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COULD "Promising" DARWINS BE USED IN A SIMILAR WAY AS "hot stocks” IN AN INVESTMENT PORTFOLIO?

Can "Promising" darwins be used in a similar way as "hot stocks” in an investment portfolio?
If so, Can ten picked “promising” darwins out-perform my “Trade what I see” darwin MLT?

I am trying to compare my darwin performance with the closest thing to my trading philosophy which I call Trade what I see in darwin investing by selecting darwins in the Promising category.

The thought process is quite simple, how can a person like me without much exposure in portfolio management get a foot in. How can I take advantage of the tools so kindly provided in the platform and use them similarly as many stock investors use stock scanners?

I believe filters such as promising and I also suspect that both on fire and trending filters in the investor platform, can all be applied in the same way as stock scanners are applied to filter stocks that are shining in the most recent market cycle.

Conditions for entry into the portfolio.

Pick the first ten listed darwins with the highest D-Score at the beginning of each month in the Promising category.

Rules to keep them in the portfolio:

Darwins must must be kept in the portfolio for a minimum of one calendar month.

Exit rule:

If by the end of each month, a darwin in the portfolio is no longer part of the promising category top 10, the darwin is then dropped and replaced by another that is now part of the top ten in the list.

What are my expectations?

To find out whether by picking Promising darwins in the end of the month, a portfolio can actually grow.

To measure how effective my “Trade what you see” trading idea compares against darwins which best represent changes in the market month by month.

To experience portfolio management for the first time and to help me build an investor mindset.

I will keep updates on perfomance by the end of each month.

Thank you for reading.

So far out of curiosity, backtesting is showing a tie at around 7% return since January!.

I

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good luck with your experiment

Or you could just choose the top 10 AUM and hold for a year

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Backtests are the past, and “Promising” looks to Performance score that looks to the past, so Promising will always produce a good backtest, just like high Return… high Dscore… Good Scores… what you want…

“hot stocks” is more like “on fire” filter, the problem is the same, often shining stuff of the last market cycle rust on the next market cycle.

BTW if you are making money with an “hot stocks” strategy you can try to invest hot darwins.

Trade what you see or trade what the others wants you to see ?
Traders and brokers show you always the above average stuff to convice you to invest and earn easy money.

A significant result had been forward testing Promising top 10 visible at the beginning of January.

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That is the obvious choice I suppose, but even that it does not guarantee profits, nothing does!
but for the sake of the experiment I am trying to measure my new darwin with the upcoming stars of tomorrow and not with already established ones.

Thank you.

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Hi,

Judging from your fedback, I am realizing that to invest in darwins successfully it’s definitely another skill set that one needs to develop. I am quite familiar with the platform but have never paid much attention to the investment side - I was far too obsessed with learning how to trade. At the same time, in the back of my mind I had always thought that when the time comes I would just select the best darwins of a particular category and then boom! make great returns. It is clearly not as easy as it seems, afterall we are all great investors when backtesting, so you made a good point here.

However, key to self development is to know one owns limitations and work with what is best available. I´d like to think that the mathematical formula used to work out which darwins make the cut to top the list of these filters, are way more reliable than the naked judgement of a new investor, I mean the word “promising” which is really saying “may be so” says it all I suppose.
The other reason why I want to carry this experiment, is to find out whether “non tech savvy” investors really have a chance as investors, because quite frankly a lot of the technical jargon in platform can be a bit complex at times, it feels like in order to drive a car you need to acquire the knowledge of a mechanic, so those filters I think make the platform a lot more user friendly.

Only time will tell, I will keep you posted.

Thanks for your reply, I appreciate.

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It is not so easy as it could seem, by the way your idea makes sense, I would call it momentum investing, you bet on the continuation of a good run.
As investor I am more for value: buying low robust stuff.

Here you can find another experiment of turning a filter into a rotating portfolio:

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This is a much more precise description of both strategies, the portfolio and MLT.
You nailed it, thank you.

I found it really interesting!

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I would say that you don’t need to be a mechanic to be a good car dealer but a driving license is not enough.
It is a business and to make money with a product/business you need a deep knowledge of that product/business.

Just for you to know, we did exactly that experiment with a demo account in www.darwinizate.com, and having a Leverage x2 as investors, these were the results we got with exactly the system you just defined, @CherryPicker

We had some months were we couldn’t invest in THA as it was closed, so we entered the 11th Darwin with higher Dscore.

Besides, every end of month we sold the entire portfolio so we could buy then those 10 darwins with higher dscore with the same amount of money in each of them. Otherwise, as you keep droping and entering new darwins, amount invested is not similar, which can clearly make your results random.

Regards, and I will follow this thread to see if results differ from 2018. Right now, we can consider we have more and better darwins in Darwinex than some months ago.

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It´s disappointing to see that a similar experiment didn´t go too far. :disappointed:

However, many of the most valuable darwins today have had a negative year in the past. Let´s pretend my experiment is another twelve month period into the experiment.

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I completely agree, a good degree of knowledge won´t hurt anyone but where is the limit?
This business is a lot more peculiar than most businesses. Expecially when managing a portfolio of darwins (which is a bit like betting on human behaviour!!), in which you are limited on how far deep you can really go with your knowledge. I mean most people don´t really know themselves!.

I certainly will avoid at all cost getting into a situatioin where analysis paralisys becomes an issue when selecting darwins for a portfolio.

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I am not saying investing and rotating a filter is a bad idea, it is a bit like trading with moving averages, to make money you have to work on it.
Darwinex provides us hundreds of numbers, we have to understand what really matters and what doesn’t.
Like a car dealer doesn’t know every number of his cars, only the important ones. :wink:

You have to find a way to beat randomness and noise, nobody knows the right filter and the right rotation timeframe.

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“If it were easy, it would have no value.” - Bill Toomey

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