How brokers may make money out of a contest

You can't do that. Most contests require minimum participation i.e 10 trades.

Look at the current Fxsol Standings... Chinas got game man..

http://www.fxsol.com/contest/test-dr...winners_03.jpg

Indeed, there's a 10 trades minimum requirement for most.





China traders rocks! With FXSol, this is a demo account and you can risk blowing your account with no real consequences to your pocket and mind 'health'. But with IBFX, it's a live account you use with your own money, minimum risking 250$. So the results are logically lower, but still good enough!

After 25 days of competing, here are some results that would show that brokers can make lot of money out of a contest.

Traders in the contest on Feb 1, 2008 : 433
Traders in the contest on Feb 25, 2008: 253
The top down list shows that trader 246 and above have blown his account => 433-246 > 187 traders or 43% of contestants have totaly blown their account!

Internal data I got shows me that traders >200 rank has lost more than 50% of their accounts.

If we take the normal 90% of traders lose money, and it would be more in a very competitive environment as a contest, we would have that 433 x 0.9 = 390 traders have lost money in the contest, and 43 traders have won some $.

Top ten list shows that trader number ten has done 156% = > traders from rank 11 to 200 are ranging between -50% and 156%

So the final trader list should be like the below:
Traders A: 156% < 1-10 < 752%
Traders B: 0% < 11-43 < 156%
Traders C: -50% < 44-199 < 0%
Traders D: -99.46%< 200-245 < -50%
Traders E: -99.9< 264-433 < 99.47%

I can roughly say that just by trading against the participants, taking into consideration that the minimal balance to enter contest is 250$ (Instead of 500$) you can get:

Traders A: You would lose against them around 6500$ and pay them 6000$ prizes
Traders B: 0% < 11-43 < 156% you would lose against them around 6500$
Traders C: -50% < 44-199 < 0% you will win around 9500$
Traders D: -99.46%< 200-245 < -50% you will win around 8500$
Traders E: -99.9< 264-433 < 99.47% you will win 46700$

For a total win of 46700+8500+9500-6500-6000-6500= 45700$
with Bonus free publicity and new opened accounts with new newbie traders...

There used to be monthly contest at FXCM before I entered Forex in 2006.

I noticed that Chinese traders were consistently on the Top 5 at 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://www.fxcm.com/trading-contest.jsp , but they moved the results to DailyFX forum. They put minimal information so statistics would be very difficult to get.

I do agree with you about Chinese traders numbers (1/4 of total earth population!), but I think that they have an advantage based on their culture: They work a lot and they really want to make it. We can see this in the Chinese extraordinary booming these last years,

I participated in a different contest (Managing an enterprise production line) during my Management Business Administration studies and they did have lot of contestant from China that make it to the top.

This century may be under the Chinese new world invasion...

+3.8% at rank 85 for Feb

^^

Thank you Puppy for your input.
Taking into consideration the new data, here the updated estimated payoff if you trade against all participants:

Traders A: You would lose against them around 6500$ and pay them 6000$ prizes
Traders B: 3.81% < 11-85< 156% you would lose against them around 13000$ Traders C: 0% < 85-115< 3.8% you would lose against them around 200$
Traders D: -50% < 115-199 < 0% you will win around 5500$
Traders E: -99.46%< 200-245 < -50% you will win around 8500$
Traders F: -99.9< 264-433 < 99.47% you will win 46700$

For a total win of 46700+8500+5500-150-13000-6500-6000 = 35000$

Plus all the spread. If we consider every that the mean open close amount of contestant is 10 minilots, and the average spread would be 5 (Mot traders who tries to win use GBP pairs for their volatility), they would do an additional 5 x 10 x 433 = 21000$ in spread...

Interesting thread. Very obvious stuff, still interesting to see your calculations haniam )

Those Fxsol Standings are sick. If I am not wrong, weren't those traders in the top 3 since the beginning of the competition? ...Or at least just Zheng. He has to be good if he didn't go bust so far.

March competition with 444+ traders.

But the 444th trader's result are really odd: -174% !!!

And me who was thiking that with Forex brokers, the maximum amout that could be lost was the entire balance

Here some odd result for march 2008 competition.

Attached a transcript of the conversation I had with the support when asking about the negative balance of the traders.

Just for info, they have more than 1000 contestant for August month!

Let's see how many will be still in in 10 days

It is, damn brokers