Darwinia – Explained

This video explains our monthly Darwinia trading challenge: why we run it, how it works, and what to expect if you win the allocation. We hope you enjoy it!

Darwinia is a monthly cash-prize for DARWIN providers. To provide a DARWIN, you must:

  1. Trade a live account with Darwinex
  2. Authorise Darwinex to market the DARWIN based on your trading for that live account

We started Darwinia in November 2014 with 2500 EUR, and it’s since grown to the current monthly pot.

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Visit the latest ranking!

It’s called Darwinia to draw a parallel with Darwinian selection in nature – only skilled traders survive the market, and because it rewards DARWINs with high 0-10 Investment Attribute scores (thus DarwinIA).

In addition to abuse for the name :-), we receive questions on how the ranking works – which we hope to cover with this post.

Why (does Darwinex run) Darwinia?

There’s no point explaining how you do something without first explaining why you do it (here’s why). If you’re just after the ranking, jump to the end for an explanation. However, be warned: ignoring the why defeats Darwinia’s purpose.

So, first things first, here’s why we do this. At its core, Darwinex is 2 claims:

  1. Skilled traders are likelier than unskilled ones to win tomorrow.
  2. Darwinex algorithms detect trading skill, today.

Which all sounds very nice, but where’s the proof?

That’s one of the whys to Darwinia – to prove both claims above.  Here’s how our desired chain of thought works. We:

  1. Publish skill grades for all DARWINs,
  2. Pay the DARWIN providers with the highest grades every month
  3. Track the performance of their DARWINs over time

If Darwinian selection works, investors should, over time, detect overlap between:

  1. DARWINS who win monthly Darwinia prices,
  2. DARWINs with consistent long-term term performance,

Once they do, Darwinia will have proven that today’s skill delivers tomorrow’s investor profits.

As a bonus, it helps Darwinex walk the evolutionary talk…  Every broker talks trader alignment, but how many pay for Experience, Risk Management, Consistency, Timing, Performance and Scalability?

Why does it run monthly?

Once Darwinex reaches steady state, Darwinia ought to be a secondary revenue source to successful DARWIN providers, who will hopefully make a lot more from quarterly success-fees from investors in their DARWINs than the monthly Darwinia cash-prize.

Why do we place so much emphasis on quarterly success?

Because smart investors distrust churn based models. Commissions generated aren’t even a factor in the Darwinia ranking. Please note that Darwinex can legally charge for investor success because we hold the regulatory permission to do so: Darwinex is an FCA regulated asset manager!

As a bonus, rewarding success is a nice self-selection mechanism. Given the choice over success fees and commissions, truly consistent traders, who prefer success fees, self-select into joining Darwinex. Churn champions, on the other hand, stay clear – which is just what we want.

Why not pay monthly success fees?

On this, consistent traders and savvy investors have legitimate reasons to disagree.

DARWIN providers prefer monthly – success pay. They have a point: normal jobs pay weekly or monthly because living costs accrue daily. Surely if your strategy makes a profit month in, month out, you deserve a monthly check?

Which is when investors answer: what if a strategy wins amazingly in January, stays flat in February and implodes in March? Surely it would be a joke if Darwinex charged success fees for January? And they have a point.

That’s why we run a monthly cash-prize (Darwinia): to help bridge this trader-investor divide.  We believe our claims (1 Darwinia winners are worthy long term investments, and 2 high 0-10 grades are the difference between skilled and lucky winners). So we walk our talk by paying Darwinia monthly, and taking the middle ground between traders and investors.

Which brings us to your why for Darwinia. Think of it as help from Darwinex to quit your “other” job and pursue full time trading, with a starting base salary. We know the current first prize of 1200 Euro isn’t quite there yet, but hey, as Darwinex grows (and we are GROWING) we’ll grow the prize, so you too GROW.

How do I win Darwinia?

In a nutshell: by providing DARWINs with high grades every month, and hopefully winning.

These are the only inputs into the ranking

These are the only inputs into the ranking

The factors entering the ranking are listed on the Leadearbord:

  1. Each DARWIN’s 0-10 grades for the 6 Investment Attributes
  2. Each DARWIN’s Investor Performance in that month, with medium risk (10% monthly Value at Risk)
  3. Monthly activity: irrelevant as long as you trade as often as you normally do. It excludes those on (trading) holiday from that month’s prize.

Note: factors are listed in order of importance. High grades IA grades count logarithmically more than monthly profit.

A further point on the grades: Darwinia is ranked with the 7 Darwinex levels in the skill progression. A DARWIN with a 7/10 in all 6 IAs gets more points than one with e.g. stellar performance, but mediocre Risk Management. Above anything else, Darwinia rewards consistency across ALL 6 skills / investment attributes.

Why logarithmic? Because given a monthly profit, a:

  1. “Pro” (Level 7) has between 2 and 3 more chances to win than
  2. “Expert” (Level 6), who in turn has 2-3 times as many chances than
  3. “Rookie” (Level 5), etc.

Given a monthly profit, a “Pro” has 2.5 higher chances to win Darwinia than an Expert, 6.25 more than Rookie, etc.

It’s deliberate: we want you to worry about improving ALL grades, and ignore the rest.

We do it, because we want to prove to the world that when you seed skill, profits eventually follow.

Until independent traders and Darwinex get there, we hope Darwinia helps you get there, quicker.

Feedback!!!!

Please, please, please if there’s anything you feel we haven’t explained  clearly enough, don’t hesitate to ask and we’ll do our best to improve this blog-post!

2 replies
  1. Carlos
    Carlos says:

    Buenos días,

    Estaba chequeando el actual ranking de Darwinia y veo que en puesto 9 (Dentro del Top 10) aparece una estrategia (IVU) que ha arruinado completamente la cuenta: -100% de rentabilidad.
    Entiendo que no queráis desvelar el algoritmo de calculo del ranking, pero creo que algo se está escapando, o que algún filtro no debe estar funcionando bien.
    Me parece correcto que la rentabilidad no sea el atributo principal del ranking, o que al menos no lo sea sin combinar con el riesgo, pero me parece que una estrategia que se ha cargado completamente una cuenta no merece estar en el ranking y menos en el Top 10.

    Darwinia a parte de ser un premio a los traders, también es un escaparate para los inversores y no me parece que el ranking esté recogiendo lo mejor.

    Es mi opinión.

    Gracias y un saludo,
    Carlos

    Reply
    • Juan
      Juan says:

      Muchas gracias por tu sugerencia Carlos.

      Lo que evalúa Darwinia es el DARWIN IVU, no la estrategia que subyace al DARWIN.

      En estos momentos el ranking incluye hipervinculos al DARWIN, y a la estrategia. Como hay gran diferencia en el perfil de riesgo (el DARWIN opera con un 10% de VaR constante, y la estrategia con el 100%), puede llevar a confusión. Nos plantearemos quitar el vínculo a la estrategia, que NO es en lo que invierten los inversores.

      Este caso es un ejemplo muy claro de cómo echar a perder en la cuenta propia del trader el buen rendimiento que están consiguiendo los inversores en IVU los últimos meses

      El motivo de la pérdida de https://www.darwinex.com/en/user/QQ623736908/summary/IVU.11/ no es que sea mala estrategia, sino que con un VaR del 100% (apalancamientos prolongados de D-Leverage de 200:1 o más) en cualquier momento puede reventar la cuenta, lo cual no afecta al DARWIN (salvo que el trader deje de operar).

      Lo que buscamos con Darwinia es incentivar a los traders para que se consideren los primeros inversores en su propia estrategia. Nos duele ver a gente perder con estrategias que a menudo son buenas (esta en concreto lleva unos últimos 3 meses fantásticos), con apalancamientos racionales.

      Cuando lo consigamos, a largo plazo ganaremos más todos.

      Si quieres que profundicemos sobre este tema, encantado de hablarlo. En cualquier caso gracias por habernos avisado porque efectivamente como está ahora puede llevar a confusión.

      Reply

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