Part 1 – what is a crypto tournament?
Tournaments are a relatively new format to crypto. The definition of what a crypto tournament is, is in itself pretty vague, and open to interpretation. So let’s try to clarify that, and introduce you all to one of the most exciting and lucrative new trading niches!
A lot of times I hear trading tournament or crypto tournament used in a way that I consider improper : most of the times is some incentivised volume competition, which tends to cater to whales only, and is used to bring liquidity to a newly listed asset. Nothing wrong with this at all, and some of these are actually quite lucrative and might deserve a separate guide for them, but this are not tournaments properly intended.
By crypto tournament, we intend a Trading Competition with a fixed buy-in, usually held by an exchange, where as well as the actual wins/losses of each unique trade, you have a prize pool distributed on top of it proportionally to the best performers. So you have a winner that gets the lion’s share of the added prizepool, and then usually top 10% of the field shares the rest. More importantly, you tend to have like we said a fixed buy-in and an equal starting stack, which levels the playing field. And finally, they tend to be ROI ( return on investment ) based. As in : whoever makes the highest return on investment in the predefined amount of time wins. Usual timeframes are daily, weekly and monthly
So, the concept is pretty simple, but why should you be interested ? Well, quite a few reasons, actually.
For starters, it’s an amazing and relatively inexpensive testing ground for your trading skills. Usual buy-ins are around 100$. Some are as low as 10 bucks. And for that amount you get to compete on a levelled playing field versus some of the best traders in the world, all starting with the same stack. On top of that, technically you are not forced to take any trade at all if the situation doesn’t look profitable. So the extra prize pool is basically a freeroll.
All that being said, you’ll want to trade, because of course the value is in the added prize pool. Yes, you read that correctly, added. The vast majority of exchanges simply adds those prizes as a bonus, and as an incentive for traders to choose their platform. The more asymmetrical this prize to stack ratio is, the more aggressive it makes sense to be with your stack. But we’ll get to that in part 2 of this series, when we’ll talk about strategy.
Finally, there’s the gamification element : Tournaments are simply a lot of fun ! Climbing the ladder, and going head to head with some of the best in the world during the final minutes of a competition, where every small percentage on every little trade matters is pure adrenaline. Having a definitive win – bragging rights and all – will be morale boost, but also a real testament of your successes as a trader. In such an impermanent line of work, it’s a great way of keeping score. Money per se Is not the all inclusive motivator for some, competition matters. This is all accentuated in Team Tournaments, which we will discuss extensively in part 3 of the guide.
And finally, it will make you a better trader. Having a predefined timeframe, with a limited asset array – Bitcoin and ETH usually – will tend to remove all bias, focus your mind on price action, on the chart. It’s distilled trading in a competitive metagame – it’s not just you in a vacuum, you are adapting your strategy to what others do. Depending on who is ahead or behind you and what they are doing – usually openly and simply displayed – will influence your every decision and add a layer of complexity and psychology to the game. Most tournament grinders ( that’s what an habitual tournament player is called ) I know became much better in all aspects of trading as a result of this.
To bring all this together and clariy, let’s make a concrete example. We’ll start with the weekly tournament on Interdax, an up and coming exchange that focuses on tournaments, providing daily opportunities for grinders. You can read this exchange’s review here and get the best fee discount on the market : those do tend to add up quite a bit if you play tournament regularly.
Here is the tournament’s interface, pretty Cleary displayed. At Cryptocube we have a Tournament resources section as well as a tournament calendar if you want to dig deeper and always stay up to date with all the action !
Up top you see the buy-in, 0.1 BTC in this case. By clicking register, that amount will be “invested” in the competition. A sub account just for the battle will be created, and you’ll simply start trading BTC normally. Any win and losses, will be normally calculated, and you’ll keep/lose them when the competition is over.
Next to the buy in you see the prizepool – 0.25 BTC – which is added for free by the exchange. This is where the value lies. On top of your winnings and loosing, the top 3 players, based on ROI will share that prizepool.
And here is the live view of the battle. There are only 12 players competing in this battle, with top 3 sharing the prizepool progressively : 0.14 btc for first, 0.07 second and almost 0.04 for third. Again, ON TOP of your winnings. As you can see, with 25% of the field getting a prize, and with prizes being so asymmetrically important, there is a lot of strategy involved. On the right, you also see all of your opponents names, their ROI and if they are currently long or short, adding to the metagame element we mentioned before.
Moreover, as I’m sure you are wondering while running these numbers in your head : yes, you are early. Fields won’t be this small forever, nor this soft, with free prizes simply added. There is literally nothing to lose, only extra money to be made if you are going to trade BTC anyways. Team competition are even bigger and more fun, with the recent Binance competition totalling a whopping million dollar prize pool!
We can’t wait for the next one, and Cryptocube will always have it’s own team competing. You can join us for free here on the telgram and on the dedicated ( tournament only ) mailing list.
Allright, now that you are getting excited about this, it’s time to hone your skill, and prepare an appropriate winning strategy. We’ll talk about this in the second part of our tournament guide.