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Sell/Buy leveraged portfolio to compound & cost of trade Darwins

As some people in the forum suggested, I plan to sell/rebuy my whole portfolio from time to time (probably monthly). My portfolio will be 2x leveraged, so after I sell, I’ll be able to include the money obtained thanks to the leverage in the new leverage when I buy again the Darwins. This will lead to a compound effect (as I’ll be always using my maximum available money+leverage)

So, my question is: how much cost the Darwin sell/buy? I mean, I’m not able to find anywhere a bid/ask for Darwins (I don’t know if such thing exist), or if there is some fixed money that cost to buy/sell a Darwin, or whatever.

I guess that I want to know how much % up should be a Darwin to make it worth to sell/buy it instantly to take advantage of leverage.

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It is impossible to calculate this in advance.
When you buy a darwin the investment is slightly in red because of spreads and commissions of the open trades. If the darwin has no open trades there are no execution costs.

It would be a pain in the ass to examine every darwin or to wait for darwins to be flat so it is enough that you don’t “releverage” the open profit too often.

According to my experience it is useless to do this operation more often than once per quarter.
In this way the execution costs can be considered negligible.

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Great advice (as usual), thanks.

@Awvanderbie I read that you do this daily, so I’m curious about your ideas on this.

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I don’t think that doing it every month will cost you much.
I will try to do some math here.
The number of the darwins in your portfolio doesn’t impact your cost because you pay a commission that is proportional to your investment. What is different between each darwin is the average D-Leverage that will impact the cost of the commission and of the spread. So, to quantify the cost, you should take the average D-Leverage of your portfolio and then you can calculate the cost:

Average D-Leverage * 0.015% (this cost is two times commission plus 0.5 pip spread) * 12 = Annual Cost for rebalancing.
Assuming a 3 D-Leverage the cost would be of 3*0.015%*12 = 0.54% annual

How do I calculate the 0.015%? with eur$ pair, 5€ is the commission for a lot = 5€ /100.000€ = 0.005%

If I wrote something wrong feel free to highlight it, but my reasoning seem fine to me!

Post Note: 0.54% is referred to the capital X2

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Hmm… so everyday it could be checked if a darwin has some open trades, if that’s not the case, sell/buy the darwin to maximize compounding effect. It could be done even multiple times per day. Unfortunately it is a very time consuming task… But… wait a minute! This could be easy & automatically done once the Darwinex API is released. Helloooo @javicolonbo ;D :smiling_imp:

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What’s about investor fees?

If you sell with profit the fee is locked and added to the high water mark.

If you sell your losses and buy back your losses are gone and if you sell next month with profit you have to pay the full fee.

As long as 20% of the losses of closed positions are not added to the high water mark - which could be done technically very easy - the sell / buy back strategy makes only sense on winning positions.

If I am wrong please let me know.

Wrong. :slight_smile:

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So they will be regarded when you buy the Darwin again but it is not visible?

There is only one HWM per darwin no matter how many “trades” you closed.
If you rebuy a losing darwin you recover for free, even if you sold the darwin 2 years ago, the watermark is forever.

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Also if you didn’t make profit but losses with the first trade?
Edit: As far as I watched it the HWM stays zero. If yes, that should be improved.

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You restart from the P&L value.
For example I closed PGH with a result of -69 , HWM was +66 , so fees are paid til +66 , if I buy it now the profit is “free” from -69 to +66 .
It is fair and pushes investors to stick with darwins.

The first time you buy a darwin you sign a contract with the provider, ther is only one P&L , one HWM and one “fees” per investor per darwin.

The contract lasts forever anf fees are updated once per quarter, no matter if you sell and rebuy every week or once per year.

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Very interesting information, I wasn’t aware of that.

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