Tooling and execution
Latency arbitrage
Trading on a price that is known to be stale because a faster feed has already moved. It profits from a delay in the environment rather than from any view about the market, and it is prohibited industry-wide.
GFN’s figure
Latency arbitrage is explicitly prohibited on GFN accounts, alongside exploiting delayed or incorrect pricing, exploiting platform errors, front-running and coordinated trading between customers.
- Status
- Prohibited
- Related prohibitions
- Delayed or incorrect pricing, platform errors, front-running
- Consequence
- Review, restriction, rejected payouts or termination
In detail
Latency arbitrage,explained
The reason it is banned everywhere is that it is not trading. The profit comes from the firm's infrastructure rather than from the market, and it scales until the firm notices.
Detection is straightforward, because the pattern is distinctive: repeated entries immediately before a price updates, with unusually high accuracy over very short holds.
Related
Terms thatcome with it
Most rules only make sense next to the ones they interact with. These are the entries this one depends on.
Latency
The delay between an action and its effect - an order leaving your machine and reaching the venue, or a price leaving the venue and reaching your screen. Measured in milliseconds.
Prohibited trading
Activity a firm bans because it targets the trading environment rather than the market. It covers exploiting errors and pricing delays, coordinated trading between accounts, and third-party account management.
Tick scalping
Taking positions for a handful of ticks at a time, often held for seconds. Where the profit comes from a pricing lag rather than a market view, firms treat it as exploiting the environment.
High-frequency trading
Automated trading at very high order rates and very short holding periods, measured in seconds or less. It depends on infrastructure rather than analysis, and it is not what a retail prop account is built for.
Breach
Any violation of an account's published rules. Breaches are graded: a soft one triggers corrective action, a hard one fails the account. The word is used for both, which is why the grade matters more than the term.
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