Trading contests carry a certain amount of risk with them, especially real money trading contests. This is true of trading in general, but when you enter a contest, it can be easy to forget about the inherent risk that trading carries along with it and take foolish risks all for the sake of trying to win.While winning is the end goal, it can never be done by acting foolishly. Yes, people will take big risks at times in contests, but these people seldom, if ever, win because of their foolishness. Instead, calculated risks are what you should be going for, especially if you want to have a shot of the title. Just remember that when you are taking a risk, the likelihood of a reward needs to more than justify the risk itself. Otherwise, it is a Hail Mary pass and has very little utility to you.
It’s also worth noting that scams can easily arise in the world of trading contests. In fact, this is a pretty easy place to host a scam without fear of getting caught. Let’s say that you enter a contest for $100, and for a week you have great results, only to fall just outside the top ten, and thus a shot of winning any money. But where did the money go? Who won the money? In most cases, you wouldn’t even think about that. The world’s a big place and the internet is pretty anonymous, so there’s a chance that someone on the other side of the world won, and you would never see them or hear about them. This sets the stage for scammers to come in and hold a contest, but without ever paying out any prizes. In many cases, you might never even know you were scammed.
Obviously you want to avoid a situation like this. You should do your research about potential contests just in case, just as you would if you were contemplating depositing your money into a new binary options or Forex broker. Part of avoiding a scam is doing the legwork on your end in order to be as educated as possible in order to protect yourself and your cash. Google searches, questions on forums, and independent reviews can all help you gain a better idea of what’s legitimate and what’s not.
This shouldn’t scare you off from never entering a contest, but it should make you think before you act. There are plenty of real and reputable contests out there, so focus on those, and not on the predatory ones just trying to make some money off of you.
If you are new to trading, entering a high cost contest right off the bat might seem like a good way to quickly hone your skills, but it is not the wisest choice. You want to have some experience before you enter a contest with an entry fee, even if it is a demo trading contest. With that said, a no cost, demo account contest can be a great introduction to the world of short term trading. It can be an easy way to help you decide if this is something that truly interests you and help you have a better idea if devoting your time, money, and energy to trading will be worthwhile or not.
These are all negative aspects of trading contests. As with any area that attracts money to it, there will always be scams and downsides. It’s usually pretty easy to tell the scams apart from the real opportunities to grow your skill and money, and luckily there are far more legitimate contests out there than not. Still, it is always better to be educated and know what you are up against.