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Would you invest in a Darwin when the Trader Hasn't?

While looking around at the leading Darwin’s with the most invested, one thing struck me. One of the best performing Darwin’s has very little of its own capital, yet it’s heavily subscribed with investor capital. While I do believe the Darwin’s themselves are as good as they look, it does sit slightly uncomfortably with me! Anyone else think so or is it just me?

My own Darwin does not currently have a great deal of capital in it (not for long!!) but I myself feel more comfortable trying to establish good performance prior to the avalanche of investors that are obviously hiding from me at the moment :slight_smile:. I’m not sure if I plan to do any investing myself, but for my own investing I would want to see that there is skin in the game for everyone involved and not just the investors.

p.s. this is not a criticism of the fantastically performing Darwin’s (with a hint of Jealousy!) but merely an observation on investment behavior.

Should there (could there) be a way of measuring “skin in the game” for Darwin’s that take on investors. Bearing in mind that the best trader on Darwinex could be someone with very low capital and means???

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I can think of a couple of reasons for this.

  1. The trader has indeed little trust in its own capabilities and wants to keep his losses small once the strategy fails
  2. The trader has different accounts trading a portfolio of strategies and wants to benefit from the diversification of multiple strategies. He therefore has only little capital in the “single strategy presentation account”
  3. The trader might trade bigger accounts with other brokers. While Darwinex is an excellent broker there are other very good brokers as well
  4. The trader might not want people to know how much money he is actually handling. For whatever reason.
  5. The trader is coming from a country with low income and what is looking tiny for others might be a lot for him personally.
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Also the number of darwins managed by the trader has to be considered.
A darwin running on 200 can be tolerated.
Ten “testing” darwins running on 100-200 is what an investor should avoid.

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To continue list from @KlondikeFX:

  • The trader can invest part of own capital to his Darwin as Investor for using Darwinex Risk Management algorithms, for example.
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all valid reasons @KlondikeFX :-).

here’s my own thoughts on the above

  1. If the trader has little trust in capability, he/she should be listing their darwin for public interaction i.e. keep private
  2. Maybe OK if correctly done, but still not good if they are doing so because of no1 above
  3. fair enough but they should be linking accounts maybe.
  4. this should not be accepted - I think we need to ensure and promote transparency to allow investors to make an informed decision
  5. This is totally fair and should not work against anyone from a lower income economy.

One of my own concerns is that we could get the short term successful strategies entice investors and then they fail, which leads to destruction of investor confidence. when I see the amount of investors who invest 8/9k in a Darwin that only has $400 capital it does not feel right or comfortable.

Maybe this will work out well, but we should be aware of the investment choices being made on the platform. That is not to say we should control them either.

I would love lots of investment in my own Darwin, but I want to earn that investment through proof of my own success first. I won’t sleep at night knowing that that I have lost money of investors regardless of how bad their own investment choices were. Maybe I’m in the wrong game :smile:

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fair point @CavaliereVerde

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This question is interesting,

It includes an emotional aspect and a technical aspect.

From an emotional point of view, the more I accumulate experience as an investor, the less I attach importance to this factor. Frankly, there does not seem to be any clear correlation between the quality of a Darwin and the trading capital.

In passing I regret that Darwinex indicates > 10’000.-- instead of the correct amount. Indeed, 10’001.-- it’s not the same as 1 million for example :wink:

From a technical point of view, in my experience as a trader, I strongly recommend that you have at least a capital of $ 2’000.–, if only to have a minimum of granularity with the lots. It also seems to me that with very small amounts, the VaR is even more difficult to control.

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I was asking myself the same question for quite some time. Don’t want to underestimate ones trading style or capital, it is OK to have a small capital, but if you are able to make e.g. 100% gains year after year obviously you know what you are doing. If one lives in a country with a poorer standard, it is even more logical to invest in yourself and earn 10 times more than what it happens to be a yearly salary in some company. Take for example some guys on MQL5, they earn up to $30K (from the subscription fees) per month but they trade Cent accounts (with a $100 on it). And 1000 people are subscribed. Nobody is perfect (including me) but some things I will never understand. :slight_smile:

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Valid point. Not to forget if the darwin has positive divergence he can also profit from better execution that way :slight_smile:

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Personally @TradingStoic if I knew someone was making 30k subs and only trading cent accounts that would be an Alarm bell. After all if their systems were that good they would earn more building up their own capital. It reminds me of the “if you can’t do, you teach”.

Like most of you already know its very difficult to get any true view of forex due to the marketing and scamming going on. It seems to be a right of passage for all newbies to go through it but it paints a bad picture of trading for all concerned. Thank god binary option came along to distract all the bad marketing and scammers :slight_smile:

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I agree with you 100%, however, 1000+ subscribers don’t agree with us I guess. :smiley:

I agree totally @Medialux, personally I think >10k is fine but maybe they should have a >50k and >100k to reflect size (maybe they have already)

Anyone trading on small capital would need in my opinion need to have a very specific method to trade without involving leverage risk, either that or they will in fact by default be trading with high risk. Those strategies are ok if you are starting on low capital but would not translate when more capital is involved.

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Well on that note. I was at one time subscribing to Mark McCrae’s “Traders Secret Library” for $50 per month, and I know for a fact that he had over 5000 subscribers to that alone. The guy just peddled out anything with robot in the title, good and bad.

We’re in the wrong game and should be out there trying to fleece newbies (joke - honeslty!!)

@TradingStoic
It took me less than 30 seconds to find the provider you are speaking about on mql5 … :smiley: :smiley:
:thumbsup:

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what you have to keep in mind though is, that Darwinex was also created to “leverage trading talent”. So if an investor makes it a requirement that traders need to have at least >100k in their account he will for sure miss out on a lot of those talents :slight_smile:

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The equlibrium is leveraging talent without leveraging slyness.
Unfortunatelly crooks are much more frequent than poor traders.

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I bet you did :slight_smile: I wish he was an exemption, but there are many similar accounts.

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My sentiments exactly. Why would you invest in somebody who literaly doen’t trust his own system. Of course there are some who don’t have a capital of their own, however the logic and good sense tells me to invest in the systems which have bigger trader capital. I even proposed to rank systems by trader capital. I believe it is important, because it shows responsibility. Otherwise anyone could open 20 accounts with 500 dollars on them and use very risky strategies - a Kazmikaze deposit. That way he or she only risks a tiny capital but has a leverage in form of investors.

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Very rich people don’t care about blowing a few 5k accounts. As long as you don’t know the real person behind the strategy it is always a risk. Beyond 2k gives more confidence though.

What is the reason it says >10k instead of the actual amount? Anyone from Darwinex that can answer that? Is there also >50k or >100k category?

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