There are inherent pitfalls of social trading signals against traditional investment structures I am afraid. One of them is that a mandated professionnal money manager will not leave over its customers and run away overnight while quite some Darwins pilots will do so.
Some argue that a trading volume remuneration like happening at ZuluTrade is pushing traders to act unruly and that may be a real concern. However the HWM performance fees also have their counterside evil effect especially on young Darwins which sums up in the fact that when you are making a drawdown and escaping from the HWN, knowing that you won’t make a dime anymore for a couple of weeks or ever, it is easier to just drop the Darwin and start a new one or switch to an adjacent one which you already own. That happens quite a lot and I figured it out by looking closely at the DarwinIA results over time but this must he a broader phenomenom. On the other hand, when you are paid on commissions only, after a 50% DD, you can continue to trade and make money on your past investors (not only on new ones with the perf fees) so your investors can fear about your ability but not your will to fix it the next day.
On Darwinex though, I have seen too often times Darwins ceasing all trading after sometimes a not so unshamefull DD of -20%. Since Darwin pilots do not have a written contract with their investors they can come and go as they please and that is plain wrong for the investors to face all those unprofessionnal behaviors.
After a huge DD or max DD, an investor needs to know if either the trader will resume operations in order to retrieve the loss (so if staying invested is an option), or even to catch an opportunity to enter the Darwin at this very time. Failing to realize a proper judgement on the Darwin’s future control can only create a secondary psychological loss and financial complication for the investor if he feels “given up”
In futures trading, at most brokers, if you don’t monitor your maintenance margins, be it intraday or overnight, and you get a margin call then margin cut, then you could be charged a fine. If you repeat such infraction which shows risky behavior to the risk departmenent (whether it is automated or not), you will be charged a higher fine and so on. This way to train the clients is the good way to educate them : fault > punition. That’s what you deserve in some cases.
Well, at the risk of shocking, I am asking Darwinex to punish Darwin owners who act without responsability to their investors.
Say for instance, that the Darwins did not warn after 10 days the investors that it was the end of their Darwins and/or they did not put themselves in hiatus/holidays mode, then frigging fine them 50 €. Second time it happens, 100 €. And make it clear in an announcement aka ruleboard.
Or else, do not pay them past performance fees they are due. Put the fees payments on hold until they indicate their future intentions on running the Darwins.
Please think about something along those lines. Investors are in on a too neutral market place at times, populated by non managers (wannabees) for the most parts. An investor cannot lose money then lose weeks of time being “in the blue” because time is money and sometimes more important than money itself.
In this topic and some others, Darwinex imho needs to show some degree of responsability higher than the one its contributors will be lacking. More rules to fill the gap between with professionnals. Unexpected behavior should not be tolerated too much on social trading sites if consistent confidence is to be achieved