It doesn’t matter how good the trade simulator used within an evaluation program is. The order fills recorded will never be 100% as accurate as the live market.
There have been cases where the opportunity for inaccurate fills on simulators have been exploited in “funded” accounts. Basically, when evaluators have put traders in “funded” accounts that are actually simulated (in order to avoid the risk of the new trader losing money), traders have been able to exploit unrealistic fills to make profits that the evaluator was obliged to pay out.
These exploits have resulted in vague rules prohibiting “high frequency trading” or “SIM abuse”. In some cases, the rules are more explicit such as:
- 50% of all trades must have a duration greater than 20 seconds, or
- trades with a duration of less than 10 seconds are not permitted
If you trade a thinner market like NQ or CL, such rules are unrealistic and disadvantageous. Likewise, if you are scalping and taking small profits quickly, you can easily suffer with these rules.
These rules are contrary to good trading approaches of:
- exiting bad trades quickly with a small loss
- always taking profit, especially if you have the potential of being penalized by “intra-day drawdown based on unrealized P&L” rules
Realistically:
- if you know that you’re abusing the limitations of a simulator, you may well get found out. You knew what you were getting into.
- if your trading style is not compatible with certain rules, don’t trade in a program that has such rules! Evaluator programs are a competitive marketplace!
- if you have a genuine, profitable discretionary trading approach, it would be a strange decision for an evaluator to prioritize rules over good trading results.
