- Explanation of the Hedging Rule at Ylos Trading

The Hedging Rule at Ylos Trading is established to ensure that traders do not use tactics that could manipulate or distort true trading performance. Here's a detailed explanation:

Definition:

• Hedging: In the context of trading, hedging involves opening positions in opposite directions to mitigate risks. However, at Ylos Trading, the hedging rule has a specific connotation:

Rule:

• Prohibition of Hedging: It is forbidden to hold opposing positions in different accounts simultaneously. This means you cannot, for example, have a long position in one account and a short position on the same asset in another account at the same time.
• Hedging with Similar Assets: It is also considered hedging to use opposing positions in similar assets, like buying an asset in one account while selling a correlated asset in another account, with the aim of reducing or eliminating market risk.
• Prohibition of Flipping: It is also forbidden to operate differently just to count a day as operated. This includes opening and closing positions quickly or in a manner that does not reflect the trader's normal, disciplined strategy, just to meet activity or withdrawal requirements.

Objectives:

• Trading Integrity: The rule aims to maintain the integrity of trading operations, ensuring that open positions truly reflect the trader's market strategy and are not used to manipulate outcomes or meet performance criteria artificially.
• Consistency: It promotes a consistent approach to trading, where each operation is part of a coherent strategy, not attempts at manipulation or hedging to artificially reduce risk or inflate performance.
• Transparency: Avoids practices that could mask true market exposure, ensuring that trading results reflect the trader's skill and strategy.

Practical Application:

• Genuine Strategy: Each operation must be part of a well-defined trading strategy. If a trader wants to hedge their portfolio, this should be done consistently and transparently within a single account, without resorting to multiple accounts for opposing positions or in similar assets.
• Monitoring: Ylos Trading monitors activities to detect patterns of hedging or flipping. If such practices are identified, the company can take action.

Consequences of Violation:

• Review and Action: If a trader is caught violating the hedging rule, there might be a review of the account. Consequences could include:
• Warnings or temporary account suspension.
• Cancellation of the Master Account, especially if the behavior is repetitive or intentional.
• Loss of withdrawals or annulment of profits gained through prohibited practices.

Summary: The hedging rule at Ylos Trading doesn't prevent the use of risk protection strategies within a single account but prohibits using multiple accounts to open opposing positions simultaneously or operating inconsistently just to manipulate performance or activity criteria. This includes using similar assets to create a hedged position between different accounts. This rule encourages an environment where the trader's skill and strategy determine success, not system manipulation.