There are a few variations of real money contests, and here we will cover some of the more popular versions of these. As a general rule, these do not exist in the stock market thanks to SEC oversight, but they can be pretty popular in both the Forex and the binary options marketplaces.
What to Look For
When entering a real money contest, your primary goal should be to look for something that you have a realistic shot of winning a prize in. You can use these as educational opportunities, but you can also do that in a demo trading contest with much less risk. If you’re going to enter a live trading contest, it needs to be more than worth your while. You should be focusing on the metrics for determining who wins, then. For example, if you enter a Forex trading contest and the first person to make $10,000 is the winner, then the person with $100,000 in their account has a huge advantage over someone with $1,000 in their account. This could put you at a huge disadvantage if you haven’t looked this over. But, if the goal was to be the first person to make a 10 percent return, then everyone is now on a more equal footing and you have a better chance of winning.
Forex contests tend to be sponsored through third parties and have a lot of appeal thanks to the central software that is predominantly used in the industry: MetaTrader. These are fun, but often very competitive. And because a lot of trading can be automated, you might find yourself struggling unless there are strong parameters set. Typically, those contests with smaller entrant pools are more worthwhile because they disallow cheating more thoroughly.
Binary Options Contests
Contests in the binary options market come in three different forms. The first is a percentage return contest. This is the one that most directly shows your skills as a trader, and if you enter one of these contests, the best traders are the ones that see the highest return on their money.
The next is the correct trade contest. Here, you are pitted against other traders and try to make as many correct trades as possible. Because binary options have either/or outcomes, your goal here isn’t so much to worry about making money, but to be correct in your anticipated outcome of as many trades as possible. This will inevitably allow you to make money, but your focus can shift to assets with lower returns and higher degrees of predictability if you want to be competitive.
Finally, you have the number of trades contest. This is the least indicative of your ability as a trader and should be avoided if possible. Here, a broker will reward those traders that have the highest number of trades over a given period of time. The goal can easily switch from high quality trades to a high volume of trades, and it is really easy to just start making trades for the sake of trades without much regard to outcome. To be successful in this type of contest you need to have a good eye for outcome, but the focus is too far away from quality in order for this type of contest to be beneficial to you.
In some cases, governmental restrictions limit what brokers can and can’t do as far as promoting and holding contests go. If something doesn’t seem right to you, then avoid it. You only want to enter contests that are completely legitimate and on the up and up. If something seems suspicious to you, stay away. It’s your money on the line, and you don’t want to waste it needlessly.