Find Out All About Trading Tournaments

In order to get the interest of their customers, some brokers offer different events that traders can use for their own advantage.

Tournaments are limited-time events where traders compete against each other for generous prizes. During the tournament, participants trade with a special account (highlighted in purple in the account menu). All participants have a fixed amount of money in their tournament accounts at the start of the tournament. When the tournament ends, the winners, or traders with the highest balances at that time, get a share of the prize based on their position. Depending on the tournament, there can be from one winner (1st place) to several of them (1st through 10th places).

The ability to compete for these prizes and win is the main reason people participate in tournaments. Of course, you can accomplish much more than that at the same time: hone your trading skills and meet other traders, share winning strategies, and learn something new. The trading tournaments at their core are very similar to what you might see in a poker game.

Tournaments can be divided based on the following key conditions.

Local and global tournaments

First, there are local and global tournaments, the main difference being the geographic distribution of their participants. Only people from certain regions can participate in local tournaments. Normally, local tournaments take place near important local events, such as a national holiday or regional festivities.

As the name says, anyone around the world can take part in global tournaments. These tournaments are often the ones with the best prizes, but also with the toughest competition.

Free and paid tournaments

Tournaments can also be divided into free and paid. Everyone can enter a free tournament with no entry fee and compete for the prize. The only time you might want to pay is when you empty your tournament account but want to continue the competition. This is called a buyback and is not mandatory.

Why would someone want to enter a paid tournament if there are free tournaments available? Entry fee tournaments may feature larger prizes. And some people are eager to pay a little extra for the chance to win big. Free or paid — it's your choice, as both tournament types offer incredible opportunities.

Tournaments also vary in length and can last anywhere from a day to a month.

How to win tournaments?

Or rather, who are the people who usually win tournaments and what strategies do they use in the process? Each trader has its own special strategy, but there are a few rules that you should follow in order to increase your chances of securing your prize.

As all tournaments are limited in time, each of them is a true race against time and other traders. All the participants want to profit as much as possible in the shortest time. For that exact purpose, traders who typically win in tournaments do not follow standard risk management rules. Instead, they allocate their entire tournament money in a single trade, and repeat this process as many times as possible. In the case of a winning streak, they manage to maximize their profit. Of course, this strategy is not without risk.

Nonetheless, when time is limited and other traders are trying their best to make money faster than anyone else, this is the only strategy that gives you a competitive advantage. Most other strategies just can't keep up. This means that, from time to time, you will run out of money in your tournament account and will have to rebuy — pay for the opportunity to re-enter the same tournament.

To sum up: since most tournaments are free of charge, you might want to try them out and improve your trading and risk management skills. Whenever you are feeling more confident about them, paid tournaments can give you a great chance of winning nice prizes with your strategies.