Darwinex Review – Our Independent, Technical and Professional Opinion
Looking for a Darwinex review that’s professional, technical and above all honest?
Want to figure out whether Darwinex is a good broker, and especially if is good for you?
Then you are in the right place.
In this Darwinex review we’ll provide in the first place an explanation of how this Social Trading broker works.
But not only.
Here’s what you’ll discover in this review:
- Our opinions on Darwinex
- Its strengths
- Its weaknesses
- Any dangers
- For who is best suited
All this, always with a technical and professional approach but explained in easy terms.
No false promises, no bait and switch.
Only technical opinions based on our professional experience.
Let’s start now.
Darwinex is the commercial name of Tradeslide Trading Tech Ltd. This company, founded in 2012 by Juan Colón Bolea, CEO and co-founder, and Javier Colon Bolea, trader and co-founder, provides brokerage and asset management services.
Open Now a Demo Account with Darwinex and see what is all about.
Darwinex is authorized and regulated by the Financial Conduct Authority (FCA) in the UK, with FRN 586,466. The fact that it is a company regulated by the FCA implies a periodic review of their solvency, of their internal procedures, of how they manage data and the funds of their clients and of the of the personnel qualification level. They also have a MiFID passport to provide their services in all EU countries.
The regulation and the duty to fight money laundering prevents it from providing services to the citizens of the countries where this is against the local laws and regulations. As an example: United States, Japan, North Korea, Sudan, Syria or the Islamic Republic of Iran.
In addition to providing an excellent brokering service for all the traders who want to operate in the markets, this company also provides investors with the possibility to replicate the transactions of professional traders.
After a first phase of beta-testing, Darwinex officially opened the doors to investors on 9 December 2015.
Darwinex review: the new frontier of Copy Investing
The signals replication service offered by Darwinex is different from the one of a normal Social or Copy Trading company. As a matter of fact, the social aspect is pratically absent, contrary to what happens with other competitors like eToro and ZuluTrade (these are the links to the courses, but you can also read our eToro Reviews and ZuluTrade Reviews to better understand what we think about the companies).
Darwinex is characterized by protection policies for the intellectual property of the trader’s strategy, advocated mainly by the co-founder and trader Javier Colón Bolea.
With Darwinex you can replicate the performance of the trader with a service very similar to copy trading, but, given this protection policy, the interactions with the trader and the visibility of his transactions in the market are excluded, so much to redefine the concept of Social Trading in Social Investing, or, even better, Copy Investing (term coined by InvestinGoal for this Darwinex Review, it stems from the fact that there is no social aspect but only copying, then “copy”, and you can’t see the trading operations, but it’s more like an investment in a fund, as we will see shortly, then “copy investing”).
In order to manage the risk and protect intellectual property of its traders, Darwinex introduces the concept of Darwin. In essence, the investors who want to invest with this company will replicate the strategy of traders buying or selling Darwins.
What are the Darwins are and how they work
Darwins, an acronym for Dynamic Asset and Risk Weighted Investment, are synthetic financial assets. They are synthetic because their value doesn’t result from market course but from the trader strategy.
We can imagine a Darwin as a closed black box, where the Trader performs his own trading strategy. You can see the box, but you cannot see what’s inside and what is being done. In other words, you cannot see what the trader does, but you can choose to invest money in his Darwin to replicate his performance.
The Darwins are priced initially with a value of 100, and this value will increase or decrease depending on the operational performance of the strategy. The Darwin price value is updated every 30 seconds.
The investor who decides to replicate the trader’s strategy actually will do so through the purchase of the Darwin connected to it. Therefore, in the investor’s account we will not see replicated the long or short positions on stocks, currencies, indexes or commodities, but only Darwins with their respective prices.
From the analysis and selection of the trader perspective, the investor doesn’t have therefore the possibility to analyze in detail the traders’ strategies, but he has at his disposal a series of judgments and merit scores created by Darwinex concerned with the experience, the level of risk, the skill and the safety of the trader, and the possibility to analyze the performance of the Darwin which is reflecting the performance of the strategy applied by the trader.
The focus of this company is definitely on investor protection. When the trader performs his strategy within the Darwin, it is closely monitored and, when situations of over-exposure arise, restricted by algorithms according to fixed limits imposed by Darwinex. In practice, the trader can even open a position with an out of the norm leverage, but what will be replicated by the investor through the Darwin will be an operation with leverage and exposure never beyond a certain limit.
The same applies also in case of extreme volatility. If this were to burst, causing sudden and dangerous overexposures, Darwinex will limit the damage by closing partially or totally your positions.
From one point of view, once you understand some not immediate basic concepts, the Darwinex system may be easier for novice investors.
Despite this, we believe that the depth of detail on the strategy, which aims to understand the logic that led the trader to make certain decisions at certain times of the market, is priceless, allowing the evolved investor to fully understand whether the trader reflects or not his risk-return idea and can coexist within a people-based portfolio.
Using Darwins as fund shares
To shed more light on the functioning of Darwins, we could compare them to fund shares.
A fund is a container of capital managed by a manager (the fund manager indeed), who uses a stated (usually) investment strategy to operate in the markets with the aim of maximizing returns and, in many cases (especially among the older funds), replicating or beating a benchmark. The investor who invests in a fund will not hold in his portfolio the securities underlying the fund, the financial instruments purchased by the manager (stocks, bonds, etc), but only his slice of the fund share, the price of which will increase or decrease depending on the skill of the fund manager in making right market choices that will lead to an appreciation of the fund and therefore the share value of the investor.
With a very similar concept, the investor holding Darwins will not have within his deposit the assets underlying the trading strategy, but he will hold an amount of Darwins equal to the capital invested on them, and his gain will be determined by an appreciation of these, which will occur only in the event that the trading strategy connected to the Darwin will be successful.
The two primary purposes of the Darwins
The Darwin has several objectives, but two are the fundamental:
- Protecting the intellectual property of the trader’s strategy. As we mentioned earlier, one of the Darwinex founders is a trader, for this reason probably this company is particularly attentive to the intellectual property of the trading strategy. According to their logic, protecting the intellectual property of the trading strategies could do nothing but attract professional traders within Darwinex, driven by the possibility to achieve extra returns without jeopardizing the intellectual property of their investment process. Darwinex still provides a detailed description of the performance of the Darwin, with several indicators that are mostly Darwinex judgment systems on the quality and experience of the trader. It is therefore not absolutely possible to see the details of the trader’s transactions.
- Managing Risk/Reward levels. Darwinex, through the use of algorithms of its property, automatically modulates the risk of the trader strategy. Should it become, for various reasons, more risky, the Darwin connected to the strategy would not replicate the transaction, or it would replicate it with a lower leverage. Darwinex, then, modulates the replication of operating signals from the Darwin to maintain a Var (Value at Risk) of max 20% per month (with a 95% reliability). The Var corresponds to the monthly average fluctuation, upward or downward, of the financial instrument. A value of 20% is comparable to the average fluctuation of a share of the S&P 500.
How To Start the Copy Investing with Darwinex
To start trading with Darwinex it’s sufficient a minimum deposit of 500 EUR / USD / GBP. The minimum investment that can be made for each Darwin is 200 EUR / USD / GBP and the maximum is equal to 25,000 EUR / USD / GBP.
Darwinex also provides a Demo access (virtual money) that turns off automatically if not used for more than thirty days. The goal is clearly to let the investor becoming familiar with the instruments for his investment activities. The demo platform correctly and faithfully replicates the services to which the user will have access with real money, with the exception of slippage, a factor not present in the demo platform, contrary to reality.
To use the Copy Investing service of Darwinex investors pay two types of fees:
- The Trading Fee in % on the trading volume (we will see its entity in the next paragraph);
- The Success Fee calculated on a quarterly basis, equal to 20% of the profits made, net of trading fees.
Becoming a Signal or Strategy Provider with Darwinex
The provided brokerage service is definitely high level. Through Darwinex you can negotiate 34 among the most liquid currency pairs, 9 indexes and 6 commodities. To operate on indexes and commodities you can do it through CFD (Contract For Difference).
It is a STP broker, which means that it provides its investors the same quotations provided by its liquidity providers, without applying any markup, which is why the bid-ask spreads are really thin(except in times of extreme volatility or market tension) and for most of the time they are below 1 pip. The gain for the brokerage activity is achieved by applying a fee of 0.0025% of the nominal value traded.
This is certainly a distinctive element, considering that normally brokers that offer social trading services have generally very large spreads, about 3 pips (of course in this case the spread is smaller but you pay a fee for a brokerage service definitely of high level). The Swap rates are fixed daily by their liquidity providers and also these are forwarded directly to investors without markup.
Trading activity is made possible by the use of the most popular platform in the world with regard to forex trading, the MT4, with a maximum leverage of 200.
For all traders who use VPS to operate with automated trading systems, Darwinex optimizes the experience by facilitating access to the BeeksFX platform, with discounted prices. This platform is connected to their servers to Equinix LD-4k, this reduces and eventually eliminates the latencies between the VPS service and their LP (Liquidity Provider, in this case LMAX).
Darwinia: the Darwinex trading contest
The Darwinia is a monthly contest that rewards the best Darwinex trader. Every month 400,000 Euros are assigned to the top 16 traders for a period of 6 months, during which those traders receive the famous Success fee of 20%.
The monthly winners are identified based on their D-score (a score given by Darwinex) for their monthly trading activity and, of course, for their monthly returns.
This contest aims to encourage traders to operate well, to achieve substantial capital to manage and make themselves visible. In the site, in fact, there is an entire section devoted to the contest which highlights the winners, giving also the possibility for investors to evaluate their strategies and include them in their portfolios.
- Want to become a Darwinex trader and partecipate to the Darwinia contest?
- Or do you want to become an investor and exploit this new Copy Investing opportunity?
Start by opening Now your Demo or Real account! Click here!