DARWIN Investment Conditions

DARWINs enjoy whole brokerage fees - 60% cheaper than the commission retail traders pay. Here is the full list of conditions of investing in DARWINs.

Contents

  1. Quote
  2. Minimum / Maximum investment & FIFO rule
  3. Divergence
  4. Trading hours
  5. Brokerage fees
  6. Management fees
  7. Performance fees
  8. Leverage
  9. Conditional orders
  10. Stop-outs

Quote

The DARWIN's quote price is determined by the return obtained since the underlying strategy's inception with 100 = 0.00% return.

If there are open trades on the underlying strategy, the DARWIN's quote updates every 30 seconds.

The price shows what an investor would have theorically obtained if they had invested in the same currency as the underlying strategy, with an initial value of 100, and with an identical execution between the DARWIN and the investor, i.e. 0% divergence.

Brokerage fees, spreads and swaps are all factored into the quote. Management and performance fees are not.

Read more: What does the DARWIN's quote mean?

Minimum & Maximum investment and FIFO rule

  • The minimum amount to have invested in a DARWIN is 200 units of your Wallet's base currency, and in increments of 25 for subsequent investments or partial closures.
  • The maximum amount to invest in a DARWIN is 100,000 units of your Wallet's base currency. Get in touch with us if you wish to make an investment above this amount so we can review your case.
  • If you have made various investments in the same DARWIN and you wish to make a partial closure of the same DARWIN, Darwinex will apply the FIFO rule (First In, First Out), in other words, the oldest investment will be the first one to be closed, and then the next investments based on the investment date of the DARWIN.
  • The profits generated with a DARWIN will be automatically reinvested while the investment is open.

Divergence

The divergence is the difference between the return obtained by the investors in a DARWIN, and the theorical return of a DARWIN. It is shown as a percentage and its value can be either negative or positive.

Divergence is caused mainly by investor volume with system latency and difference in base currencies being additional minor causes of divergence.

Providers can control investors' divergence via order fractioning and capacity management. With the latter, they can specify the conditions under which to close / reopen investments in their DARWIN. When the DARWIN closes to new investor capital, both investors – including those with a conditional order – and DARWIN providers, will receive a notification.

Read more: What is divergence?

Trading hours

Monday to Thursday 17:05-16:59 New York. On Fridays the market will close at 16:55 New York.

A DARWIN is a liquid financial asset, which can be bought and sold instantly 24/5, except:

  • During market rollover. As a means of protecting investors, and due to the noticeable decrease in liquidity in the market, between 16:59 and 17:05 New York, the Exchange will remain closed. The only exception will be Friday night, when the market will close at 16:55 instead of 16:59 New York.
  • Market closure. If the DARWIN has open trades in assets whose market is temporarily closed, be it due to a bank holiday or usual daily market closure, the purchase/sale will not be carried out immediately. The system will buy/sell those assets whose markets are open, waiting for the opening of the other markets to complete the operation. In case of a sell, only after 100% of the assets open in the DARWIN have been sold will the operation appear in the "History" tab and the capital as "Available".

Read more: What happens if you want to buy/sell a DARWIN which has underlying trades open with different opening/closing times?

Brokerage fees

DARWIN orders enjoy wholesale brokerage fees - 60% cheaper than the commission retail traders pay.

This is to make Alpha production neutral & efficient = independent from the volume and frequency of the trades.

In terms of spreads and swaps, DARWINs pay the same fees as retail traders as we pass on the fees we're charged by our Prime Brokers.

Read more: Assets and spreads

Management fees

We charge 1.2% annual management fees on invested equity (1.85% for 10% VaR DARWINs during phasing out).

Every business day (M-F) 1.2% / 261 is charged on the equity (invested + PnL without performance fees). For each day, the average equity during the day is taken into account. To calculate the average equity during the day, the investment is weighted by the time it has been open during the day. For example, if an investor had an invested equity (invested + PnL) of 4,000 for 12 hours, that is 2,000 of average daily equity. The management fee is charged daily at closing the investment in a DARWIN or at market closure.

No management fees are charged during inactive DARWIN periods. We identify inactive periods based on the DARWIN's behavior over the previous 6 months. We look for gaps with no market exposure, i.e. no open trades or net trades. E.g., an account with +1 EURUSD and -1 EURUSD is considered to have no exposure. From these gaps, we select those that are in the 95% percentile, i.e. 5% of the largest in duration. From these, we take the one with the shortest duration which will be our reference to determine the inactivity. An account is inactive if it's true that it currently has no exposure (it is in a gap) and that this gap is greater than or equal to the gap we use as a reference. An additional factor of the formula is that if the current gap is greater than 2 weeks, the DARWIN is considered inactive independently from the reference gap.

Performance fees

We charge 20% quarterly performance fees per invested DARWIN calculated using the HWM (high-water mark) method.

Using this method we ensure that you only pay performance fees for new profits earned avoiding overlapping with profits from previous time periods.

Your quarter starts when you make your firsts investment in a DARWIN in the same portfolio. Your successive investments in the same DARWIN in the same portfolio have no effect on the starting date of the quarter. Should you invest in the same DARWIN in a different portfolio (you can have up to 5 live portfolios), HWM starting dates across portfolios would be different.

Each time your quarter with a DARWIN ends, if the previous high-water mark has been surpassed, we'll charge you 20% of the net profit (closed profit + open profit) generated in the quarter.

Read more: What are performance fees?

Leverage

For investors who're comfortable with higher risk levels than DARWINs' default 6.5% monthly target VaR(95%), we offer portfolio leverage x3. This means that with e.g. 5,000 own funds you'll be able to invest up to 15,000. Investing 15,000 in 6.5% VaR DARWINs is the same as investing 5,000 in 19.5% VaR DARWINs.

Portfolio leverage is disabled by default but once enabled it cannot be disabled. 

Read more: What is leverage for a DARWIN portfolio?

Conditional orders

Conditional orders are orders which are not immediately executed to the market, because the quote price has to reach a certain value before the order is triggered.

We offer four types of conditional orders for DARWINs.

  1. Buy Limit. A Buy Limit order is to buy a DARWIN at a quote price lower than what it is right now. This option is used by investors who want to make the most of a fall in a DARWIN in order to buy ''cheap''.
  2. Buy Stop. A Buy Stop order is to an order to buy at a higher price, in other words it is used to buy a DARWIN at a quote price higher than what it is right now. This order is used by investors who want to make the most of the momentum of a specific DARWIN.
  3. Take Profit. A Take Profit order is to sell a DARWIN when the quote price is higher than what it is right now.
  4. Stop Loss. A Stop Loss order is used to sell a DARWIN when the quote price is lower than what it is right now.

Read more: What are conditional orders?

Stop-outs

Due to the low leverage DARWINs trade at, the probability of negative balances is very low. Nevertheless, Darwinex needs to have a mechanism to prevent, as far as possible, negative balances altogether.

The stop-out is applied to each DARWIN individually. It is not applied on the portfolio level.

The stop-out gets triggered in the moment when the losses of a real investment in a DARWIN reach 90% of the real (not the leveraged) investment. For example, if an investor invests €15,000 in a DARWIN in a leveraged portfolio, the real investment is €5,000 (the other 10,000 are borrowed from Darwinex), and when losses reach €4,500, Darwinex immediately closes the investment in the DARWIN.