but again, only if you’re not copying signals or using banned strategies.

Bottom line: Most major prop firms technically allow algorithmic or automated trading, but only if it’s your own system. If you’re buying a commercial off-the-shelf EA or copying signals, you’re likely violating their terms.

Step 2: How Do You Actually Set Up Algo Trading on a Prop Account?

Here’s where things get interesting. Let me walk you through what happened when I tried wiring up a basic trend-following bot to a demo FTMO account on MetaTrader 5.

• Get Your Prop Account Credentials
  After signing up and passing the FTMO Challenge (which took a few tries, not gonna lie), I received my MetaTrader login details.
• Load Up MetaTrader, Install Your EA
  I dropped my custom EA (.ex5 file) into the “Experts” folder, restarted MT5, and attached the bot to a EURUSD chart. Screenshot below:
  
• Check the Prop Firm’s Rules Again
  This is where I almost messed up. FTMO’s platform logs your activity, and if they spot high-frequency, grid, or martingale patterns, you’ll get flagged. I double-checked their EA guidelines and made sure my bot didn’t use these tactics.
• Run the Bot, Watch Like a Hawk
  My EA started trading. Within a day, I got an automated email from FTMO’s risk team asking to clarify my strategy. Turns out, my bot opened several trades per minute during high volatility, which looked suspicious. I explained my logic and provided the code. They approved it, but warned that any hint of signal copying or “trading for others” would get me banned.

The lesson? Even when prop firms say algo trading is allowed, they’re actively monitoring for patterns that look like copy trading or unfair advantages. If you’re writing your own code, be ready to defend it.

Step 3: What Happens If You Break the Rules?

Real talk: I’ve seen traders lose their funded accounts (and profits) for using commercial bots or copying signals. Prop firms are getting smarter—they use software to fingerprint popular EAs.
Here’s a Forex Factory post where a user shares their FTMO account ban after using a purchased EA. The support team sent them a detailed log showing suspicious trade clustering.

The upshot: You can absolutely use bots at most leading prop firms—but you must be able to prove it’s your own work. Anything else is a gamble.

Case Study: “Verified Trade” Standards Across Countries

Now, let’s zoom out. The idea of a “verified trade” isn’t just a prop firm thing. Globally, standards for what counts as a legitimate, auditable trade vary—especially when you’re dealing with complex, automated transactions.

Each regulatory authority has its own definition of “verified trade.” For example, the CFTC’s Regulation AT requires all algo systems to have kill switches and full audit trails. The EU’s MiFID II RTS 6 is even stricter about risk controls for automated systems. If you want more on this, check out the OECD’s 2023 report on Algorithmic Trading.

Why does this matter for prop firms? Because a lot of them are now integrating these regulatory standards into their monitoring. If your bot fails to leave a proper audit trail, or looks like it’s “gaming” the system, you could get flagged—even if you’re not breaking the letter of the rules.

A Real-Life Example: When Two Firms Disagree

Here’s a story from a friend I met at a trading hackathon. He tried to use the same mean-reversion bot at two different prop firms—one US-based, one EU-regulated. The US firm flagged his account after a week, saying his trades looked suspiciously like “order book spoofing” (which is banned under CFTC rules). The EU firm, following MiFID II, just asked for a copy of his source code and let him keep trading.

The point? Even among legit firms, there’s no single “global” standard for what counts as legit algo trading. You’ll need to check each firm’s and country’s rules.

Industry Expert Soundbite

As Dr. Eva Zhang, a quant developer and consultant for several EU-based prop firms, told me in a Zoom call:
“Prop firms are under pressure from regulators. They don’t care if your bot is smart or dumb—they care about transparency and auditability. If you can show your work, most firms will let you run it. If not, you’re out.”

Personal Takeaways: Lessons Learned (the Hard Way)

After all my testing, forum lurking, and direct run-ins with prop firm compliance teams, here’s my blunt advice:

• Always email support before running a bot—even if the FAQ says it’s allowed. Get it in writing.
• Never use commercial EAs or copy trading services unless the firm explicitly says it’s okay (they almost never do).
• Keep detailed logs of your code, trades, and logic. You may need to defend your work.
• If you’re outside the US or EU, check local rules—regulators can be even stricter or more relaxed.

I once lost a whole month’s profits because my bot “looked too similar” to a popular EA. Lesson learned: prop firms are not playgrounds for quick hacks.

Conclusion: Yes, You Can Use Bots—But Read the Fine Print

Can you use algorithmic or automated trading at top prop firms? The answer is “usually yes, but only if it’s your own work, and you can prove it.” If you’re serious about running bots, read every rule, ask support for confirmation, and keep your work transparent.

Next steps? If you want to get started, try FTMO’s free demo, or check out Topstep for futures. And don’t forget to join forums like Forex Factory to see what’s working (and what gets banned).

Final word: Don’t let rules scare you off—just don’t try to cheat. Prop firms are looking for real, responsible traders. If you’re up for the challenge, automation can actually be your edge.