I’m sorry I’ll be critical again. My aim is to give constructive remarks. If I wasn’t loving Darwinex, I wouldn’t be so upfront sincere.
Initially, I am quite concerned that the indices are treated more inequally than the forex :
indices not supported by the FIX trading API atm, which doesn’t help to approach developpers for an integration of the Darwinex line (partial interest instead of full). The availability of ZeroMQ may appear as a compensation that makes up for forgiveness but alas cannot be considered as a substitute. There are well established vendors who will only work from one standard to streamline support within an existing product and that is FIX. If we’re down to hybrid bridging towards MetaQuotes, instead of coding something special from scratch (ZeroMQ), people can use futures platforms+feed, even simulated, on a MT5 futures account w/ dual login from CQG that permits to trade multiple platforms at the same time, then use a local copier between MT5 futures and MT4 FX-CFD. That’ll require minimal work and provide by default a very advanced and flexible experience, rather than creating an own custom solution, when not deploying an army of coders for 10 years (what did SierraChart or NinjaTrader to arrive at their level of interface sophistication). Yet, this remains plumbing work, not optimal. Many clients only enjoy plug’n’play.
Since the Darwins API has immensely progressed, I hope the FIX trading API will be completed so it doesn’t lack pieces of Darwinex
micro version of some indices, but not on other ones (DowJones - very popular, ASX, Nikkei), making it for an uneven balance of margins/leverage diversification if aligning the trading management at the micro level
Now, let’s dig deeper than from the surface with more statements (plz correct any point if wrong, I don’t pretend to know it all or speak error-free) :
in reality, LMAX could provide mini and regular sizes of contracts available for indices. Fact, the average spreads of the regular contracts are narrower than the mini versions. The VWAP price on larger volume is also better, but that is of almost no concern to any average Joe trader (re AuM scaling, you tell me)
Darwinex sets their own commissions on indices, independantly from a contract size (there is only 1), based on volume. I like this non-staging. The price tag is good (in and out of the 2 rebate schemes)
the variable spreads of LMAX are more or less consistent over time, at least that can be attested from the past. There are historical periods (or intraday moments) where it can widen “off track”. Some measures are public.
For those who don’t know, in comparison, the Micro E-Mini futures have okay tight stable spread but quite really big commissions compared to the CFDs . Arguably, larger spreads + lower commissions for the same all-in execution price is less trading efficient : example, stoplosses trigger more easily.
From analysis : when the spreads of LMAX are normal/low, let’s report that the regular indice CFDs can be more interesting to trade than the Micro E-Mini futures, in terms of all-included cost and VWAP price. The visible near TOTP liquidity of regular LMAX CFDs can even be above the one of the large future contracts !
However, the Micro E-Mini futures tend to always beat the mini LMAX indices.
- the Darwinex indices that now have micro sizing enabled track the spead / liquidity of the LMAX mini indices. Before, it was linked to the regular contract ? The DowJones still appears to be
Conclusion : no doubt that the micro indices are nice for $500-$1500 deposit traders and I guess for Darwins’ investability, or also for the traders with more money when it helps to fine-tune money management and tactics.
However, when you’re filled on a spread which can be some % higher, that is quite a dragging performance hit for active traders. Less performance, more drawdown = also less attractivity if showcasing
There’s something way worse than a bigger execution cost, which is missing on some fills. Yesterday, I was trading both sizes of the DowJones CFD, when it arrived near the very bottom of the day (26260), I had a reverse planned there. The LPs are smart, knowing their job well, applying modulation tricks if they really see fit, they widened the spread from 2(regular)/3(mini) points to up to 5/10 briefly at this key turning point. Luckily, I was in front of the screen, I noticed this ‘manipulation” and reversed manually with a poorer exit/re-entry. Without this manual intervention, my target+limit entry wasn’t filled even though well placed, in case of normal trading conditions. It would have been without spread widening. Beware, I’m not complaining, just describing (and admitting) a real exchange type event.
Anyway, missing an exit or a reverse from a decrease in quotes quality can be drastically damaging (I lived through it more times than I wish I had). The micro spread is almost double the one of the YM I take for reference. If I were swing trading once every 2 days, I wouldn’t mind, but it gets problematic at 5-10 trades per day. Too much of so-so trading costs consume a non negligeable part of the average daily range. Darwinex is aware of it, we were served studies on the impact of trading costs.
It leads me to state that ANY day I’m choosing bigger contracts over ones which trade worse. I feel just about comfortable on the mini Dax but barely at all on the mini DowJones (for now avoided by Darwinex). My opinion evolved …now I wish you’ll keep it at this size and conditions !
From here, maybe you saw it coming, all things considered I am regretting the micro indices, judging from the trader’s side (even more so when the activity won’t be kept at a minimal rotation).
I wish Dwx could offer both contract sizes (past and present, w/ matching differential conditions) concurrently, instead of enforcing one. That would let the trader have the choice where the trade-off will happen between advantages and inconveniences. I know that personally I 200% prefer to have more robust spread liquidity and fills than low margins and increments. I’m not saying it lightly, this is a primary concern.
NB: I’m skeptical about the argument that opposes CFDs against futures (which would justify the micros’ existence alone). Both instrument classes have own specific selling points. More than that, like explained earlier, there will be possibilities to link the trading of both (intra Darwinex) while hiting on both the liquidity to deploy AuMs and limit divergence. Therefore, they should be treated hand in hand imho, not versus