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Darwin portfolio management: narrow the selection and/or invest short term

Probably the person who has spent more time trying to find a formula to invest on darwins is @CavaliereVerde. He said he has being doing it for 7 years, and still he hasn’t found the way to be profitable. So, or he is doing everything wrong or it is not possible or almost impossible to make a profitable portfolio of darwins.

I have an opinion about it, and repeat, I have an opinion, nothing else.

I think it is not possible to make consistent profits investing long term on the current darwins if you pretend to make it the traditional way of choosing a wide amount of darwins. Why? There are not enough darwins with long, solid and profitable track record, plain and simple.

In Darwinex 99% of darwins are like start ups, would you take 10-20 start ups to invest long term? No, of course not.

So, what are the options? Narrow the selection and/or invest short term.

Long Term: you can choose 2-3 darwins like THA or ERQ…and stay for some years not matter what (at least they change the trading behavior) or…
Short Term: you can choose a couple of darwins like CIS using SL, and TP, so when you have a nice profit you get out (if CIS stay this way for several more years, he will be another THA).

Is it possible that THA, ERQ, etc…lose money? Of course YES, it is, but probably they will make money in the long run, so you’ll.

It is possible CIS has a sudden DD, yes, it is…that’s why I said to invest short term and using SL and TP.

The darwins mentioned on this post are not necessarily the ones I’d pick, but they represent the examples perfectly.

My two cents.

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@Forexintradiadarwin I hope you don’t mind having moved your post into a new topic, I think it’s worth its own discussion. Very interesting.

There’s also this other topic on long vs. short- term but maybe too old to continue discussion there.

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No problem at all! Thank you.

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I agree with narrowing selection. I have a filter I have been running for a while and it is starting to look good. 5-10 darwins (never had 10, 6-7 usually). Monitored monthly. It is still less than a year old, but at least it is not a losing one. I’d like to see how it ends by December.

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A post was merged into an existing topic: {Video Series} Algorithmic Backtesting & Optimization for Alphas

Iam not a fundamentalist of diversification. :smiley_cat:

I am here to make money and if I were really convinced that it is more easy to make money investing 3 darwins instead than 10 I would invest 3 darwins.

It is evident that finding 3 good darwins is more easy than finding 7 or 10 .
The point is ho much informations do we have about those 3 “best” darwins?
Are those 3 really bullettproof?
Would you trust those 3 guys with all of your money?
This is the point, I ma looking for a portfolio that is robust enough to receive potentially all of my money.

You violate the basics of diversification with this: don’t put all your money in the same asset class.

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If you’re using number of investors you are always running behind the herd :ram::sheep::sheep: and should not complain if you see only as**s. :wink:

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Yes everyone thinks to be smarter than the crowd.
I never said that following the crowd is the best but at least it is not a losing idea, if I am at break even after one year it means I have beaten commissions spreads and swaps.

Stock indexes follow the herd and make money while 90% of portfolio managers with their smart ideas do not beat the indexes.

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Unfortunately that’s only part of the truth because they follow more the price (market capitalization) and the stocks in it have a benefit by increasing prices by demand which Darwins have not.
Against stock investors the investors in Darwin’s have more a disadvantage by demand called divergence.

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My opinion is that a higher number of Darwins is better if you know what you are doing and if you think you have the necessary tools for a wise choice.

Following a very generalized concept.

Around 80% of traders lose money.
If we consider the long period, probably we could say that around 90% of traders lose money.

This leaves you with 1 Darwin out of 10 making money here.
Say that we have 2000 active Darwins, you have 200 Darwins that are profitable in the long period.

Maybe we can easily remove some losing ones from the list, with hard filters:

  • Drawdown above xx% (above 50%, for example);
  • Losing money in the last 2 years;
  • Divergence above a certain level.

Say that now we have 1000 Darwins, with 200 good ones in that group.

Without applying any other filter and without considering the level of expertise of the investor, every time you pick a Darwin, your chances to pick the wrong one are quite high, 4 to 1.

Also, consider that when you pick the wrong one, you usually lose a considerable amount of your investment, that needs time to get back through other profitable Darwins.

It really takes a good investors that knows how to discern a good trader from a bad one to build a profitable portfolio, otherwise you might just choose one or two Darwins, without diversifying, and hope for the best.
Since the odds seem to be against you, if you don’t think you have the necessary tools to filter to create a good portfolio, your chances to be profitable seem higher when you choose a lower number of Darwins.

Right now, I find myself in the second category. If I had to invest here on Darwinex, I’d rather choose one or two Darwins at most.

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I we consider a significant sample of 3 years I think 99% lose money. :wink:

We still have 20 alphas to find and probably 15 of these 20 are not so visible.

The point is that with 5 you cannot be wrong.
From uncorrelation studies 7 is the sweetspot, 10 give you more safety from a collapse.
I agree that more darwins means higher probability of a wrong one but you are not safe with 5 and neither 3. I saw different fallen “gods” in 4 years of investing.

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The problem is that correlation is not shown but on portfolios where it is shown very volatile. If you use your only demo portfolio for that you cannot test an investment strategy which is hazardous - and can be a reason why a high percentage of investors lose money.

Unfortunately it is not only one, but 40% on a three months period and their losses eat up more than the profit of the rest. My experience with my demo portfolios.

Obviously, you are better suited than me to try to find the good ones.
I was just saying that when we add a filter, we remove some bad ones from the list, but we can potentially remove some good ones too.
We have 1980 bad Darwins and 20 good ones? You add a filter with certain number of investors? Maybe you wipe out 200-300 bad ones, you might also wipe out 1-2 good ones.

You and some others, right now, are probably good enough to build a successful portfolio. For me, and I believe many other people, it looks like odds are in favor of losing money, rather than earning it. If we also consider that you don’t get commissions back from winning Darwins when you are losing on other Darwins in your portfolio, it is currently extremely difficult for me to think of building a successful portfolio.
That is the reason why I think that, at the current state, for many beginner investors, it would be better not to diversify that much.

In any case, I see some good posts in the other thread about re-branding, plus I’m sure some other good traders are joining (although maybe some others are leaving because their voice is unheard). Maybe it’s just a matter of time before it gets easier :slight_smile:

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I have TWO different complex and customized filters that leave me with less than 30 and than I go for a dicretional exam of the trading journal.
Last but not least a dicretional evaluation of the trader using this community and external sites.
I am not “investing forex” , I am investing people… :wink:

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That is why I say you are suited for this job, not me :wink:
I don’t have complex filters. My only two filters are:

  • Analyzing candlestick charts;
  • Pray.
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That pure social trading, Darwinex wants to be more

This is not social trading, this is how the world works.
If I am here it is because I trust Juan Colon.
When I buy PLF I am trusting Ali Saif .
If I buy Tesla I am trusting Elon Musk.
Warren Buffet trust the manager of the companies he is investing.

People makes the difference ALWAYS , everything else is a detail.

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Everybody buys only with confidence.
Can you imagine that there are differences between

  • Forex and stocks?
  • the informations you have and Buffet has about his investment ?
  • between your portfolio and the unpublished one of @juancolonbo?
  • between trusting someone and making money with him?

I respect your opinion, but I don’t see an extraordinary point of view in it to make money with it.

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I am going to change your sentences for others more suitable for business (IMHO).

I am here because I trust Juan Colon’s project and the opportunity that his business offer to people like me.

I like PLF behavior and performance, I invest PLF because it is a solid asset.

I love Tesla technology, I love Tesla’s cars, its performance, the low maintenance, and I believe in green energy too. Elon Musk is a genius, but even if he leaves the company (it happens everyday in big corporations), I trust the company.

Warren buffet knows most things about these managers life and past decisions, behavior, standards, results…etc. In many cases he even meets them personally in a dinner or private meeting.

People makes the difference, I agree with that. But I also know I have to separate feelings from business. Also, it is not the same to associate someone to invest in a business. Business is business, when you mix feelings and money, often times you lose the impartiality and your thoughts are biased.

However, the point here is not who you or me trust. This thread is about narrowing selection and/or invest short term. Regardless the way you pick your darwins, with the current options is it better to pick a couple or three solid darwins or still is safer to gather 10-20? What about riding a hot darwin for a while and get out as soon as you get some nice return?

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