Demo trading contest results are spot on
Last week fxstreet’s annual demo trading contest was concluded and the results are striking, though not surprising: almost everybody lost
Last week fxstreet’s annual demo trading contest was concluded and the results are striking, though not surprising: almost everybody lost money. And a lot of it too.
- 56 contestants have won $4,728,093.32, which represents a +168.86% return over their initial capital.
- 498 contestants have lost $21,553,294.38, that is, they have lost 86.6% of their initial capital.
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Basically this means the following: 89.8% have lost money which represents 86.6% of their starting capital. That is, they were wiped out. Remaining 10.2% have won over $4.7 million meaning that the broker potentially won over $16.8 million by doing nothing but waiting for traders to lose their money.
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Why I say that? Simply because it’s demo and the brokers don’t mess around with winning accounts on demo accounts for several reasons. Were that a live trading contest the result would be similar on the losing side but completely different on the winning side – 56 traders would never ever win $4.7 million because someone would have ‘helped’ them to lose their money.
This also goes to show you that indeed over 90% of traders lose money over very short period of time however a very small part of the traders can actually make money and a lot of it. It only took 90% of traders 2 months to lose 90% of their capital. It’s remarkable how this little experiment proved the industry known statistics which no one is keen on publishing.
I’m all eager to see the results of the LIVE contest which kicked off a week ago. I have a feeling results would be a little different 😉
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Hi, I’m a bit new to forex and was wondering why it’s in the best interest of forex retailers to have their customers lose money. It seems like it would be better to have constantly winning traders who stick around and keep giving them spreads. Don’t losers give up most of their account to the market, not the retailers?
Thanks, your 8-17-2009 post on the topic cleared things up nicely for me. I guess it’s time to start researching good ECN brokers.
Hi Michael
Great article…, just a small correction
The LIVE Contest will be starting in September 2010, so it has not started yet.
Live Contest
September 6th – October 29th 2010
I want to encourage everyone to participate, the purpose is to learn and not to do like the demo contest that almost everyone blew up their account
I think I was 13 years old when I realized that there are a lot of stupid people. When I heard 95% lose, I wasn’t surprised. I was surprised at stupid people trying to defend it, claiming 90-95% losers was just a myth.
Jane, We have a solid proof that the 90%-95% losers is not correct and we’re working to release a comprehensive study of profitability of Forex traders that is based on the Currensee community or real traders. The reality, and I hope you would see this in the real account competition, that there are about 30% of the traders that make money. BTW – part of the CFTC’s proposed change in regulation they intend to mandate that brokers will report profitability statistics on a regular basis and then it’s going to be interesting to see which broker has the most succssful… Read more »
I think that all of you are right.
The difference between all of you is how you measure it.
How you determined what is the life time of a user ? measure profitable as how many peoples are profitable in a month is one thing for life time of a user it’s completely different.
I’m not sure that even CFTC knows how to do also.
Let’s see
Lior,
Very good point, the way we measure it internally is that we measure the percentage of successful traders in a month and the percentage of successful traders overall in the platform – their success rate is very similar but we would release a comprehensive report shortly.
— Asaf.