Why we don’t publish a DARWIN migration policy
Investable traders are Darwinex’s lifeblood.
The better the traders, the more investor profits and AuM, the bigger the appeal for better traders. No growth strategy beats happy traders and investors because detecting, attracting and rewarding talent feeds a virtuous profit exchange.
The flip-side of “trader/product first” is that we hardly market outbound, and most good traders won’t learn about Darwinex until you reach out to them. Which brings us to the point of this post.
By definition, many traders start their track-record away from the DARWIN Exchange. This is the reason why Darwinex supports track record “migration”, whereby traders import trades placed with 3rd party brokers when listing their DARWIN.
Track record migration is a very popular feature – but like everything in life, there’s risks and cons to it. Read on to understand our stance on the matter, including risks & our verification policy. This is a hot topic… so feel free to join the fray in the comments section, on Twitter or the community forum.
Migrating track-records: a win-win
In a 100% honest world, account migration is a win-win whereby:
- Traders market their track-record to investors, immediately.
- Investors get transparent trader and (trader) exchange choice.
In theory, it’s all pros (unless you’re an auditor :-)).
In practice, the investor proposition has grown off the back of migrated track-records: many of the DARWINs with the most investor AuM migrated their track record from other brokers. Migrations are an essential part of a framework allowing every trader to get a free diagnostic.
Migrating track-records: the risks
On the flip-side, the stakes have risen – and with it fraud attempts / risks.
The market value of an investable track-record (genuine, stolen or fake) grows alongside investor AuM. 5 years ago, there was no upside from faking a track-record at Darwinex. Thanks to everyone’s trust & hard work, the best track records at Darwinex now fetch 5 digit yearly success fees.
Unsurprisingly, we’ve had a number of issues over the years, including accusations for:
– Track-record theft – which we discussed here,
– Accusations for track-record forgery – check the community
Suspicions cause lively debate… possibly because there’s no 100% failsafe approach to definitely prove / rule out theft / forgery. Further, beyond the first checks, validation costs increase exponentially but barely add certainty.
Which begs the question – where to draw the line? Should we either:
- Discontinue migrations – depriving traders, investors and Darwinex of their pluses, or
- Support migrations – incurring the risks and the validation burden.
Our stance on this one is to continue to support migrations, providing investors with transparency & choice. Investors, not Darwinex, should ultimately make up their mind on whether / when to trust a track record.
Time is on our side
Before discussing what checks Darwinex could or should deploy, please bear in mind:
- Our reputation is on the line, and “our” means not just Darwinex, but everyone who’s got something at stake in the concept doing well.
- We flag migrated accounts, disclosing the date before trades are with Darwinex.
- Darwinex certifies every live trade after migration – only live accounts traded with Darwinex broker are eligible for DARWIN listing,
The key to settling debate is to acknowledge that beyond some efficient checking, nothing beats common sense and patience:
- If it looks too good to be true, it may not be true. With thousands of DARWINs out there, something standing head and shoulders above track records with 5 years history might be either fake or unsustainable (and possibly both).
- If someone stole somebody else’s EA / track-record, etc. and it’s that good, eventually whoever actually owns it will find out.
- Whoever managed to fake yesterday’s track record, will still need to beat the market tomorrow. Faking the past is tough – faking the future is impossible.
One reason we don’t publish a “migration control policy” is because we don’t want to help the fraudsters. The weightier reason is that we don’t really have one: we check what we reasonably can, and then we simply wait.
Because no validation, other than time, is 100% safe, Darwinex reserves the right to take as much time as we feel reasonable before investing in migrated DARWINs. As ever, rest assured that making migrated DARWINs will be made available for 3rd party investment the moment DarwinexLabs invests itself.
We take our time – you take yours
Thereafter, the choice is EVERY investor’s:
- WAIT for x seconds / days / weeks / years / decades before investing, or even,
- Don’t invest in migrated DARWIN’s, period.
Take your time – the choice is YOURS.
So there you are.