The launch yesterdays of IronFX's intergalactic Forex trading competition once again raises the question as to the merits of such Forex contests, the actual ability to win something while meeting the contest's terms and conditions and the validity of using trading competitions as a means of attracting a quality trader base.
IronFX is certainly not the first to promote such a competition, though their prize is undoubtedly the most outlandish offering to date. Even for the squeamish among us (myself included), the prospect of winning a trip to outer space is incredibly exciting – but if you stop to read the terms and conditions of such trading competitions, or to consider who else is competing, the chances of winning may be as likely as getting hit by a meteor. Which brings me to my question: should we, as traders, trade with the express goal of winning Forex contests, or do such contests distract traders from making logical and responsible investing decisions?
Complex Terms and Conditions
The skeptic in me questions whether most traders even bother to read the terms and conditions of any advertised trading contest before entering. The IronFX contest, for example, requires a minimum deposit of $1000, which immediately disqualifies anyone looking to test out the brokerage first before committing a larger sum of money. On the other hand, $1000 is peanuts relative to the cost of a trip to space (or the $100,000 cash prize, should you choose to prefer to remain in this stratosphere). The winner also obligates him/herself to attending promotional events and publicizing his/her win. Failure to meet these commitments can result in forfeiture of the prize (though to be honest, I'd be curious about how they'd take back the space travel once the flight is completed or if they delay the journey until the press requirements have been met).
During the course of 2014 (and previously), live trading competitions have been offered by other globally-recognized brokers including ETX (whose springtime "?Beat the Broker" competition required a minimum deposit of 750GBP for a prize of 250GBP) and Alpari whose 4-tiered trading competition, set to expire at the end of December offers a top prize of a one year funded PAMM account and requires a minimum deposit of $500. Smaller brokers such as HotForex and FreshForex have also offered live trading contests this year, and though the prizes are considerably smaller (1st place in the monthly HotForex competition is only $1000 and the minimum deposit is $500), so are the number of participants, which any analytically-minded trader will know means there's a higher chance of winning"¦if you want to take your chances with a broker you're unfamiliar with.
Demo Trading Competitions
Perhaps more popular (and less risky) than a live trading competition is a demo trading competition, a marketing ploy employed by many brokers (and even some binary options companies) to lure in traders who they hope will eventually deposit. Some demo trading competitions require the trader to share his or her strategies, successes and failures, the very act of which provides free promotion for the broker. That being said, I don't begrudge the broker free publicity if they're providing a valuable service to their traders. Trading in a demo competition may be an excellent opportunity for those looking to test their latest strategies with a potential to win big if their analysis proves correct. Among those offering demo trading competitions are Dukascopy, FXTM, Forex Broker Inc. and FXOpen, each of which has different trading requirements in order to qualify for the offered prize.
One of the biggest dangers of the Forex industry is those looking to earn a quick buck that believe that trading will be the golden ticket to early retirement, funding a child's wedding or cruising around the world. In reality, Forex trading requires dedication, skill and knowledge, three of the things that live trading competitions eschew. If you ask me, the prize for live trading should be solid returns, even if they're modest. It's more likely that in the attempt to win the prize you'll lose site of the fact that trading also puts your capital at risk, and you'll become a casualty of a great marketing scheme. So, while trading competitions might be a great vehicle for established traders, new traders should approach these offerings with extreme caution and a focus on what really matters, or, at the very least, should begin with a demo trading competition.