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Shorting Darwins to increase their Capacity

Dear Darwinex Community,

I have a suggestion which will increase the capacity of a Darwin and also somehow reduce risk for investors.

Which is: Darwinex allows investors to use their capital to increase capacity for a Darwin, together with LMAX liquidity pool. Liquidity from investors will be given priority over LMAX’s.

Explanation:

Darwin ABC and its investors’ funds buy 1 lot of EURUSD. Normally, LMAX will absorb this long position.

Investor X believes that Darwin ABC is going to lose, so he presses the button “increase capacity” and add 10,000 USD to Darwin ABC.

So, Darwin ABC is now long 1 lots EURUSD, investor X is short 0.1 lot EURUSD and LMAX is short 0.9 EURUSD.

If Darwin ABC is right, investor X will lose money, he can choose to get out of the trade by selling it to LMAX.

Reversely, if ABC is wrong, investor X will make money together with LMAX and can get out of the trade any time.

So:

  1. Investor X doesn’t have to pay commission by making an opposite order with Darwin ABC but he has to pay commission when he decides to get out of this trade.

  2. Investor can also reduce their risk

  3. Darwin will increase capacity.

1 Like

Can this be summed up to : give investors the possibility to short darwins ?

1 Like

https://blog.darwinex.com/trading-data-supplied-non-investable-traders-worthless/

I have just watched this podcast.
So we have 99.5% losers and only 0.5% winners.
With this fact it would be much easier to make money shorting losers than buying winners.
That is the reason why reatail brokerage is a gold mine for market makers.

Despite this, shorting losers would be against the vision of Darwinex.
That vision states that Darwinex is a mean to pair winning traders to winning investors.
I think that as investors we are helping Darwinex in the difficult task to find that 0.5% of winners, the needle in the haystack.

3 Likes

In order to deal with conflict of interest problem, the Darwin sell short should be able to trigger only on Darwins whose D-score > 50 (for example) and Darwins of Labs (DWC, DWF).

The 20% profit from Sell Short Position will be contributed to Darwinian Dividends.

@ignacio

1 Like

Dukascopy has just activated the “Shorting” Function which allows individuals to participate in the liquidity pool: https://www.dukascopy.com/swiss/english/forex/wealth-management/lp-pamm/

It’s a very smart move, because the liquidity pool has achieved a high return recently which can be used for a marketing documentation. However, after a winning curve, usually accompanied by a losing streak, so they attract investors’ funds in order to reduce their risk