DARWIN DWC

DWC is a very special DARWIN, fruit of the labor of our division Darwinex Labs, it makes available to investors the analysis of the aggreagated data generated by all traders operating at Darwinex.

‌What is it? Real-time sentiment index

DWC is a real-time sentiment index that measures how market participants are presently orientated in the market without compromising individual trader intellectual property.

Market cycles

We’ve observed at Darwinex what appear to be recurring “market cycles” that last anywhere between 4-6 months.

These cycles typically involve:

  1. A 3-4 month “benign” cycle where DARWIN portfolios perform well. It is characterised by a period of low volatility in the forex markets in which aggregate trading accounts at Darwinex usually yield good results "easily".
  2. 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.

DWC2

The abovementioned market cycles are manifested in the DWC in the following way:

Asymmetric cycle

During this part of the cycle, in which the majority of the trading community, after a marked market trend accompanied by an increase in volatility, are positioned on the same, the DWC is at maximum because most strategies have struggled.

Symmetric cycle

Sentiment is equitably distributed among traders, with no clear trends and fairly contained volatility. In this environment, the DWC is usually found in the lower area of the last detected range.

How does it work?

We have detected that there are two distinct phases when it comes to trades distribution in our trading community:

  1. 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.
  2. 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 that majority of traders, who end up assuming unexpected losses.

It is very important that you understand that all orders are always routed to the market and, neither Darwinex nor our clients, act as a counterpart.

Tips

  • During the so-called "sweep" cycle, DARWINs most prone to suffer significant losses 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 opened 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 the data of our traders, we have designed a fair 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: