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Everything You Need To Know About Darwinex

TheTrustedProp
Date: May 11, 2024

In the world of finance and investment, attracting the interest of potential investors can be a challenging task. However, there are innovative solutions available that can help you package your investment strategy in a way that is attractive to investors. One such solution is the creation of a DARWIN, which is essentially an index that represents your investment strategy and can be bought by investors.

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What is a DARWINEX?

A DARWIN is like a unique index that encapsulates your investment strategy. It allows you to present your strategy to potential investors without the need for complex asset management permissions. Instead of seeking out individual investors, you can offer your DARWIN index, making it easier for investors to access your strategy.

The Importance of Index Performance

When it comes to attracting investors, the performance of your DARWIN index is crucial. The goal is to grow your index's quote rapidly, consistently, and smoothly. To ensure fairness and comparability among different indices, index volatility is standardized, making all indices "apples-to-apples" in terms of risk and return.

Sharing in the Success

One of the most attractive aspects of offering a DARWIN index is that you get to share in the success of your strategy. When investors buy your index and it performs well, you receive a share of the returns it generates. Specifically, you earn a 15% share of the returns, while 5% goes to the platform that facilitates the investment.

Transparency in Trading

Investors who buy your DARWIN index are essentially replicating your underlying investment strategy. This is done transparently, with your index coming with a ticker and a starting quote of 100. Investors can track the performance of your index without access to the specific details of your trades. This transparency ensures that there's no trading behind your back or reverse engineering of your strategy.

The DARWIN Assets Universe

DARWIN indices are composed of immediately liquid assets, providing investors with instant liquidity. The eligible assets universe includes 800 US Stocks, the most liquid Futures, 100+ ETFs, FX crosses, and CFDs (indices, commodities, stocks, and ETFs).

Trading these assets can be done through the Interactive Brokers TWS platform or OTC (CFDs) via MetaTrader 4 and 5. By providing a DARWIN, you can reduce transaction costs, with the commissions becoming cheaper as your skill and strategy performance improve.

Professional Client Status

Becoming a Professional Client has its advantages and disadvantages. While you gain access to monthly volume-based rebates, a dedicated account manager, and the possibility to get re-categorized as a retail client at any time, you may no longer be eligible for the Financial Services Compensation Scheme (FSCS).

Attracting Investor Capital with Interactive Brokers

If you trade with Interactive Brokers, you can benefit from their infrastructure to attract capital without incurring additional costs. This service is supported by a dedicated customer success team, providing you with the support you need to attract investors.

What to Expect

When you trade IBKR assets with their trading conditions, you can transform your trading strategy into an investable index, your DARWIN. Here's what you can expect:

  1. Trade IBKR assets: Utilize Interactive Brokers' assets for trading.
  2. Create your DARWIN: Build or consolidate your track-record trading their assets universe.
  3. Participate in DarwinIA: Join the seed allocation program to attract third-party capital and earn a 15% success fee.
  4. Attract investors with your brand: Leverage the Darwinex Pro white-label solution to approach investors with your own brand and fee structure.

DARWIN & Classic Accounts

There are two types of accounts available for traders:

DARWIN IBKR Account

With this account, you can trade as you normally would and grow your Assets Under Management (AuM). You earn performance fees on the profits generated by creating your DARWIN index. The revenue for your DARWIN index comes from three sources:

  1. Seed Allocation: Darwinex allocates up to €10 million a month to the best traders in the monthly capital allocation program (DarwinIA), committing the allocation for 6 months and paying a 15% success fee.
  2. Third Party Capital: Investors can invest in your DARWIN index and pay 15% of the profits generated. These fees are collected and paid to you on a quarterly basis.
  3. Attract Investors: Approach investors with your own brand, your fee structure, and regulatory compliance with Darwinex Pro.

Classic IBKR Account

This account allows you to trade a wide range of assets, including stocks, options, futures, currencies, bonds, funds, and more on global markets. You can also transition your track record to a DARWIN account when you decide, and Darwinex will help analyze the eligible assets for a DARWIN creation.

Boosting Your Trading Experience

To enhance your trading experience, Interactive Brokers offers integration with various platforms:

  • TradingView: A leading charting platform to spot trading opportunities across the markets.
  • Client Portal - Web Trader: A one-stop destination to view, trade, and manage your account with one login and no downloads.
  • Trader Workstation (TWS): Interactive Brokers' flagship platform available in Desktop, Mobile, and API to trade and thrive.
  • Other Trading Platforms: Including NinjaTrader, MultiCharts, Zorro IB Bridge, and IB Gateway.

Trading on a DARWIN IBKR Account

Trading on a DARWIN IBKR account provides access to global markets. When combined with Darwinex offerings, you can access seed and third-party capital with your Stocks, Futures, and ETFs strategy. These assets are tradable from Interactive Brokers' flagship platform Trader Workstation (TWS), web trader, or through integrations like TradingView, NinjaTrader, MultiCharts, Zorro IB Bridge, or IB Gateway.

Future and Stocks Trading

Interactive Brokers offers futures trading on exchanges like CME, ICE, EUREX, and CBOE with fixed pricing conditions. They also provide access to hundreds of USD-denominated US Stocks with different account options for long and short trading.

Create Your DARWIN Index

You can create your DARWIN index through a live Interactive Brokers account or via an MT4 or MT5 account with Darwinex. The algorithm will learn your trading habits for a month, and after that, you'll be able to create your DARWIN index.

The steps include:

  1. Register: Register for an IBKR account or an MT4/MT5 account with Darwinex.
  2. Onboard: The onboarding process allows for a personalized experience.
  3. Deploy Capital: Add funds to your wallet and onto your live trading account.
  4. Trade: Build or consolidate your track-record by trading the assets universe.
  5. Create DARWIN: Enable it instantly on imported track records and after a month on new accounts.

Attracting Capital with DarwinIA Allocations

DarwinIA is a monthly seed capital allocation program where traders can receive recurrent and cumulative allocations. It consists of two levels:

  • DarwinIA GOLD: Maximum allocation of €500,000, committed for 6 months, and allocation criteria are based on the current month's return.
  • DarwinIA SILVER: Allocation criteria are based on a minimum rating, with a minimum allocation of €25,000 and commitments for 3 months.

Reaching a rating of 75 guarantees a minimum allocation of €25,000, with the potential for up to €375,000 if you outperform other traders. The rating considers your current month's return, cumulative return over the previous five months, and maximum loss over the last six months.

Attracting Third-Party Capital

Darwinex allows you to attract third-party capital under their FCA (UK) asset management license. They apply a risk management layer to your trading strategy, transforming it into a new asset class, the DARWIN index. This index replicates your entries and exits, offering lower brokerage fees compared to retail rates.

Intellectual Property Protection

Your trades are not visible in real-time to others, ensuring that investors pay 20% of their profits from the DARWIN. This protection prevents investors from replicating your strategy outside of Darwinex without your knowledge.

Build on Your Existing Track Record

Migrating your trading history from another broker to Darwinex allows for analysis of your strategy and potentially faster access to DarwinIA GOLD. You can migrate your MetaTrader 4 track record, move your IBKR account to Darwinex, or inquire about migrating your track record from other platforms.

Invest in DARWINs

Darwinex offers the opportunity to invest in DARWINs, which are verified investable indices. These indices are typically uncorrelated to traditional investments, providing portfolio diversification. They also offer instant liquidity and controlled risk, with competitive and transparent brokerage.

A Believable and Fair Pricing Model

Darwinex's pricing model aligns with your success and the success of DARWIN providers. They follow a High-Water Mark Principle, where you pay performance fees only on your net, individual upside. The management fee is 1.2%, with a 20% performance fee, of which 5% goes to Darwinex and 15% to the DARWIN Provider.

Technology Backing Your Investment Journey

Darwinex provides a proprietary platform and advanced toolkit to help traders and investors. They also offer access to traditional markets for those who prefer to trade traditional assets.

Building Trust Since 2012

Darwinex has more than 10 years of experience in growing traders and supporting investors within a solid ecosystem. They manage risk independently from DARWIN providers, ensuring client funds, capital, and reputation remain safe. Darwinex is authorized and regulated by the Financial Conduct Authority (FCA) in the UK and offers deposit insurance and excess cover.

DARWIN API Suite

For those interested in further analysis and trading, Darwinex offers the DARWIN API Suite, which includes various APIs for accessing DARWIN quotes, trading DARWINs, monitoring positions, and streaming real-time quotes.

In conclusion, your path towards investor interest can be paved with the creation and management of a DARWIN index. By offering your investment strategy in this format, you can attract investors, share in the success, and benefit from a transparent and efficient trading ecosystem provided by Darwinex and Interactive Brokers. Whether you're a trader or an investor, the opportunities in this space are vast, and the potential for growth is significant.

FAQs

The main advantage is that it allows you to present your investment strategy to potential investors without the need for complex asset management permissions.

The performance of your DARWIN index is vital because investors are attracted to strategies that can generate consistent returns. A well-performing index is more likely to attract investor capital.

The DARWIN Assets Universe includes a wide range of liquid assets, offering investors instant liquidity. It's important because it allows you to create a DARWIN index with a diverse portfolio of assets.

Becoming a Professional Client involves meeting certain criteria and offers advantages like monthly rebates and a dedicated account manager. However, it may make you ineligible for certain protections like the Financial Services Compensation Scheme (FSCS).

The High-Water Mark Principle ensures that you only pay performance fees on your net, individual upside. It prevents you from paying fees on previously lost profits.

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