DWC is a very special DARWIN, fruit of the labor of our division Darwinex Labs, which makes available to investors the analysis of the aggregated data generated by all traders operating at Darwinex.
What is it? Real-time sentiment index
We’ve observed at Darwinex what appear to be recurring “market cycles” that last anywhere between 4-6 months.
These cycles typically involve:
- A 3-4 month “benign” cycle where DARWIN portfolios perform well: it is characterized by a period of low volatility in the forex markets. During that period, aggregate trading accounts at Darwinex usually yield good results "easily".
- A 1-2 month “sweep” cycle with higher volatility where trading portfolios struggle.
Thanks to the DWC, we measure sentiment cycles and allow the investment community to take advantage of them.
How does it work?
We have detected that there are two distinct phases when it comes to trades distribution in our trading community:
- Symmetric distribution. In the symmetric distribution phase, the market sentiment of the community is homogeneously distributed between bulls and bearish. That is, there are more or less the same number of traders thinking that an asset can go up as it can go down.
- Asymmetric distribution. The asymmetric distribution phase occurs when the majority of the trader community is asymmetrically positioned on one side of the sentiment, be it bearish or bullish. When this happens, the market usually makes sudden movements that surprise the majority of traders, who end up assuming unexpected losses.
- During the so-called "sweep" cycle, during which DARWINs are most prone to suffer significant losses, DARWINs tend to share certain patterns. Normally they have a grade lower than 5 in the Loss Aversion (La) Investable Attribute, that is, they let losses run much longer than profits. This data should be complemented with a grade in the Capacity (Cp) Investable Attribute greater than 5, which means that the DARWIN usually leaves its positions open over 24 hours and, therefore, makes them more likely to have open trades when unexpected market movements occur.
- The investment in this DARWIN is only recommended for active DARWIN managers who can regularly monitor their portfolio.
- By using our trader's data, we have designed a fair "Darwinian" dividend distribution policy in which, performance fees that investors obtain by investing in the DWC, will go to the best traders, via DarwinIA, when certain conditions are met
Do you want to know more?
If you want to know more about DWC you cannot miss the following webinar: