CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64 % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Basic questions on investing: open profits, fees and leverage

So…

Say i buy $1000 worth of HFD and in the next 6 months HFD goes up 30% does that mean i will profit $300 minus 20% commission = a profit of $240?

Say i buy $1000 worth of HFD 2 x leverage and in the next 6 months HFD goes up 30% does that mean i will profit $600 minus 20% commission = a profit of $480?

Does a darwin work pretty much the same as a stock?

Also doesa darwins price go up based on the % they profit from trading activity?

Example the darwin owner profits 30% in their trading activity does that mean that their darwin price will . raise 30%?

thanks all!

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No, you buy for $ 2000. 2 x leverage must be set to the complete portfolio before you buy and your buying power is doubled. The result you calculated is correct for $ 2000.

If you try it on your demo portfolio you can answer most of your questions from watching it. :slight_smile:

If you mean the trading account - no. The Darwin’s performance depends on the trades of the risk manager and what you see on the Darwin is the result of it. What is happening on the trading account is only the base of the trading done by the risk manger.

OK but these are details…
We know what is the true question: will future return will be the same as past return?
99.9% NO

BTW it is exactly like stocks, everyone should buy Mastecard, Apple or Microsoft, that have a spectacular 40-50% return last year , why waste time and money building diversified portfolios with bonds real estate… (ironic)

No,

you just buy Darwin for whatever arbitrary sum of money you want. the % return you make/lose from that point on is all that matters. the percentage return relative to that entry date.

It is not like shares, where you 1 share rises and falls in value

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@Muiris @CavaliereVerde @IlIlIlIlI

Hi there thanks for the swift responses guys I have another 2 questions.

Could you explain open PNl and close PNl?

What exactly is closed PNL is that the profit and loss from the day before? And open PNL is the profit and loss from today?

Question 2

Say I have £10,000 in a Darwin, and that Darwin increases by 5% in a week, where does the 5% profit that I gain go? Does it appear in my accounts available to invest? Does it get added to the £10,000 investment in that Darwin?

Do you only gain your profit once you sell a Darwin?

Thanks!

I suggest you to try with a demo for some months, there is no quick profit with market and investments so there is a plenty of time to experiment.
Just buy 3-5 darwins that you like and after 4 months everything will be clear.

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Good advice from @CavaliereVerde. The Darwinex Platform is very different to many other Investment Platforms, and counter-intuitive in some ways.
For example; you will not find units bought or sold in the same way as shares or collective investments. Also there is no indication of the current value of a holding, only the current profit or loss.

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Also eToro works with amount+open profit/loss .
You open an investment on a trader/stock/ETF and you have your invested amount ± profit/loss.

Then if you want to consider the profit/loss real only when it is closed it is more a psychological subject.

This is just a way to display numbers.
What really matters is picking stuff that will grow in the future and that is the difficult part, where 99.9% of people fail.

I would suggest you start thinking about how much you could lose in a week.

Sorry for another question but I don’t know if my brain just isn’t working but there is something that I don’t quite understand.

Say I invest £10,000 in a Darwin, and after a day that Darwins price goes up by 1% that means (ignore. Fees for now) that I have £10,000 invested and a profit of £100

If I am aiming to compound my capital gains I don’t see how this is. Possible without selling the Darwin and reinvesting using the profit, is this the only way?

For example if I don’t sell the Darwin I would only still have £10,000 invested and not £10,100 so if the Darwin went up another 1% I would still only earn £100 not £101?

I guess what im getting at is what happens to the profit, is it added to the investment or would I have to sell the Darwin and buy it back to add the profit to my investment?

Cheers, again im sorry for been a pain!

Quote compounds automatically but if you are investing leveraged the open profit is not leveraged so you need to sell and rebuy, it is like rebalancing a porfolio of ETFs , you can do that annually.
BUT you are going too far my frend, FIRST you need to build a portfolio that grows and this is the difficult part, everything else is a nuance.

And please dont ask the same stuff on more topics! THANX :wink:

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I will try to answer your questions with an example.
Say you buy £10.000 with no leverage (you can have the possibility to invest £20.000 if you have £10.000 in your investor account) in a Darwin at a quote of 100.
Say that in 2 years that Darwin has a quote of 200. So you have £20.000 Equity in your investor acount. From those £20.000, £10.000 are profits and another £10.000 are your original investment in the Darwin.
Now next month the Darwin has a quote of 220. This would represent a 10% increase from the 200 quote BUT a 20% increase from the 100 quote (remember that you invested in the Darwin at a quote of 100) so you will have a new profit of £2.000 (20%) because you bought at a quote of 100 not 200.
So I will say that it compounds automatically…
Now lets look at same example with a leverage investment.
So you have £10.000 in your investor account. You take advantage of the 2x leverage and invest £20.000 in a Darwin at a quote of 100.
In 2 years that Darwin has a quote of 200.
You will have an equity in your investor account of £30.000. £10.000 would represent your original equity and £20.000 would represent your profits. (you invested £20.000 and as Darwin doubled its quote, your investment would have also doubled). So you would have profit £20.000 with £10.000 that you deposited in your investor account. That is 200% profit. With no leverage you would have gain 100% but as you invested with 2x leverage you get 2x100=200%
Now imagine that you sell and buy back to keep taking advantage of the 2x Leverage. You sell £30.000 and now you can invest £60.000 with the 2x leverage. So you have now invested £60.000 in that Darwin at a quote of 200.
Now you will have an equity of £30.000 and an investment of £60.000.
Say that In a month that Darwin has a profit of 10% so its quote will be 220.
Your new profits would be 10% from £60.000 (and 20% from your equity of £30.000 because of the 2x leverage) so you will have a new profit of £6.000.
I hope this example clarifies all your questions. If not please ask your new questions :grinning:
And as other colleagues in the forum have told you, please take it easy if you are new to the platform go step by step with no rush.
And also take into account that if you take the 2x leverage, your losses would be 2x higher in case your invested Darwin has losses.
In the example above i have simplified and i have not taken into account the 20% performance fees you would have to pay.
Best regards.

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Hi, sorry for what could be a very basic question but I was wondering if the profit I make from a darwin add up to the invested money, in order to have a compound interest.
Otherwise every now and then I’d have to sell, get the cash, and then buy again.
Thanks

Hi, short answer is yes.
For a detailed example please read this post
Best regards.

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@CavaliereVerde Got an update on leverage from Darwinex and they said that profit is re invested and re leveraged please see response.

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