Alex Borzak
News of forex broker rating. The opportunity to receive money on a deposit by taking part in broker or DC forex demo account contests attracts many beginning traders. What do such contests give to a trader, how real are their chances of winning, and what are the brokers’ targets when arranging such contests? For it is widely known that
1. Demo account contests are a part of broker company public move in media.
2. Many traders fear that the winners of contests with a large prize fund are often... known in advance.
The organizers of forex broker rating from and “Market Leader” traders’ portal tried to figure out: which forex brokers have the largest prize funds of demo account contests, is a shot for prize fair among traders, and how are these contests assessed by brokers and forex?
Which forex brokers have the largest prize funds during the month of demo account contests?
Conclusions: as observed from the table of forex broker rating:
■ it included monthly volumes of DCs’ price funds, but not the yearly ones, which are usually indicated at the web-sites of these DCs. Reason: if a traders decides to take part in demo account contest, he will do it in the nearest month, but not a year;
■ such broker companies as Nord FX, ICM Brokers, AFOREX, Alpari, Grand Capital, InstaForex, Admiral Markets, and LiteForex allocate the largest funds for trader contests;
■ all abovementioned brokers (except InstaForex and AFOREX) represent the upper league of forex broker rating.
Pessimists: what is the harm of demo account contests... to a forex trader?
News of forex brokers. Despite all seeming advantages of demo account contests (without investing any money, a trader can win it and open a real trading account), a number of experienced traders suppose that one should not be into it, as
■ in order to win demo account contests, one has to constantly break the money management;
■ transferring such “contest-type trading system” into a real trading account will only result in the loss of the real trading account. This can be vividly observed on the example of permanent participants of demo account contests, who take part in them during one year... two years... three years, and more;
■ skeptics also claim that the chances of winning are minimal; moreover, there is a number of DCs, which often falsify the results and assign the main prize to a worker of the DC that organizes the contest (the largest scandal concerned Broco company).
Thus, according to our expert Sergei Crupenin: one should not spend much time on contests, no more than several months. Do not become a permanent contestant. Devoting too much time to contests will result in breaking any trading system, getting used to bid not abiding to TS rules or self-discipline, agiotage, and self-doubt.
According to Alexandr Menshykov, the Marketing Director of FreshForex company (18th position in the upper league of forex broker rating), demo account contest not only have no practical benefit, but can also have a negative impact on beginning traders.
The conditions, in which such contests are held, are “hothouse” in comparison with the conditions of real accounts. Moreover, in real trade the trader does not have to compete with anyone; on the contrary, one has to be cold-blooded while trading and act according to his system. Excessive rush and a desire to win over somebody will eventually result in the loss, and the beginner will leave the market.
What are the objections of demo account contests supporters, including their organizers – brokers?
The opinion of brokers – organizers of demo account contests for forex traders
According to the expert of EXNESS broker company (is in the top 5 of the upper league of forex broker rating) Alexandr Kovalchuk, the benefit or the harm of training account contest is not to be discussed on its own. These are the positive moments that make up the majority in such events (provided that the contest is organized rationally). Conditions of participation, contest duration, number of winners and volume of prizes, certain trading conditions of contest accounts – all this can influence the contest popularity in trader society as well as its usefulness for the participants.
The contest is well organized if a thoughtful application of the chosen trading strategy becomes the key factor of winning, but not a number of some instruments’ price motions, which result from guessing. Taking part in such contest is beneficial not only in terms of making money, but also in terms of getting new experience of practical trade in certain conditions, which frequently is much more important that financial reward.
In the nearest future EXNESS company is planning to organize regular contests for its clients at training accounts, and then at real accounts. Getting acquainted with EXNESS trading conditions, which are absolutely identical at trading and real accounts, is the main target of these tournaments. Besides, traders-winners will share real prize fund. On behalf of EXNESS specialists, I would like to wish all contestants good luck and, as usual, favourable trend!
According to the expert of ICM Brokers company (one of the upper league leaders of forex broker rating), in order to check himself, traditional demo account is not enough for a trader, as from the point of view of psychology there is no threat of losing the deposit. As for the contests, they create the conditions that are close to real, there appears the filling of risk and a necessity to associate risk with possible profit from correct forecast and bargain.
Besides, during contests participants usually start using capital management systems and risk management more actively. This is proved by the result of the contest, organized by Masterforex-V Trading Academy and ICMB company, with a prize fund of $10 000, where participants have shown very high results, having increased their accounts in 4-8 times when money management was met.
Our contest jury, which consists of company representatives, big investors, members of , is drawing up the results, which we will additionally inform about. The contest showed that there are skillful traders, who are to be supervised and helped to develop further.
Opinion of FOREX MMCIS group representative (the upper league leaders of forex broker rating) Olga Parhomova: “It is for sure that contests are needed and useful! They help traders to practically grasp the basis of Forex trade at a quicker pace. The trader is not exposed to any risk when he is trading at contest account by virtual means. He can get ready for a trade and choose the tactics in quiet atmosphere. He can also try various strategies and choose the one that is most appropriate. He does not need to have any financial expenditure during the process. The market participant will certainly use the acquired knowledge and skills during the trade at real account”.
Changes in forex broker rating
The 17th independent criteria of Dealing Center and forex broker assessment is introduced into world forex broker rating is introduced by the unilateral decision of the jury; namely, $10 ths. of demo account contests monthly prize fund gives 10 points to each DC in the Academy broker rating. Consequently,
■ Nord FX broker company has additionally received 20 points, having firmly set in TOP 3 of world forex broker rating;
■ other DCs, accordingly, have also received additional points in the rating: ICM Brokers – 10 points, Alpari – 6 points, Grand Capital - 3.5 points, AFOREX and InstaForex – 3 points, Admiral Markets – 2 points, and LiteForex – 1.88 points.
Questionnaire in traders’ forum: in your opinion, do the contests that are held by brokers, do good or harm to a trader?
1. They do good, for they provide the opportunity to earn money for the real account for free;
2. They do harm if they become a trader’s habit, who does not switch from demo account to a real trading account for a year.
Alex Borzak
