Prop Firms That Allow Averaging Down (Nanpin): What the Rules Actually Ban Isn't 'Buying the Dip' — It's Increasing Lot Size
※ This article reflects each firm's public terms and help center as of September 16, 2026. Not investment advice. Averaging down and martingale are methods where losses can expand rapidly. Firm-specific rules are updated frequently, so always check each firm's official site before buying.
You often see the claim that "prop firms ban averaging down (nanpin)," but when you actually read the terms, that's usually not what's written.
What's actually banned is martingale — that is, "increasing lot size after a loss." Averaging down at the same lot size, or at a reduced lot size, is not a problem under the terms at many firms.
The firm that draws this line most clearly is Funded7.
Conclusion: the answer up front
| Firm | Same-lot/reduced-lot averaging down | Martingale (increasing lot size) | The constraint that actually bites |
|---|---|---|---|
| Fintokei | Allowed (not on the banned list) | Allowed (explicitly lifted in July 2025) | Floating loss on the combined total of all open positions capped at 3% of balance / no commercial EAs |
| City Traders Imperium 1-Step | Allowed | Explicitly allowed | Balance-based 5% trailing drawdown / third-party EAs also allowed |
| Funded7 | Allowed (explicitly stated) | Named and banned under Rule 4 | Tiered risk caps of 1–3% |
| FTMO | Not named | Not named | The "substantially larger position" clause / 200 simultaneous positions |
| E8 Markets | Not confirmed as named | Same as left | A discretionary clause that can cap risk at 1% per trade idea |
| Funding Pips | Not named | Not named | Most-cited account closures in reviews are for Risk Per Trade Idea violations |
| Hantec Trader | Not named | Not named | One-sided bets banned / on a funded account, combined floating loss reaching 3% of the initial balance is an instant fail |
| Moneta Funded | — | Banned | Grid also banned / EA must be self-built only |
| Eightcap Challenges | — | Banned | Grid and hedging also banned / 10 simultaneous positions max |
| Alpha Capital | — | — | Fully automated EAs are banned outright (a non-issue before the method even matters) |
If you're running an EA, Fintokei or City Traders Imperium; if you're trading discretionarily, Funded7 is also a candidate — that's roughly how it lines up.
How the terms separate averaging down from martingale
Funded7's wording is the clearest
Funded7's Rule 4 explicitly bans martingale by name. What's banned is "increasing lot size geometrically after a loss," and the official terms even give a concrete example.
- BANNED: increasing from 1.0 lot → 1.5 lots → 2.0 lots
- SAFE: same lot size, or averaging down at a reduced lot size (as long as it stays within Rule 2's risk cap)
In other words, what Funded7 bans is the lot-size curve, not averaging down itself. Summarizing this as "averaging down banned" throws away a method that's actually usable.
Fintokei lifted the martingale ban entirely in July 2025
Fintokei switched to explicitly allowing martingale as well. The original text of the official help article reads:
"As of July 28, 2025, Martingale Trading & Aggressive Averaging is no longer listed among our prohibited trading practices." "You will not be penalized for using Martingale or Aggressive Averaging."
The same page explicitly states it doesn't recommend it, and cites the Maximum Risk limit on open trades and Daily Loss Limit as the alternative guardrails. The policy shift is "we don't restrict the method — we restrict the amount of risk."
Checking the prohibited trading practices page on September 16, 2026, there are 9 banned items, and neither averaging down, martingale, nor grid is among them. What is banned: latency arbitrage, tick scalping, copy trading, third-party EAs, multiple profiles, shared devices, IP spoofing, third-party payment processing, and hedging across multiple accounts.
FTMO doesn't name it, but a different clause catches it
FTMO's list of forbidden trading practices doesn't name martingale or averaging down either. Instead, this is the clause that ends up doing the work:
"Opening substantially larger position sizes compared to your other trades"
Martingale's final step ends up several times the size of the first, so it runs straight into this clause. Same-lot averaging down, on the other hand, never creates a "substantially larger" position, so it's less likely to trip it. Here too, the lot-size curve is the deciding factor.
What actually determines how many steps you can take is "total lot size"
What actually blows up an account when averaging down isn't a banned clause in the terms — it's the floating-loss cap. And what drives the math isn't the average entry price — it's the total lot size.
Let's look at a $100K account with a 3% floating-loss cap (= $3,000), averaging into XAUUSD at $10/oz intervals over 5 steps.
Same lot size (0.2 lots × 5 steps = 1.0 lot total)
By the time you've entered the final step, the average entry price is $20 below the first entry, and the current price is $40 below the first entry.
Floating loss = 1.0 lot × 100oz × $20 = $2,000Remaining room = $1,000 ÷ 100oz = $10/ozMartingale (0.1 → 0.2 → 0.4 → 0.8 → 1.6 = 3.1 lots total)
At the same intervals and the same number of steps, the average entry price gets pulled down further, so the floating loss amount itself ends up in a similar range. But the total position size is 3.1x larger, so the weight of any further price move is completely different.
Floating loss = 3.1 lots × 100oz × $8.4 = $2,604Remaining room = $396 ÷ 310oz = $1.28/ozEven at the same 5 steps, the room left right after the final step is $10/oz vs. $1.28/oz — a 7.8x difference. The reason martingale tends to get banned isn't a moral judgment — it's this number. The moment you place the final step, the account has almost exactly one price move's worth of runway left.
When designing this, don't ask "how many steps can I fit in" — ask "how many dollars of room is left right after the final step."
Firm-by-firm notes
Fintokei: the 3% cap applies to the combined total of every position open at the same time, regardless of symbol or direction. Running averaging-down positions on multiple pairs at once eats into the same shared limit, so it's safer to stick to one system per account. It also doesn't allow commercial EAs (item #4 on the banned list), so a purchased averaging-down EA can't be loaded even though the method itself is allowed. This 3% warning also accumulates across accounts — 3 warnings caps you at 1% risk, and 6 warnings restricts every account you have.
City Traders Imperium 1-Step: drawdown is Balance Based (highest balance minus 5% of the starting balance), so floating loss doesn't move the floor. This is the only setup here that squarely matches a design that holds a floating loss and waits for a bounce, the way averaging down does. Third-party EAs are allowed with no proof of ownership required. Note this condition is 1-Step only — the 2-Step, Instant, and Direct plans are a different setup entirely ("self-built EA only, martingale not allowed").
Funded7: risk caps are tiered (Gold 3% / Silver 2% / Bronze 1%), and if you don't set a stop-loss, assumed risk is calculated as ATR(14) × 1.96. Running an averaging-down EA without a stop-loss makes it easier to hit the cap under this conversion.
Hantec Trader: has a one-sided bets ban clause, and continually adding to positions in one direction, as averaging down does, may prompt a request for explanation. On a funded account, combined floating loss across all positions reaching 3% of the initial balance is an instant fail (no such rule during evaluation). Habitually risking more than 3% on a single trade can also get you discretionarily placed into the Risk Management Group, lowering your leverage.
Funding Pips: account closures for Risk Per Trade Idea violations are the most-cited complaint in reviews. With no explicit ban named, the real question is how you weigh the risk of a discretionary closure.
What about the middle ground (reduced-lot averaging down)?
A design that averages down at a reduced lot size is the safest category under the terms. Funded7 explicitly labels it SAFE, and it doesn't trip FTMO's "substantially larger position" clause either. Since total lot-size growth is contained, the room described in the calculation above stays intact.
On the expected-value side too, our own testing found that adding a stop-loss to an averaging-down setup raised the consistency-rule pass rate from 13.2% to 41.2% (see our validation article). Not "averaging down alone," but "averaging down + stop-loss + fixed lot size" is the design that works with both the terms and the expected value.
FAQ
Q. Aren't prop firms banning averaging down?
Most firms don't explicitly ban it. What's banned is martingale — increasing lot size after a loss. Funded7 spells it out with concrete examples: "increasing from 1.0 → 1.5 → 2.0 lots is BANNED; averaging down at the same or a reduced lot size is SAFE." Summarizing this as "averaging down banned" throws away a method that's actually usable.
Q. Are there firms that officially allow martingale?
Fintokei, and City Traders Imperium (1-Step). Fintokei removed it from its banned list on July 28, 2025, explicitly stating "you will not be penalized for using it." CTI's 1-Step rules table states "Martingale: Allowed." Neither recommends it — both rely on risk caps as the guardrail instead.
Q. Can I buy a commercial averaging-down EA and use it?
Yes, on City Traders Imperium's 1-Step (third-party EAs are allowed with no proof of ownership required). Fintokei bans commercial EAs, so even though averaging down itself is allowed, you can't load a purchased EA — it has to be self-built, or one where you've adjusted the parameters yourself.
Q. How many steps am I allowed to take?
Decide based on "how much room is left right after the final step," not the number of steps. On a $100K account with a 3% floating-loss cap, averaging in at $10/oz intervals over 5 steps at the same lot size (1.0 lot total) leaves $10/oz of room right after the final step. At the same 5 steps but with martingale, total lot size becomes 3.1 lots, and room drops to just $1.28/oz. Same number of steps, but a 7.8x difference in runway.
Q. Is Fintokei's 3% per symbol, or across the whole account?
Across the whole account. It applies to the combined floating loss of every open position, regardless of symbol or direction. Running averaging-down positions on multiple pairs at once eats into the same shared limit, so it's safer to stick to one system per account. This warning also accumulates across accounts — 3 warnings caps you at 1% risk, 6 restricts every account, and 10 ends your service with the firm.
Q. Doesn't adding a stop-loss defeat the purpose of averaging down?
On the expected-value side, it actually worked the other way. In our 12-configuration test, averaging down alone passed the consistency rule only 13.2% of the time — not usable on its own. Adding a stop-loss raised that to 41.2% while preserving its immunity to the consistency rule. It also makes the risk cap under the terms clearer, so a design with a stop-loss in place is a better fit for a prop account.
Q. Are grid trading and "torarepi" (repeated range trading) treated the same way?
Often they fall under a separate clause. Moneta Funded and Eightcap Challenges both name and ban grid trading explicitly. Fintokei's list of 9 banned items, on the other hand, doesn't include grid. For more detail, see Prop Firms That Allow Grid Trading and Torarepi.
Sources
- Fintokei — Martingale and Aggressive Averaging: now allowed but not recommended
- Fintokei — What is considered as a prohibited trading practice?
- City Traders Imperium — EAs On CTI 1-Step Challenge
- FTMO — Forbidden Trading Practices
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Written by
Hosono P | the prop firm strategist
I buy challenges with my own money and record everything through to the payout. Recorded payouts: ¥6.1M in total from Fintokei, Fundora and Funded7, plus $4,776 from The5ers (as of September 2026). Author of the semi-discretionary EA "ELDRA".