forex online center

Putting a Contest in Forex Trading

It used to be when banks gave free toasters, televisions sets, or a radio to patrons opening a Certificate of Deposit. Now, freebies have found its way to forex traders. Brokers and FCMs (forex commission merchants) are bringing contests in to attract customers and develop their trading skills. Monetary bonuses are often given, amounting to $300 or more to open an account.

Other incentives take the form of rebates while on training or offering partial payments from enrolling a course rendered by firms. Today's trend is to put up a contest where traders and amateurs alike compete on a simulated trading account. The winner of this game gets to have a lot of cash and opportunities to trade real big currency. This contest is used by trading firms as an incentive to get more trading accounts, which gives them a smart, nicely thought about gimmick for competitive edge. The real score for traders isn't marketing, or is it about getting the most accurate forecast of the market, it's a contest between themselves.

These contests actually have three basic phases. The first phase puts the trader's strategies, tactics and skill to the test through simulator, which can otherwise be used in real money trading. After simulation, they would be given mini-accounts, where they can trade real cash but without risking that much. The final contest involves real trading competition for big cash and a huge other lot.

Traders in a simulator should achieve a level of trading performance or criteria before moving to the next phase. One criteria is to get as much profit within as specified reward and risk ratio such as a maximum drawdown of 10 percent in one month. If the trader achieves the criteria, he moves up. The contest help develop traders' skill and techniques, and for a firm utilizing this game gets to improve their processes and profitability in the future.

Any firm or a group of traders can set up a contest simply by listing down their specified goals and racing out to achieve them. Winners can be declared by achieving either one, or two, or three or all of the following goals: by achieving several winning trades continuously; by limiting a drawdown of less than 15% in one month; by finding 10 economic trends that would gain the firm profitability, achieve two 40-pip winning trades in less than a week, etc.

Essentially, these trading contests are used by firms as their marketing tools. But it's a marketing tool than offers more advantage to the firm and the trader than they have bargained for. In addition to enhanced profits, it develops discipline, methodology, strategy and consistency. It can be a trader's benchmark to the best they can be.