This article was first published on 4 October 2019 and updated with new information on the SG Active Trading Tournament 2020.
In Singapore, you’ll periodically see different kinds of stock investing and trading competitions being organised, like the annual NUS-SGX Stock Pitch Competition, which has teams from various tertiary institutions in Singapore compete.
We’ll explore the pros and cons of such competitions and find out whether they really help new or experienced investors become better at investing or trading in real-life.
What Are Trading And Stock Competitions And How Do They Work?
In trading and stock investing competitions, all contestants start with the same amount of virtual capital and are given a specified timeframe to grow that capital to the greatest extent.
Depending on the theme of the competition, there could be certain rules enforced, such as only allowing investment into certain markets. Good competition platforms provide close to real-time prices and simulate trading fees as well.
InvestingNote is holding an upcoming SG Active Trading Tournament from 10 to 30 September 2020, where contestants can enter for free and compete for a chance to win cash prizes. The SG Active Trading Tournament has a theme around Daily Leverage Certificates (DLCs), which are SGX-traded products that give investors leveraged exposure to selected local and overseas stocks and indices.
Benefits Of Joining Trading And Stock Competitions
For those new to investing, competitions are a great way to dip your toes in the water to invest as if you were doing it for real and see where you stand (or fall short). You get to invest using real tools and price data, but without putting real money on the line and incurring trading fees.
For experienced investors, competitions are a great no-risk way to test out new strategies or tweak the mix of your portfolio, contrasting it with the returns of your real investment portfolio.
In some competitions, such as the SG Active Trading Tournament, the investment moves of all competitors are all out in the open. This makes it a goldmine for learning, since you can see what investments the best-performing contestants are making, and how they react to changes in the market.
The time-bound nature of competitions also serves as a helpful nudge to all investors to dedicate time to honing their investing craft. As we are probably well-aware, it is all too easy to succumb to procrastination when it comes to things that are important, but not urgent. Competitions inject urgency into investors’ self-development and learning.
For students or fresh graduates, competitions are a useful validation of the theories you’ve learnt in class or from books, and it can be another way to stand out from your peers. Competitions also bring both veteran and newbie investors together, allowing you to meet like-minded individuals and expand your network.
Finally, the prizes that come with investing and trading competitions are a nice incentive for taking part and learning.
The upcoming SG Active Trading Tournament enters all contestants who sign-up into a lucky draw for a chance to win an Apple Airpods Pro for just registering, or an Apple Watch Series 5 for making at least 3 trades during the Elimination Round. There are daily prizes for investors who made the most profitable trades each day. Furthermore, the top three investors at the end of the tournament walk away with $4,000, $2,000 and $1,000 respectively.
Drawbacks Of Trading And Investing Competitions
While there is undoubtedly a lot you can learn from taking part in competitions, there are things about investing and yourself that you won’t discover and develop, until you actually put your own money on the line and invest.
This is because we behave very differently when the stakes are real, and we have to grapple with our emotions, even though we know we shouldn’t let it cloud our judgement. Whether it is fear, greed or foolishness, it is very easy for investors to ignore good sense and make poor investment decisions.
Successful investors would have developed the mindset and discipline not to be swayed and instead stick to their investment principles and risk management measures.
Another way competitions differ from real-life is the short timeframe. Investors in real-life have their own investment time horizon, which can be as short as 1 year to as long as 50 years.
This means that certain strategies, such as building a diversified, well-balanced portfolio with income-generating stocks would not be practical in competitions, even if they are logical and profitable in the real world. Thus, competitions may encourage risk-taking to a degree that most people won’t be comfortable with when their actual investment portfolio is involved.
Dedicate Time To Your Own Development As An Investor
With these caveats in mind, you’ll probably be able to find value in competitions, no matter who you are: a great way to validate your prowess, a low/no-cost method to test new strategies, an opportunity to network with like-minded investors, and perhaps more importantly, a chance to learn more about yourself and how you invest.
If you’re interested to join a competition and see how you fare – not to mention win attractive prizes – you can consider taking a look at the upcoming SG Active Trading Tournament, which is happening from 10 to 30 September 2020. Entry is free and open to all. If you do join, all the best and congratulations, because you’ve already taken a step for your own learning and development as an investor.
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