The aim of the stop-out (automatic closure) in DARWIN investments is to prevent investors to enter into a negative balance on their account.
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 total investment in a DARWIN reach 90% of the real investment. For example, if an investor invests €1,000 with 2:1 leverage, the real investment is €500 (the other 500 are borrowed from Darwinex), and when losses reach €450, Darwinex immediately closes the investment in the DARWIN.