Hedging Guidelines for Halcyon Traders

At Halcyon Trader Funding, our mission is to support traders who exhibit steady, responsible trading practices. To ensure a level playing field and properly assess each trader’s true abilities, we enforce clear restrictions on hedging within all our accounts.

What is Hedging?

Hedging occurs when a trader holds both long and short positions simultaneously on the same underlying asset. This includes taking opposing positions on instruments that represent the same market exposure.

Example:

• Holding a long position in E-Mini NQ and a short position in Micro NQ simultaneously is considered hedging because both contracts represent exposure to the Nasdaq index (NQ).

Our Policy on Hedging

• Hedging is strictly prohibited across all accounts and trading programs.

• Traders must not hold opposing positions (long and short) on the same instrument or instruments tied to the same underlying asset simultaneously.

• Trading different, unrelated assets in opposing directions is allowed (e.g., long gold and short crude oil).

• The use of hedging strategies undermines the evaluation process by masking true risk management and trading performance.

Why Hedging is Not Allowed

Hedging can artificially stabilize an account by offsetting losses in one position with gains in another. This practice:

• Obscures a trader’s actual risk management skills

• Masks genuine profitability and trading discipline

• Makes it difficult to evaluate true trading performance and consistency

• Undermines the integrity of the evaluation and funding process

Our goal is to assess traders on their ability to manage risk, make informed decisions, and achieve profitability without relying on offsetting positions.

Additional Guidelines

• All traders are required to comply with CME Group’s hedging rules. (For reference, see CME Rule 534: https://www.cmegroup.com/rulebook/files/cme-group-Rule-534.pdf)

• While hedging the same underlying asset is prohibited, trading different instruments on unrelated markets or assets in opposite directions is permitted. However, over-reliance on hedging strategies can complicate performance evaluation.

Contract Size Policy: Micros vs. Minis

To maintain fairness and prevent manipulation of risk limits, traders are prohibited from trading both micro and mini futures contracts simultaneously within the same account.

Account Restrictions:

• You must select and trade only one type of contract per account.

• Either trade micro contracts exclusively (such as MES, MNQ, MCL), or trade mini contracts exclusively (such as ES, NQ, CL).

• Holding or opening positions in both contract sizes at the same time is not allowed.

Examples of Violations:

• Trading ES and MES contracts concurrently.

• Holding positions in both NQ and MNQ contracts simultaneously.

• Any combination of micro and mini contracts opened or held together within the same trading session.

It is acceptable to switch between contract sizes across different trading sessions, but overlapping positions of micro and mini contracts are prohibited.

Monitoring and Enforcement

Our platform uses systems to detect:

• Opposing positions on the same instrument (e.g., long and short ES positions).

• Concurrent exposure to both micro and mini contracts for the same instrument (e.g., ES and MES).

• Any mixed contract sizes across all traded instruments.

Breaches of this policy may lead to:

• Account disqualification (for evaluation or challenge programs).

• Denial of payouts.

• Permanent closure of trading accounts.

• Summary

  • Holding opposing positions (hedging) on the same underlying asset is strictly prohibited.

  • Trading opposite positions on different, unrelated instruments is permitted.

  • Traders must choose to trade either micro or mini contracts within a single account and may not hold both contract types simultaneously.

  • Switching contract sizes between trading sessions is allowed, but overlapping positions in micros and minis are not permitted.

  • Compliance with CME guidelines and all Halcyon Trader Funding policies is required.

  • Violations of these rules can lead to account review, disqualification, payout denial, or account closure.

If you have any questions or need clarification, please contact Halcyon Trader Funding’s support team.