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Passive Investment Portfolio by Qaytarlah

100% agree. That’s why I find extremely interesting that one of the cofounders of Darwinex, @javicolonbo states in public that they have quantitatively demonstrated that is not a good idea to buy Darwins on peaks.

What do you think of my thoughts on why I think the “coinflipping case” is not valid here?

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Weeks are coinflips, maybe months are coinflips, but quarters and years are not coinflips.
Their results depends on how well a strategy is fitting the market.
Good and bad cycles tend to alternate, like seasons.

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But what about the frequency of trades. Surely a trader that makes 12 trades a year could be considered a coin flip in the same way as a trader that makes 12 trades a day, or week.

It has not to do with frequency but with time and fundamentals.
If a given quarter/year is volatile it will be no matter your trading frequency.
Summer lasts the same time no matter how many times you go swimming. :slight_smile:
If you fix the ruleset the performance will depend on the market.

Hey @Qaytarlah

I totally agree with you, you cannot compare a trading strategy to a coin flip. My example was only used to create a game with positive ROI and ask if you’d still wait for a drawdown, before investing.

Also, as CavaliereVerde pointed out in different terms, trading strategies do well only with certain market conditions. Since market behavior is not always the same, you can expect that, during some periods, the strategy is not performing at the best, facing a drawdown.

I take my IRY as example.
IRY performs at the best during trends and, generally, when volatility is high. In November 2019, market was dead. Very small movements, mostly in ranges. IRY closed the month at -1.99%.
December 2019 has been a very good month, especially for GBP/USD, with the election in UK. IRY closed the month at +11.49%.

Now, investors might think: “this guy just had an incredible month, I’m not stupid, I’m not gonna buy it now. I will wait for next drawdown”.

January: +3.12%
“Ok, drawdown should be around the corner, let’s wait!”

February: +4.88%
“Oh, that’s unfortunate. At this point, I wait for a big drawdown in March.”

March: +4.03% so far

The point is: how long are you going to wait before investing? You already missed a profit of 12.03%, from the end of December 2019, where you were waiting for a drawdown.
Do you think that next drawdown will make up for the 12.03% profit that you have missed?

This is my point and my opinion :slight_smile:

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Yeah, I’m with you.

It’s better to invest when a darwin is in a current drawdown” I’ve read the argument many times before on this platform, every time it catches my attention and I quickly come to the same conclusion as you.

Some experienced investors are treating the drawdown in the equity curve of a trader as if it were the same as a pullback in a market trend where you usually start a position with a better price but the psychological reasons why the one and the other happen are not the same.
And your example is the proof.

Meanwhile some novice investors are probably buying high and selling higher, doing the right thing unknowingly and by chance (and of course losing money in other cases as well).

The thing is that investors can only pray that they have chosen genuine traders behind their darwins and protect themselves by creating a diversified portfolio and/or using stops in case sh!t happens… but coming in at just the right time and blindly (with no direct contact with the trader) is a matter of luck (only traders “kinda” know what the future might really hold in terms of P/L).

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IN a DD! Never! That’s the highest risk to lose immediately!
I also read that too often and I think: take care about your wording. To buy AFTER a DD could make more sense, but who is able to tell when the DD is over? Funnily enough nobody of the Darwin sales monagers used this wording. :slight_smile:

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@Qaytarlah Nice contribution you put in here.Thanks for contributing info from Spanish podcasts.
I watched the data you presented and I have few ideas to make it more realistic/reliable.Mainly because of Migrations.Backtest should be started at the date when all your darwins ‘started’ trading in real-time data together.That will give you only about 2 years of backtest,but it will be more realistic.
Those that were migrated had their pre-migration performance simulated.It is different than performance achieved in real-time Risk-manager operation and Darwinex broker trading conditions.
In the same manner Avg.Yearly profit should be recalculated with only darwinex data,than some darwin numbers get significantly revised downwards.By doing this you will filter out any trackrecord-farming initial boost(if any of your chosen darwin providers engaged in such Marketing strategy).

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The backtester starts from the IPO.
The private part, either migrated or local, is not considered.

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Backtest starts in Spring 2017,while there are darwins that entered backtest in 2018.What kind of Portfolio backtest is this?

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You are right, for example the inception of SYO is delayed but it does not reduce the value of the backtest.

Backtests are only and indication, to have realistic expectations about return, DD, and stagnations.

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Yes,we are on the same page.I only wanted to make it more precise,because of data missing(in backtest) and some data simulated(in avg.yearly returns).

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hi, I fully understand your concern in entering a strategy, my general idea is not to intervene yourself once you are already on the boat, but for the first time entry, if you happen to see a DD low point like now, it is good point to get in, and again, once you are in, stay and wait long enough to see.

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Hey @Tomcat thanks a lot for your words and for your contribution. It’s very much appreciated (despite my delay). I feel like it’s one of the biggest challenges here, so I welcome very much ways of looking at more reliable data.

SYO is the Darwin with the most on recent migration on Feb2018 so here’s the revised backtest from such date. A 2y3month period.

Results are certainly different, which is great to know. Around 20% in around 2years Vs Around 40% in around 3 years. That’s okay, the sample is still very small (2 years vs 3 yeas) so I’ll not worry to much, and it still is around 10% yearly.

What matters to me. Which I find extremely difficult to assess is:

  • Avoid traders without skin in the game or with non-legit intentions. Hopefully I’ve avoided those
  • Avoid trading strategies without a longlasting edge.
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It’s time for the first update and results sharing.

Portfolio 1 (not leveraged. 75% of the capital). 7 Positions: SYO, UYZ, PLF, FEG, MJP, WFJ, ZXW&LVS

Portfolio 2 (leveraged x2. 25% of the capital). 10 Positions: [Portfolio 1] + ULI, NSC, GTD&VRT (sharing a postion of 1/10 at 50%-50%, like ZXW and LVS)

  • Main point: Too early to say much. March’s -5% in less than a month is quite “bad” but given the exceptionality of what happened and that DDs of -10%-15% are found in every Darwin’s record, I am not too surprised/concerned. And then April and May are being slow-ish but in a very “normal” range.

  • MJP seems to have abandoned the arena? I liked their approach, for diversification, but from what I understood, their style seem to operate without Stops Loss and/or being very flexible / long term around them. Bad times for a style like that. I sent them an email asking for news/details, no response. The Darwin hasn’t traded since 20 of March. Has anyone heard something from them?

  • I opened a (smaller) position with ERQ with the money left from the sell of MJP. I’ll monitor divergence closely.

Have I missed something? Questions? Feel free :slight_smile:

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What was your initilal reason for MJP ?
It is the only one out of my radar.

I don’t know… I listened to their interview, read their reports, they sounded very legit and like they knew what they were doing. Plus their different approach was a benefit in itself towards real diversification. The Darwin met all my criterias so i went for it.

Was MJP out of your radar due to lack of awarenes around it or was it deliberate because there was something you didn’t like about MJP. If so, what?

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Because of low MC and low LA .
High DScore isn’t a proof of edge but low DScore needs further investigations and explainations.
I have not studied the interview and their site.

I have something similar with BSL but in this case I have the compensation of the knowledge and communicativity of the trader here in the community.

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MJP managers link to their website from their DARWIN description and there they offer an email address for contacting them. I’d like to encourage you to do so.

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I did so, 12 days ago. I’ll keep the community posted. So far, no response.

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