Last updated on October 20th, 2019 at 11:29 am
In summary, I admire what Darwinex is doing. They are innovative as they are doing something that nobody else is. Sure, there are a few companies out there that might be trying to do something similar, but they truly stand out on some key points that I hope to explain here.
I have traded with Darwinex since the start of 2018. During that time I have faced some hurdles and I will explain them, from a traders perspective. Although I’ve been tempted to open an investor account, I have not done so and therefore I don’t feel it appropriate to discuss that side of things.
In a nutshell, Darwinex is a broker that offers several instruments. This includes Forex as well as CFD‘s. In the CFD department, traders have access to indices around the world, a large selection shares, some cryptocurrencies, and of course commodities.
The main benefit, and what makes Darwinex stand out, is that investors can put money behind a trader.
Let me emphasize a few things here. Any trader that has ever attempted to obtain licensing in order to manage funds will know how difficult that can be. In some countries, it is nearly impossible. Darwinex creates a separate asset that tracks your fund, and by doing so, takes care of all licensing obligations.
And if that weren’t a big plus point for the broker on its own, they protect the asset so that traders can’t get ripped off. What I mean is that trades are not visible which is a huge advantage. Imagine you’re with a broker that does copy trading. What is to stop a follower for investing a bare minimum amount and then taking those same trades with another much larger account, bypassing the profit share?
So far, what you’ve read here is information that you can find on other sites and even the Darwinex website itself. I’d like to talk about some of the lesser-known topics. Things I’ve discovered by trading an account with them since the start of 2018.
Can You Really Get Investment Income?
The answer is yes, very much so. However, I don’t think it is that straight forward.
To provide a backdrop, there are two different types of investments available. One that is offered internally, by the broker itself, and the other is from external investors.
Outside Investments from Darwinex
So there are a few accounts that have more than a million US dollar invested. Let me save you from doing the math. That is an income of $40,000 per year for the trader if you’re able to make a 20% annual return.
So far everything I’ve said here has been positive. This is the portion where I have a few negative things to say.
It’s great that there are a couple of accounts that have that kind of funding, but it’s important to note that most don’t. At the time of writing, there were just over 2000 traders competing in their DarwinIA contest. That means there are that many traders fighting for investment.
In that context, you really have to be in the top 1% to get good money behind you from active investors at Darwinex. That is not a simple feat, and I have no qualms in admitting my trading expertise is nowhere near the top 1%.
I think that Darwinex is trying its best to get more investors to sign up and I think over time the allocation from external investors will increase. In the meantime, there is not enough incentive, for me at least, to try and compete for this source of funds.
While I see a shortfall from outside investors, Darwinex more than makes up for it by investing their own money into their traders.
Let’s take a moment to fully grasp this. Darwinex believes in its own program so much that they are willing to put their cash on the line. This is literally putting their money with their mouth is. I’m nothing short of impressed that they are doing this, it is amazing.
There is real risk involved here. I’ve looked at some of the accounts that have been allocated funds. Not all of them make money, though a lot of them do. Either way, Darwinex exposes themselves to risk. If that is not a strong show of confidence in their own product, then I don’t know what is.
The best part is that they are continuously increasing these funds. They are very much focused on giving everyone a chance to obtain these funds too.
Personally, I am gunning for this scenario with my trading account at Darwinex. Every month you have a chance to get funded. You need a decent score, it doesn’t have to be brilliant, and you need a decent gain to get funded.
What I really like is that their metrics cap the monthly gain in terms of how much it counts for in their final evaluation. I traded with another broker before that held a month contest similar to Darwinex. They handed out money to the highest monthly gain. I always thought this was incredibly irresponsible of them as it promotes careless trading. Trading is not about the highest rate of return. It is about a risk-adjusted return. Or another way to read that, it’s about being around next month and next year and not constantly risk blowing up your account to do well in one individual month.
Also, Darwinex doesn’t just give allocations to say the top three traders. That would once again make it nearly impossible to get funded. They understand this and I respect them for it. In their last contest, they gave allocations to the top 45. I believe that will even increase in the contest this month.
Their Evaluation Method – The Darwinex Score
I have a few bad things to say about this and a few good things. First of all, the idea of creating a system that properly evaluates a traders potential is an ambitious task to begin with. It’s clear that they’ve put a lot of effort into theirs. But still, they are never going to please everyone as all traders don’t fall under the same umbrella in their strategy.
For me specifically, I’ve gotten hurt by their ‘experience’ metric. I find it a bit ironic because I feel fairly confident that I’ve been trading for a lot longer than at least three-quarters of the traders with Darwinex. But this is partially my fault. Darwinex allows you to import your trading history from MT4 brokers, unfortunately, my prior broker used a proprietary system.
The experience score tracks your trades, and for the most part, I actually think that it is a good metric. The problem that I have is that if you’re a swing trader, it can take several years to build up this score. Unlike other scores, once this score reaches 10, it will never go down. This score weighs on all other scores, in other words, you need a 10 here realistically in order to move forward.
In my case, my calculations told me that it would take me three years to get a score of 10. I found this out after six months of trading and basically gave up on the prospect of getting investment. I reevaluated after another six months and decided to change up my strategy to try and ‘fit’ their metrics better. This was a huge mistake, I had some big gains initially, but I’m not cut out for short-term trading. It’s just not me. I drew the account down from a peak of about an 18% gain to a loss of 13% in a matter of four months.
Bottom line, if you’re a swing trader, you need to be a bit patient in building your experience score. Don’t do what I do and change your strategy, trust me, it will be tempting. If you trade intraday, my estimate is that it will take you around 9-12 months to get your experience to 10. Better yet, you’ve probably traded elsewhere, just import your history and it won’t be an issue.
There is still a lot more I can write about Darwinex. I’m going to wrap here, at least for now. Maybe I’ll do a part 2 on this. But there are a few things I should mention.
- Service – The service at Darwinex has been absolutely amazing. I’ve emailed these guys a bunch of times. They always get back to me promptly, they are professional, and they care.
- Innovation – A second mention because its a big deal. I don’t know of anyone doing something like this. Also, they’re constantly trying to improve themselves. So in my books, they have my respect.
- Spreads – They are competitive. This is not something to be overlooked, but it’s not an issue with them.
- Assets – They have plenty of assets to trade. But more importantly, they are constantly looking to expand out with new products.
Every broker has its flaws and so obviously Darwinex has a few. On balance they are a great broker and the way I see it, much better than many of the other ones out there.