has recently conducted a survey at its forum for traders and investors. Over 90% of the respondents underlined that various demo-trading contests arranged by online FX brokers and dealing centers have a major drawback: the longer novice traders participates in such demo contests, the more remote they are from their major goal (to become professional, successful traders). That is why experts are sure that such demo contests are harmful for traders.
The reason is ridiculously simple – the trading tactics used for real-money and demo trading are the opposite. In real-money trading it is money management that is the primary factor (especially when an investor is looking for a good trader to hire him as a portfolio manager). At the same time it is impossible to win a demo trading contest (we mean a standard one) while sticking to sound money management (in demo trading contests it is all about gambling and “going all-in”). Is it possible to revolutionize trading contests?
seems to have found a solution. The Academy experts in cooperation with ICM Brokers (one of the leaders in ’s rating of FX brokers ) arranged an essentially different demo-trading contest based on investors’ interests.
What is so revolutionary about ’s idea?
What does it take to attract investments? If you can answer this question, them than you can understand the principles behind this new type of demo-trading contests.
First of all, the investor needs confidence in the trader’s strategy (it must be profitable and as less risky as possible). These days investors can agree to 80% or 60% a year (instead of 100%) as long as you can offer low drawdown, conservative style and sound money management.
A wise investor will never give his/her money to the winner of some demo contest just because he/she (the winner) earned the biggest amount of pips. Trust management is a complicated process, which needs professional skills, experience and time.
First of all, a wise investor is oriented towards preserving his/her capital. Profits are secondary. That is what traders should keep in mind. First of all the expert teams from and ICM Brokers select those who made relatively few trading mistakes and only then chose the one with the biggest profit. That is how they determine the winner.
The contest by and ICM Brokers: results
According to the results of the recent 2-month contest (ended on Sep 19th), the experts selected 10 contestants, who managed to gain 40-633% (there were participants with bigger gains but they were disqualified for violating money management - some of their trades were equal to 50-70% of the capital). The prize pool of $10.000 (sponsored by ICM Brokers) was distributed between 3 of the selected 10 contestants. That is the top 10 list:
· Gfif – the winner - got $5000 deposited on his trading account
· Neri – 2nd place - got $3000 deposited on his trading account
· Goddess – 3rd place - got $2000 deposited on his trading account
Expert opinion:
According to Eugene Olkhovsky, a Canadian expert from , wise investors know that if a trader has earned +100% (say, he/she turns $10.000 into $10.000) playing aggressively (50% of the deposit per trade or even more) without reasonable money management, sooner or later he/she may lose everything. No sober-minded investor will ever work with such a “trading champion”.
According to ICM Brokers, most of those traders who participated in the contest were observing certain MM rules and calculating the lot size. They opened hundreds of trades. That is why the results cannot be called random. Those traders are rather aggressive in their trading style but their services are in demand as well. As a rule they receive money from relatively risky investors who are ready to accept high risk as long as the potential profit is high as well.
ICM Brokers say that after participating in their contests it is much easier for beginners to switch to real-money trading because the contest environment is very close to the real-money trading environment. Consequently ICM Brokers help beginners to get valuable skills, to master them and to gain stable profits. It is beneficial for ICM Brokers as they get regular clients with stable profits, which allows the broking company to earn on spreads and commissions.
Once again, when you make hundreds of trades and win (i.e. you have +EV) there is no randomness. That is why observes should pay attention to successful contestants as they can be good portfolio managers for those investors who want high profits and are ready to risk.
Market Leader and would appreciate it if you could participate in a survey. Please, visit the Academy’s forum for traders and investors and answer the following questions:
What is the main factor an investor should consider when it comes to trusting his/her investment capital to a trader?
