View Full Version : How brokers may make money out of a contest
I was checking the outcomes of January 2008 contest and I believed that in fact, a contest is a money making machine, mainly when the broker trades against you.
Check the snap shot below:
https://www.cliqforex.com/attachments/15263026341675860426.jpg
Well, see how beginning the 7th, all traders are below 100% gain.
Starting 10th, they are under 60% gain.
Assuming that the broker is trading gainst you.
Let us try to appraise the 'price' of the contest:
Considering the overall concept that more than 90% of traders get rid of money, and since there's 237 participant, 90% will signifies that more than 213 of these traders are losing money.
We can safely enough presume that we've got 200 traders which are losing money, and probably 50 of them have blown their account (We can see in the attachment which the previous ten have lost more than 99% of the account), so only 37 (or less) are winning money.
The prizes are:
1st $3,000.00
2nd $1,500.00
3rd $750.00
4th $500.00
5th $250.00
Complete: 6,000$
Per the rule, you need only 500$ on your live account to enter the contest. I believe the traders which is going to be in the up with more than 200% return in less than a month won't be risking more than this sum. And let us assume that the traders that have lost all their equilibrium have only risked 500$.
Hence the broker is going to need to pay (as they are trading the other hand) at the end of the contest:
To the first ten participants:
4.10*500 2.70*500 1.90*500 1.30*500 1.30*500 1.20*500 0.80*500 0.70*500 0.60*500 0.60*500 = ~20,000 $
For the 27 other supposed positive gain if considered at 30% gain:
27*0.3*500 = ~4,000 $
So the total 'cost' of the game is 6,000 20,000 4,000 = 30,000 $
Let us try to appraise the 'earnings' of the contest:
200 traders are losing money.
We see in the broker announcement which the past have lost more than 99% of the account. We may safely assume that 50 trader has lost more than 90%, and let us suppose that 150 has lost an average of 50%, we'd have an 'income' of:
50*500 150*250 = 25,000 37500 = 62,500 $
So the return from the contest would be something similar to:
62,500 - 30,000 = 32,500$ 500 disperse times all the trade done.
Of course that is only a simulation, but I have the impression which the broker is getting much more from that money making machine 'contest', as I attempted to place all my calculation on the safe side.
Well, as I noticed in the 6 months back printed statements, the amount of contestant is growing each month... Just extrapolate in couple months with 500, 1000 participants and more...
pochis
12-22-2021, 12:55 PM
I thought all this was apparent. Oh well.... It is, damn brokers
Just for info, they've more than 1000 contestant for August month!
Let us see how many are still in in 10 times
https://www.cliqforex.com/attachments/15263030441638233961.jpg
March competition with 444 traders.
But the 444th trader's result are really odd: -174% !!!
And me that had been thiking that with Forex brokers, the maximum amout that may be lost was the entire equilibrium https://www.cliqforex.com/attachments/1526303023.jpg
https://www.cliqforex.com/attachments/152630303897567046.jpg Below some odd result for march 2008 competition.
Attached a transcript of the conversation I had with the help when asking about the adverse balance of the traders.
https://www.cliqforex.com/attachments/15263030401810122489.jpg
https://www.cliqforex.com/attachments/1526303042413045774.doc
March competition with 444 traders.
However, the 444th trader's outcome are really odd: -174% !!!
And me who was thiking that with Forex brokers, the maximum amout that may be lost was the entire balance https://www.cliqforex.com/attachments/1526303022.jpg
https://www.cliqforex.com/attachments/15263030362059429845.jpg
Javipkmorales7
12-22-2021, 06:18 PM
Interesting thread. Quite obvious stuff, still interesting to see your calculations haniam https://www.cliqforex.com/attachments/1526303022.jpg)
Those Fxsol Standings are ill. If I'm not wrong, were not those traders in the top 3 since the start of the competition? . . .Or at just Zheng. He has to be great if he did not go bust so far.
3.8 percent at rank 85 for Feb
^^ Thank you Puppy to your input.
Taking into consideration the new info, here the updated estimated payoff if you trade against most of participants:
Traders A: You'd lose them against around 6500$ and pay them 6000$ prizes
Traders B: 3.81% lt; 11-85lt; 156% you'd lose from them around 13000$ Traders C: 0% lt; 85-115lt; 3.8 percent you'd lose against them approximately 200$
Traders D: -50% lt; 115-199 lt; 0% you will win approximately 5500$
Traders E: -99.46 percentlt; 200-245 lt; -50 percent you will win approximately 8500$
Traders F: -99.9lt; 264-433 lt; 99.47% you will win 46700$
To get a total win of 46700 8500 5500-150-13000-6500-6000 = 35000$
Plus all the spread. If we believe every that the mean open close quantity of contestant is 10 minilots, and also the ordinary spread could be 5 (Mot traders who tries to win use GBP pairs to their volatility), they'd do an additional 5 x 10 x 433 = 21000$ at spread...
igereka
12-22-2021, 08:59 PM
3.8% at Ranking 85 for Feb
^^
There used to be monthly contest at FXCM before I entered Forex in 2006.
I discovered that Chinese traders were consistently on the Top 5 in FXCM's contest also.
Either:
1. Chinese are good traders,
2. Or plain lucky
3. Or simply have more traders involved, ie, law of average.
Im biased towards #3. FXCM contest is still effective, http://javascript"</b>:void(0); , however they moved the outcomes to DailyFX forum. They put minimum information so statistics would be rather difficult to get.
I do agree with you about Chinese traders numbers (1/4 of overall ground population!) , but I believe that they have an advantage based on their culture: They work a lot and they want to make it. We can see this in the Chinese extraordinary booming these last decades,
I participated in another contest (Managing a venture production line) within my Management Business Adminiion research and they did have lot of contestant from China that make it to the top.
This century might be under the Chinese new universe invasion...
adrix_17_boy
12-22-2021, 11:41 PM
There used to be monthly competition at FXCM before I entered Forex in 2006.
I noticed that Chinese traders were consistently on the Top 5 in FXCM's competition too.
Either:
1. Chinese are good traders,
2. Or plain lucky
3. Or just have more traders involved, ie, law of average.
Im biased towards #3.
After 25 days of competing, below are a few results that would show that brokers can make lot of cash from a competition.
Traders in the competition on Feb 1, 2008 : 433
Traders in the competition on Feb 25, 2008: 253
The top down list proves that trader 246 and above have disregarded his account =gt; 433-246 gt; 187 traders or 43% of contestants have totaly disregarded their account!
Internal info I obtained shows me that traders gt;200 rank has lost over 50 percent of the accounts.
If people take the normal 90% of traders drop money, and it would be in a really competitive environment for a competition, we'd have that 433 x 0.9 = 390 traders have lost money in the competition, and 43 traders have won any $.
Top ten list proves that trader number ten has done 156 percent = gt; traders from rank 11 to 200 are ranging between -50% and 156 percent
Hence the final trader list should be like the below:
Traders A: 156 percent lt; 1-10 lt; 752%
Traders B: 0% lt; 11-43 lt; 156 percent
Traders C: -50% lt; 44-199 lt; 0%
Traders D: -99.46%lt; 200-245 lt; -50%
Traders E: -99.9lt; 264-433 lt; 99.47%
I can roughly say that by simply trading against the participants, taking into consideration that the minimum equilibrium to enter contest is 250$ (Rather than 500$) you can get:
Traders A: You would lose them against about 6500$ and pay them 6000$ prizes
Traders B: 0% lt; 11-43 lt; 156 percent you would lose against them about 6500$
Traders C: -50% lt; 44-199 lt; 0% you may win around 9500$
Traders D: -99.46%lt; 200-245 lt; -50% you may win around 8500$
Traders E: -99.9lt; 264-433 lt; 99.47% you may win 46700$
For a complete win of 46700 8500 9500-6500-6000-6500= 45700$
with Bonus free advertising along with new opened accounts with new newbie traders...
https://www.cliqforex.com/attachments/15263030341891552362.jpg
You can not do this. Most competitions require minimal participation i.e 10 trades.
Look in the current Fxsol Standings... Chinas got match guy. .
Indeed, there's a 10 trades minimal requirement for most.
Https://www.cliqforex.com/attachments/15263030331066093403.png
https://www.cliqforex.com/attachments/1526303019.png
China traders rocks! Together with FXSol, this really is a demo account and you can risk blowing your account with no real consequences to your own pocket and head 'wellbeing'. However, with IBFX, it is a live account you use with your own money, minimal risking 250$. So the outcomes are logically lower, but still good enough!
https://www.cliqforex.com/attachments/1526303020.jpg
Adri5puyi
12-23-2021, 03:43 AM
the way to win in this game:
1. Open two accounts - different names of course
2. Account 1 = Move Extended AUDUSD (or NZDUSD) no SL no TP
Account 2 = Go Short AUDUSD (or NZDUSD) no SL no TP
These pairs tank!) Make certain both accounts may withstand 400pips drawdown.
3. Wait for final moment. The reward is function as profit. You can't do this. Most competitions require minimum participation i.e 10 trades.
Look at the current Fxsol Standings... Chinas got match man. .
http://www.fxsol.com/contest/test-dr...winners_03.jpg
How to win in this sport:
1. Open 2 accounts - different names of course
2. Account 1 = Move Long AUDUSD (or NZDUSD) no more SL no more TP
Account 2 = Proceed Short AUDUSD (or NZDUSD) no SL no TP
These pairs tank! Make certain both accounts can withstand 400pips drawdown.
3. Wait for final day. The reward is function as profit. Let us assume we fund 2 different accounts with the same X balance.
It should be in a position to withstand 400 pips drawdown.
Feb 2008 info:
AU: Open 0.8957 Close 0.9232 =gt; 275 pips lt; 400 pips
NU: Open 0.7867 Close 0.8082 =gt; 215 pips lt;400 pips
Not one of the accounts have blown, but none have even doubled. Straightforward calculation, to double account, you need to practically blow the other...
The 5th place has 238%, an equivalant of multipying by 3.4 the account
Can we double click the account together with 250-300 pips to get 250$?
The first is at 750% or about 8.5 days the account
You can not multiply your account by 8.5 to win...
it isn't too simple. There's a demand of coumpounding the wins and to take high risks.
Ans as PipStar said a sideway market, since it's the majority of the time, may definitly blow off an account and likely return what it gave in the other one.
I really don't see this process as having a fair Opportunity to win the 5th position
InesRamttR
12-23-2021, 06:25 AM
the way to win in this sport:
1. Open 2 accounts - different names of course
2. Account 1 = Move Extended AUDUSD (or NZDUSD) no SL no TP
Account 2 = Go Brief AUDUSD (or NZDUSD) no SL no TP
These pairs tank!) Make sure both accounts can withstand 400pips drawdown.
3. Wait for day. The reward is be the profit. A non-trending (sideways) market could destroy this egy.
adrix_17_boy
12-23-2021, 07:46 AM
How to win in this game:
1. Open 2 accounts - different names of course
2. Account 1 = Move Long AUDUSD (or NZDUSD) no SL no TP
Account 2 = Go Short AUDUSD (or NZDUSD) no SL no TP
These pairs tank! Make sure both accounts can defy 400pips drawdown.
3. Wait for moment. The benefit is function as profit.
InesRamttR
12-23-2021, 09:06 AM
You cannot win this type of contest by trading conservatively. You must take risks. Been there, done that. That's just the way it works.
Incidentally, traders blow off their accounts contests or not.
pdrusko
12-23-2021, 10:27 AM
View the subsequent 4 traders that were in the top ten list:
1- 'Lessons' falling from 1000 percent to 200%, that is an 80% down from your account.
2- 'Ninjahouson' falling from 650% to 200%, that is a 70% down in the account.
3- 'Damir' falling from 200 percent to under 130%, this is more than 35 percent down in the account.
4- 'Doublea' falling from 200 percent to under 130%, that is more than 35 percent down in the account.
And blowned accounts are still in advance...
Lessons to learn: In case you would like to earn lot, expect to eliminate lot, and even more...
https://www.cliqforex.com/attachments/15263026452023091592.jpg
https://www.cliqforex.com/attachments/15263026461750302737.jpg In one day ? I definitly prefer to use my cash direction than their-/
They are not trading, they are gambling...
Well, Well, Well!
After two weeks of competition, the number of participants has dropped out of 433 to 387 registered, 46 traders prefering to take off their names from the record following their accounts totally blown.
The last 10 recorded have their accounts blown, and likely more of them not recorded, yet.
The first ten do good, but I wouldn't be shocked if I read a few of these names in the down list later on this month...
https://www.cliqforex.com/attachments/15263026431365500689.jpg Watch the subsequent 4 traders that were in the top ten list:
1- 'Lessons' falling from 1000% to 200%, this can be an 80 percent down from the account.
2- 'Ninjahouson' falling from 650% to 200%, that is a 70% down from the account.
3- 'Damir' falling from 200% to below 130 percent, this is much more than 35 percent down from the account.
4- 'Doublea' falling from 200% to below 130%, that is much more than 35 percent down from the account.
And blowned accounts are still in advance...
Lessons to learn: If you would like to earn lot, expect to eliminate lot, and much more...
https://www.cliqforex.com/attachments/1526302625.jpg
https://www.cliqforex.com/attachments/1526302626.jpg
Hi,
that I think I can share some result and you can roughly guess how many men and women blow up the account.
Back in Jan, I had been -1.7 percent and rank 57.
This month I am 5.8 percent and rank 101 at their final update (past Fri).
Hence gt;75% peolple lost money in Jan in that contest and the other 300 individuals make less than 5% this month.
Hope this helps. Thanks for your input Puppy!
Please update us from the end of the contest on Feb. 25 with more data to assist us to do a bit more precise estimations.
Hani https://www.cliqforex.com/attachments/1526302625.jpg
igereka
12-23-2021, 02:29 PM
Hello,
I believe I will share some result and you can about guess how many men and women blow up the account.
In Jan, I was -1.7% and rank 57.
This month I am 5.8% and rank 101 at their last update (past Fri).
Therefore gt;75 percent peolple lost cash in Jan because competition and the other 300 people make less than 5 percent this month.
Hope this helps.
Well, Well, Well!
After 2 weeks of contest, the amount of participants has declined from 433 to 387 registered, 46 traders prefering to shoot off their names from the list after having their accounts totally blown.
The previous 10 recorded have their accounts dismissed, and likely even more of them not listed, yet.
The first ten do fine, but I would not be shocked when I read a few of these titles in the downward list later on this month...
https://www.cliqforex.com/attachments/1526302641238045266.jpg
lidilp
12-23-2021, 05:11 PM
I thought this was obvious. Oh well...
ramok_sj?
12-23-2021, 06:32 PM
I had been looking about the Feb. result for the competition, and I discovered that the participants have doubled this month!
January 2008: 237
Februry 2008: 433
The last 10 have practically blown their account...
I figure that over 350 will finish with a negative balance...
https://www.cliqforex.com/attachments/1526302639131891423.jpg look like the base ten will be on the point of blowing off there account.
I was looking on the Feb. outcome for the contest, and I discovered that the participants have dropped this month!
January 2008: 237
Februry 2008: 433
The last 10 have already practically blown their account...
I figure that over 350 will end with a negative balance...
https://www.cliqforex.com/attachments/15263026371812282530.jpg
The broker is InterbankFX out of what I know. Thanks Yuhu.
Yes this is taken out of InterbankFX site.
I'm not saying they're trading against you as most brokers do, even if they're known to do so. They knewly reduced the minimum entrance to 250$ and they're fishing much more customers, beginner traders to most.
I am aware that it's a broker conversation place, but I was not intending discussing a specific broker, but none of many ways brokers can make more cash, and 'free publicity' as Semar nicely said.
So this applies to broker companies generally.
The thing is, doing contrary to losing trade doesn't nesessarily make it a winning transaction particularly in this case. When you lose in a transaction, somebody is winning on the opposing side.
Try doing both market and buy (hedging your place) in the exact same level for GJ for exemple, with a 9 pip spread.
If one of your transaction shed, another will obligatory win, without the spread.
But we are speaking about a broker. The spread is owned by the broker, at least the biggest aspect of it. Where here you have a loss of -9-9 = -18 pips, he'll have greater than 1 or two pips loss in doing the same thing.
So once you enter a GJ place, you directly are at -9 pips, he's directly in triumph of 7 pips when he chooses your reverse trade.
Should you win 5 pips and you shut your position, he'll still win two pips from his disperse.
Should you lose 5 pips and shut your position, you're losing -5 -9 (Spread) = -14 pips and he's winning the disperse you already paid along with your loss 9 5 = 14 -2 = 12 pips by accepting another side of your trade.
Or more than 90% of traders will shed from their equilibrium and finally lose all their equilibrium in a contest, and the less than 10% winners won't make so much wins as you may see in the announcement. Hence that the broker will probably be winning when he chooses another side of you trade, and certainly will be winning probably more in a contest situation.
Ana_1999
12-23-2021, 11:55 PM
You should also incorporate the money they'd otherwise spend on picture building.
Add some 20k
gery115
12-24-2021, 01:16 AM
Nice post. https://www.cliqforex.com/attachments/1526302624.jpg
Thank you. Which broker is this? Do you mind sharing? The broker is InterbankFX from what I know.
oxtaysquiroz
12-24-2021, 02:36 AM
Wonderful post. https://www.cliqforex.com/attachments/1526302623.png
Thank you. Which broker is that? Do you mind sharing?
alexynadaoxs1
12-24-2021, 03:57 AM
The matter is, doing contrary to losing commerce doesn't nesessarily make it a winning transaction particularly in this case.
LuisYoGoLo
12-24-2021, 05:18 AM
I had been checking the results of January 2008 competition and I believed that in fact, a competition is a money making machine, largely when the broker trades.
Assess the snap shot below:
https://www.cliqforex.com/attachments/15263026361484155279.jpg
Well, see how beginning the 7th, all traders are under 100% profit.
Starting 10th, they're under 60% profit.
Assuming that the broker is trading gainst you.
Let's try to evaluate the 'cost' of the competition:
Taking the general concept that over 90% of traders drop money, and since there is 237 participant, 90 percent will means that over 213 of those traders are losing cash.
We can safely enough assume that we've got 200 traders that are losing money, and probably 50 of them have blown their account (We can see in the attachment that the last ten have lost more than 99% of the account), so just 37 (or less) are winning cash.
The prizes are:
1st $3,000.00
2nd $1,500.00
3rd $750.00
4th $500.00
5th $250.00
Total: 6,000$
Per the principle, you need just 500$ in your live account to go into the contest. I think that the traders that is going to be in the up with more than 200% return in less than a month won't be risking over this sum. And let's assume that the traders that have lost all their balance have just risked 500$.
So the broker is going to have to cover (since they're trading the opposite side) in the end of the competition:
For the first ten participants:
4.10*500 2.70*500 1.90*500 1.30*500 1.30*500 1.20*500 0.80*500 0.70*500 0.60*500 0.60*500 = ~20,000 $
For the 27 other supposed positive profit if considered at 30% profit:
27*0.3*500 = ~4,000 $
Therefore the overall 'cost' of the match is 6,000 20,000 4,000 = 30,000 $
Let's attempt to evaluate the 'earnings' of the competition:
200 traders are losing cash.
We see in the broker statement that the past have lost over 99% of the account. We may safely assume that 50 trader has lost more than 90 percent, and let's assume that 150 has lost a mean of 50%, we would have an 'income' of:
50*500 150*250 = 25,000 37500 = 62,500 $
Therefore the return from the competition would be something similar to:
62,500 - 30,000 = 32,500$ disperse times all the trade done.
Of course that is just a simulation, but I have the impression that the broker is having more from that money making machine 'competition', as I tried to put my entire calculation on the safe side.
Well, as I seen in the 6 months back published statements, the number of contestant is increasing every month... Just extrapolate in couple months with 500, 1000 participants and maybe more... it's no surprise actually. The broker's done their research and they know these traders arrive in wiht measely $500 and risking way too much. The produce an environment where people need to contend with one another to reach hundreds percent return to triumph.
It's fueling the greed of traders along with instilling terrible trading habits. It's a visciuos marketing cycle. New fish will keep coming in...