People generally do not realize that there is a well-defined set of types of crypto trading competitions that differ from each other. This set defines everything from the qualification process to the performance measurement process, the duration of the competition, and prizes for winners. The operating costs and structure of the event, whether it is free or not, are the two most important aspects that should be understood by potential participants in any competition. The rest of the characteristics are derived from these two.
The type of competition can be classified into two broad categories: free-entry competitions and paid-entry competitions.
Free-entry competitions are those that allow players to participate in the game without paying any entry fee. Therefore, there is no risk involved and thus everybody can join them without any worries. Hence, the aforementioned kind of competitions is an excellent starting point for newcomers because there are no investments involved and players are only interested in their positioning.
Paid-entry competitions include a small fee ranging from $5. This fee allows players to participate in the game with much higher stakes that offer greater out-of-pocket costs. Even though there are financial risks involved in that event, it cannot be referred to as gambling because it is more close to tournaments registration that separates serious players.
The point is that these two types of competitions are complementary and do not compete against each other.
There is a direct correlation between the way you are ranked and the mechanisms of entering. The most frequently used mechanism is ROI (return on investment), which allows ranking players based on the percentage increase in the initial amount of money. Therefore, a trader who grows his account significantly performs better than another trader whose results show larger cash profit.
Another method for ranking people that is less known but increasingly useful nowadays is PMC (position movement change). The main advantage lies in the fact that it measures not only where you finished but also how positions have moved through the competition, which gives people certain advantages.
With respect to the structure of the competitions, they can be divided into two major types. A single window competition is a competition that lasts for some definite period of time, for instance an hour, a day or a weekend, and people are ranked after its closing. On the contrary, an elimination trading tournament consists of several rounds, which give players opportunities to advance through rounds while being selected subsequently.
That element of the competition can be counted as a separate dimension. Weekly recurring tournaments consist of tournaments being organized by a stable pattern, for instance, the number of competitions being held is equal to 54 per week. The essence of that pattern is to transform a competition into training, which helps people to analyze their results and to retry trading.
Different types of competitions can be performed according to the instruments you trade. There are spot-style competitions which consist in straightforward buying and selling, while futures-type competitions employ leverage and make profit from decreasing prices.
In order to make a right choice concerning a tournament type one should define clearly his ultimate goal. In that regard, in case you would like to learn without any pressure on you, a free, single-window, ROI-based spot competition would be the best for you. On the contrary, in case you would like to progress towards being funded, you should focus on recurring competitions and elimination ladders.
Be sure to align the scoring method with your inherent style.
You can classify trading competitions based on four different criteria: entry cost (free or paid, generally starting at $5), scoring method (ROI, PNL, PMC), tournament structure (single window event or elimination), and using spot or futures as the trading mediums. Several events combine various aspects of these features, which is well illustrated through the example of a recurring event that has free entry, ROI scoring, and a spot-type competition.
You can classify trading competitions based on four different criteria: entry cost (free or paid, generally starting at $5), scoring method (ROI, PNL, PMC), tournament structure (single window event or elimination), and using spot or futures as the trading mediums. Several events combine various aspects of these features, which is well illustrated through the example of a recurring event that has free entry, ROI scoring and a spot-type competition.
ROI scoring classifies competitors by percentage gain based on their demo balance. Trading results measured through the PMC system rely on the overall moves made by a trader.
It is not necessary to put any money in. Free competitions do not have deposits and generally imply a start for people. Paid participation means more money, but there are possibilities for reaching the same goal through free events.
An elimination competition consists of several rounds, so less effective traders will get eliminated after each one.
There are several tournaments; for example, there were 54 of them held, and 48 of them have ever been organized.
There is a difference between spot and futures; a spot tournament is based on the classic buy and sell scheme, while futures add leverage to increase profits, while risks and mistakes are increased simultaneously.
