For those of you who are not aware, myfxbook has launched a contest sponsored by FXDD in which traders will battle with demo accounts for a chance to win a 1000-2000 USD price. This contest will be played on demo accounts and the winner will simply be picked up as the contestant with the highest equity at the end of the one month run. As I said on a post a few weeks ago, these contests are meaningless since they encourage the use of excessive risk and the use of unsound trading tactics in order to win, something which I will be more than happy to do to win this contest. As you heard me, on today's post I will talk to you a little bit about the tactics I will be using to win this demo contest and how I plan to absolutely EXPLOIT demo/live execution differences so that I will be able to win a trading contest with a system that wouldn't generate anything but loses in live trading.
So how do you plan to do this ? - You may be wondering - Actually it is a fact that many market inefficiencies cannot be exploited due to the fact that live execution prevents their exploitation. These differences which arise due to the fact that demo accounts do not execute positions in the real market would allow a trader to exploit them and generate unrealistic profitability in a demo account which could never be reproduced on a live account. A simple example of this concept is the use of certain scalping systems which would never work in live trading due to re-quotes and slippage, these systems however would be able to greatly succeed in demo accounts as they would allow you to profit from the market systematically.
There are however even darker ways of profiting from demo accounts which would never work on live accounts. One of the most clever ways is to exploit the feed of a fast, live broker and play "forecast"on the slow demo feed of the contest. This way you would be able to actually predict the future within the paper trading account, something which would never be possible on an actual live trading account due to the fact that all profits would be eliminated by requotes or slippage or the speed of the feed would probably not be significantly slower. This concept has already been proven and it shows that demo contests are useless since the exploitation of their vulnerabilities is clear and concise.
What I plan to do is to use an EA to exploit one of this very well known (or perhaps several of these) vulnerabilities to achieve an extremely high level of profitability on the demo account. If nobody else does this (which I doubt) and I manage to win the contest, then I still need to trade at least 10 standard lots on an account on FXDD in order to get the money. This merely means that I will need to pay about 200 USD in spreads something which I could easily do by opening and closing many trades in a really fast fashion with an EA. After doing this I would be able to withdraw the price, money which I would certainly donate to one of my favorite charities.
So what is the point of doing this ? Ruin the fun for the other people ? No ! My objective will be to show people that demo contests simply make NO sense and that running them only encourages the use and the publicity of systems which are simply not going to work in real life or at least not in the long term. Demo contests are detrimental to the picturing of realistic profit and risk targets and they certainly encourage the use of high risk and unsound trading tactics thinking that these results may be achievable in the long term when in reality they simply are not.
What do you think about this ? Are you going to code your own "unsound madness EA" to pursue the treasure at the end of the rainbow ? Make sure you leave your opinons and comments about my idea ! If however you want to know more about sound trading and how you too can reach long term profitability with your own systems coded for reliable automated trading please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !
So how do you plan to do this ? - You may be wondering - Actually it is a fact that many market inefficiencies cannot be exploited due to the fact that live execution prevents their exploitation. These differences which arise due to the fact that demo accounts do not execute positions in the real market would allow a trader to exploit them and generate unrealistic profitability in a demo account which could never be reproduced on a live account. A simple example of this concept is the use of certain scalping systems which would never work in live trading due to re-quotes and slippage, these systems however would be able to greatly succeed in demo accounts as they would allow you to profit from the market systematically.
There are however even darker ways of profiting from demo accounts which would never work on live accounts. One of the most clever ways is to exploit the feed of a fast, live broker and play "forecast"on the slow demo feed of the contest. This way you would be able to actually predict the future within the paper trading account, something which would never be possible on an actual live trading account due to the fact that all profits would be eliminated by requotes or slippage or the speed of the feed would probably not be significantly slower. This concept has already been proven and it shows that demo contests are useless since the exploitation of their vulnerabilities is clear and concise.
What I plan to do is to use an EA to exploit one of this very well known (or perhaps several of these) vulnerabilities to achieve an extremely high level of profitability on the demo account. If nobody else does this (which I doubt) and I manage to win the contest, then I still need to trade at least 10 standard lots on an account on FXDD in order to get the money. This merely means that I will need to pay about 200 USD in spreads something which I could easily do by opening and closing many trades in a really fast fashion with an EA. After doing this I would be able to withdraw the price, money which I would certainly donate to one of my favorite charities.
So what is the point of doing this ? Ruin the fun for the other people ? No ! My objective will be to show people that demo contests simply make NO sense and that running them only encourages the use and the publicity of systems which are simply not going to work in real life or at least not in the long term. Demo contests are detrimental to the picturing of realistic profit and risk targets and they certainly encourage the use of high risk and unsound trading tactics thinking that these results may be achievable in the long term when in reality they simply are not.
What do you think about this ? Are you going to code your own "unsound madness EA" to pursue the treasure at the end of the rainbow ? Make sure you leave your opinons and comments about my idea ! If however you want to know more about sound trading and how you too can reach long term profitability with your own systems coded for reliable automated trading please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !
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5 comments:
Daniel-
Should be interesting. Let us know how we can track your results once you get started.
Chris
Bring it on!
Great idea, Daniel! This will be so cool if you win and publicize how unreal these contests are. I'll be very interested to see exactly what strategy you use and how well you succeed.
he, he, he...
Keep us posted. I'm guessing you know more about these exploitable points than I or most ever will.
Take'em to the cleaners!
JT
Daniel,
Winning the contest using the mentioned tactics is of great importance,-it will allow people to better understand that only sound trading tactics should be used!
Will you tell FXDD about trading tactics if you win?
Maxim
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