- What are the steps to open an investor account?
- Can I test the product before investing for real?
- Can I open more than one investor account?
- What is a DARWIN?
- How do DARWINs work?
- Can I buy / sell DARWINs immediately?
- Does Darwinex recommend strategies to investors?
- What does it mean if I see a 'Migration date' on a Darwin's graph?
- How risky is a DARWIN?
- What happens if/when a strategy takes too much risk?
- Who manages DARWIN risk?
- What does a DARWIN´s list price indicate?
- What is divergence?
- What is a risk adjustment?
- How do I check my account´s balance?
- What is the lowest / highest amount I can invest in a DARWIN?
- Can I check my DARWIN´s live trades?
- Is it necessary to sell and re-buy a DARWIN to reinvest profits?
- What does Maximum risk mean?
- What is the most I can make/lose?
- How does Darwinex control trading risk for investors?
- Why does Darwinex recommend me a maximum risk?
- Can I change my maximum risk parameter?
- What are DARWINs maximum risk?
- What are the underlying assets to DARWINs?
- How are investor trades executed?
- What spreads are investors charged?
- What is the trader to investor latency?
- Do all investors buy/sell at the same price?
- How much does the service cost and how does Darwinex make money?
- How and when is performance fee charged?
- Why is a performance fee withheld before quarter end?
- What is the Swap charge?
What are the steps to open an investor account?
You open an investor account by:
1. Creating a Darwinex account
2. Going to your Dashboard -> Real Investor Account -> Open Real Account
2. Filling in a questionnaire in which we ask you to provide us with personal information and will also ask about your experience investing in complex assets and your capacity to take financial risk
3. Providing us with:
- A copy of your valid ID or passport
- A recent utility bill to verify your current residence
Can I test the product before investing for real?
Yes - actually we recommend that users familiarize themselves with the platform before funding their real account.
Demo functionality is comparable to real functionality - however please note that demo performance will be slightly higher as the effect of slippage is ignored.
Can I open more than one investor account?
You may open one live and one demo (virtual money) account.
What is a DARWIN?
A DARWIN is a financial asset based on a strategy traded at Darwinex.
Investors buy and sell DARWINs just like they trade stocks, funds, etc. DARWIN stands for Dynamic Asset and Risk Weighted Investment.
The DARWIN's risk is managed by Darwinex at a monthly 20 % VaR (95 % of confidence).
This webinar explains the difference between a DARWIN and its underlying strategy more in depth:
How do DARWINs work?
Every time a DARWIN´s underlying strategy places a trade, Darwinex places a trade as well in that asset on behalf of investors in that specific DARWIN.
Investors in a DARWIN replicate the underlying strategy at a 20% monthly VaR .
Can I buy / sell DARWINs immediately?
Yes, you can buy/sell DARWINs anytime.
Does Darwinex recommend strategies to investors?
Darwinex independently rates strategies with algorithms, and publishes its assessment for investor information.
Algorithms search for attributes that correlate with the long term performance by investors in that strategy´s DARWINs.
Algorithms grade from 0 (bad) to 10 (good) on 6 investable attributes - on a fully objective algorithmic assessment.
Investors are free to pick DARWINs on the basis of their own assessment of the investable attributes, or any other of the statistics supplied.
Please note that the Darwinia ranking is NOT an investment recommendation for investors.
What does it mean if I see a 'Migration date' on a Darwin's graph?
It means that the Darwin was created on top of a strategy that was migrated from another broker.
We recommend waiting a few weeks after migration before investing in these Darwin.
How risky is a DARWIN?
DARWINs are managed at a 20 % monthly Value at Risk (95% confidence level).
Statistically, this means that a DARWIN can lose 20% (or more) in a month once every 20 months.
As a reference, one DARWIN is approx. twice as risky as a stock in the S&P 500.
What happens if/when a strategy takes too much risk?
If strategies take abnormally high risk in any given trade (either on trade open or throughout a trade´s duration), algorithms protect the DARWIN investor with partial/total trade closes.
Further, the strategy´s risk management assessment is penalized.
Who manages DARWIN risk?
Traders manage risk and Darwinex supervises them to automatically step in whenever required.
Assessment algorithms reward strategies managing trade/position level risk predictably.
In addition, Darwinex controls leverage for ALL investor trades. Whenever trades for a strategy exceed a leverage threshold, Darwinex will either open the trade for investors with less leverage, or partially close trades, or both.
What does a DARWIN´s list price indicate?
A DARWIN´s list price reflects its profitability since inception, starting from 100.
List prices are updated every 30 seconds based off the market price of the assets underlying the DARWIN at that time.
What is divergence?
Divergence tracks the combined difference between trader and investor performance owing to the fact that DARWIN investors replicate original strategies with ms of delay and higher investor (trade) volume.
The time delay generates random discrepancy because markets move for and against DARWIN investors in the time interval lapsing between the original trade and the investor trade.
Volume divergence works systematically against investors. Even if DARWINs invest in very liquid assets, placing trades with millions of USD moves the asset´s short term price against investors (prices go up when investors buy and drop when they sell) as investors “wipe” the market´s available liquidity.
Further, a very small part of divergence can be due to the Darwin having a base currency different from investors' account currency.
What is a risk adjustment?
Darwinex independently adjusts a DARWIN´s risk within a narrow tolerance band.
Darwinex´s risk adjustments introduce divergence between a trader´s performance and that by investors in his DARWIN.
Risk adjustment tracks this divergence. The bigger the need for Darwinex intervention, the higher the risk adjustment penalty applied on the original strategy.
This way, we incentivize DARWIN providers with long term risk management for investors.
How do I check my account´s balance?
You may monitor your investment from your portfolio page.
Among other things, you may check your liquidation value, open and closed P&L, as well as applicable performance fees.
What is the lowest / highest amount I can invest in a DARWIN?
The minimum investment amount in a DARWIN is 200 EUR / USD / GBP.
The maximum amount is 100,000 EUR / USD / GBP per investor. However, should an investor be interested in investing more than 100,000 EUR / USD / GBP in a specific DARWIN, we’ll be happy to review their case and increase their limit.
Our priority is for investor performance to closely replicate trader performance. This is why we close DARWINs to new investment whenever divergence proves excessive.
Can I check my DARWIN´s live trades?
No, we never disclose a DARWIN´s live composition.
This would allow investors to copy strategies and enjoy their performance without paying traders, thus scaring good ones away from Darwinex.
This restriction does not apply to historical trades, where the global trading patterns of each DARWIN are transparent for investors.
Is it necessary to sell and re-buy a DARWIN to reinvest profits?
This is not necessary. As long as your investment in a DARWIN is open, the Open P&L of this investment gets automatically reinvested. In fact, if you sell and re-buy, Performance fee gets immediately retained and you won't be able to reinvest the whole P&L of your investment in that DARWIN.
What does Maximum risk mean?
Maximum risk is the measure describing risk appetite for Darwinex investors.
Risk is described by 3 sources of uncertainty:
1. Time horizon: how far into the future are returns projected?
2. Probability: how likely is a gain/loss at the projected time horizon?
3. Win/loss: how big is the investor win/loss, likely to be in the future?
A Darwinex investor´s maximum risk describes 5% likely gains/losses achieved by holding his investment 1 month into the future.
For example, an investor picking a maximum risk of € 1000:
a. Limits the probability of making/losing more than € 1000 to 5% in a month, or
b. Won´t make/lose more than €1000 more often than 1 every 20 months, over a statistically significant average.
What is the most I can make/lose?
This is individual to every investor, according to his choices when:
1. Picking his maximum risk parameter
2. Configuring his DARWIN portfolio
Either way, the probability that one-month gains/losses exceed the user´s chosen maximum risk is anchored to 5%!
How does Darwinex control trading risk for investors?
Our algorithms monitor real time whether every individual trade conforms to its historical risk pattern, given the prevailing market conditions.
Monitoring covers a trade´s full lifetime, including at open and throughout its evolution as long as it´s open.
Excess risk is NOT replicated by DARWIN investors - rather risk is taken in line with historical patterns, i.e. investors copy such trades with less risk.
Further every risk adjustment by Darwinex is tracked, penalizes the trader´s risk assessment, and is transparently disclosed for investor information via the risk adjustment parameter.
Why does Darwinex recommend me a maximum risk?
For practical, moral and regulatory reasons.
Investors risking more than they´re psychologically prepared to suffer loss aversion. Loss aversion is a cognitive bias whereby investors sell investments when losing, thus not recovering when those eventually recover. This makes them lose systematically.
DARWINs, just like any other investment, carry risk. Morally, we don´t want investors to face losses they can't bear financially.
Further, we fully endorse the FCA´s TCF (Treating Customers Fairly) focus on fair outcomes for customers - and our risk management approach is designed to achieve fair & transparent outcomes for consumers.
Can I change my maximum risk parameter?
Recommended Maximum Risk is set as a function of an investor´s financial circumstances - namely their income and savings.
Any changes to your circumstances ought to be updated in your customer profile, and may result in an updated Maximum Risk recommendatyçion reflecting your new circumstances.
E-mail firstname.lastname@example.org if you'd like to change your parameters.
What are DARWINs maximum risk?
DARWINs are managed at a 20 % monthly Value at Risk (95 % confidence level).
Statistically, this means that a DARWIN can lose 20 % (or more) in a month once every 20 months.
As a rule of thumb:
- one DARWIN is approx. as risky as a volatile stock in the S&P 500
- a portfolio of DARWINs is approx. as risky as a stock index (e.g. S&P 500, FTSE 100, DAX 30)
What are the underlying assets to DARWINs?
As a general rule, DARWINs are based on sufficiently underlyings liquid enough to absorb investor volumes without excesive performance penalty.
You may check currently approved underlying assets here.
How are investor trades executed?
Investor trades are executed at market or “best price” - immediately after a trade by their chosen DARWIN portfolio strategies is confirmed.
Darwinex aggregates its liquidity from several inter-bank counterparties, and our incentives are aligned with investors to minimize the spread & slippage in investor trades (investor spread is a cost to us).
What spreads are investors charged?
We source the best available spread from the market at all times. You may independently verify our execution prices here.
What is the trader to investor latency?
We measure and monitor latency from the point where the original trade is confirmed until DARWIN investors are filled.
You may check this in the "divergence" section for each individual DARWIN.
Do all investors buy/sell at the same price?
Yes. All simultaneous investors in a given DARWIN trade at the same price.
Whilst investor volume might be split in sub-trades to optimize fill price and time, our software averages out execution price for all investors in any given DARWIN.
How much does the service cost and how does Darwinex make money?
Investors pay for 2 concepts:
1. trading commissions: as a % of total volumes traded
2. success fees: as a % of their profits, NET of all execution costs
Both traders and investors trade on institutional bid/ask levels they may independently verify here.
Our asset manager retains a 20% success fee from quarterly profits net of all execution costs, for every DARWIN, for every investor.
How and when is performance fee charged?
Performance fees accrue quarterly, on a DARWIN´s high-watermark net of all execution costs. The high-watermark is investor and DARWIN individual.
This example illustrates the approach. Investor A buys DARWIN X on January 1st for 100, and holds on to it until March 31st, when the DARWIN trades at 110. He pays:
He pays (110-100) * 20% = 2 Euros success fee
He profits 110 - 2 (performance fee) -100 (initial investment) = 8
Why is a performance fee withheld before quarter end?
Should you choose to withdraw funds from Darwinex before quarter ends, you would owe part of your profits as part of the success fee.
Performance fee is withheld to provision against payable performance fee before withdrawal. Any losses before quarter end are partially credited back from the provision so that investors only pay on actual success.
What is the Swap charge?
When holding on to positions for longer than a day, investors borrow a currency (on which interest is payable) to invest in another (on which they earn interest).
Net interest is settled daily end of day for the difference between interest paid and earned.
Swap settlement is positive whenever interest earned on the invested currency exceeds interest on the borrowed currency - the investor gets paid.
Swap is a cost whenever the opposite is true.
Darwinex passes its inter-bank funding costs on to customers without mark-up.