This is a ridiculous contest. No trading system can be successfully tested without actually placing trades. The market does not operate in a vacuum.
everyone participating will be playing on the same level playing field with live prices and in that sense it is valid.
At least they are giving someone a chance.....who knows Schwager might be writing the next market wizard series and the winner might be one of those contestants. :eek:
IB management are clever. the prizes are widely spread, resulting in a lot of winners -> which will spark interests to open real a/c's(bots that trade 100's times per day with IB of course) and tell all of there friends, this should light up the eyes of tens of thousands of young males keen to trade there way to freedom. All the while IB gets many trading plans(useless or not) to keep, explore, test and develop. and just like any other sucessful brand, it is marketed very well to the young. very clever marketing IB, i applaude that.
This is probably an accurate analysis. However, I think it runs a serious risk of violating securities law, because IB knows or reasonably should know that no trading system can be successfully tested without actually trading the market. There is no market without participation. Thus, if IB garners a large number of new accounts based on the contest, and traders who were successful in the contest and who are awarded prizes, then unsuccessfuly ply their winning systems under real market contidions, and are damaged as a result, then IB has mislead these people into losing money to IB's advantage and thereby violated Federal Securities law by inducing these people to trade using a false representation of a material fact, i.e., that a trading system can be successfully tested without actually placing trades. Of course, unless one of the contestants is also a law student, this misrepresentation will probably not be recognized. However, the contest is a pretty risky proposition in general that could backfire against IB in a very expensive fashion. All of this is only my opinion, of course.
Your logic above is silly as it implies that every firm that has a simulator is at risk. Perhaps the aim is to give an engineering or computer science student a chance to test their knowledge in as close to a real world environment as possible. Top students will also have the opportunity to impress top management at an exceptional firm which they may never have heard about. This of course could open the door to a potentially lucrative career.
My logic is silly? Take my posts to your corporate legal counsel and see if he/she thinks my logic is silly. I don't believe that any competent attorney would find this contest without considerable risk, except perhaps due to not wanting to upset executive management, or because the attorney has never traded him/herself, and so he/she doesn't recognize the attendant risk to people who would believe that simulated trading is the functional equivalent of real trading. IB, by sponsoring the contest may be misrepresenting the material fact that simulated trading does not represent what will actually happen with a real time systems, and customers who enter the contest may be induced detrimentally rely on this possible misrepresentation, by trading their systems later with their own real money, believing that IB, by creating the contest, subscribes to the idea that simulated trading does represent what will actually happen in real trading. And if those customers suffer damages, as a consequence, then what I have just described, my friend, is the precise legal definition of common law fraud. Moreover, the people who you are targeting with your contest are college students who IB should reasonably know, will be relatively naive about the markets, so they are more likely to lose money, than traders who have experience with simulated trading systems that turn out to not work when put into actual production. PS. I have two IB accounts, and I have no problem with your firm's general performance in my behalf. On the other hand, you're not paying me for legal advice, so if you want to take a chance of shooting your toes off, be my guest.
kjkent, you're entitled to your opinion but as I'm sure you know IB tends to take a conservative approach. Our legal counsel has years of experience in the securities business and also comprises of former regulators. I assure you that they kiss up to no one and are comfortable with this contest. the contest should be a win/win situation for all involved.