DarwinIA is Darwinex's monthly seed capital allocation.
We assign up to € 10M notional to 150 DARWINs every month as a way of both incentivising providers to improve their strategies and train them for trading with AuM assigned to their DARWIN.
DarwinIA is NOT an investment recommendation.
Contents
Why DarwinIA
DarwinIA has been created with the aim to incentivize responsible trading among our traders.
As opposed to other trading contests, in DarwinIA prizes are meant to be given to traders able to deliver consistent returns on the medium term.
Being the D-Score the most important factor for determining winners, the influence of luck is reduced, enabling allocations to strategies with solid fundamentals for generating returns in the medium term.
Maximum Allocation
Every month a maximum of €10,000,000 notional capital is allocated to the top 150 DARWINs on the DarwinIA leaderboard.
Funds remain invested in the DARWIN for a six-month-long uninterrupted period. Thus Darwinex could allocate a maximum of 60,000,000 € notional to its traders.
Allocation Distribution
The monthly allocation in your DARWIN will depend on 2 factors:
-
Final ranking
The final allocation will depend on an equity multiplier based on your final ranking.
For example, if you end up at the very top of DarwinIA, we´ll apply a multiplying factor of 36 on your minimum equity with a maximum capital to be allocated of 500,000 euros.
Current equity multiplicators can be consulted here.
-
Minimum equity
Once the equity multiplier is known, it is necessary to calculate the smallest equity realized during the month to know the exact amount to be allocated during the next 6-month period.
To calculate the minimum equity we take into account 2 criteria:
-
Result of the minimum of the sum between 1- smallest equity realized during the month on the DARWIN’s underlying trading account and 2- capital invested in the DARWIN, so that investors can compare the risk that each trader has invested in their strategy in a homogeneous way.
This means that if you had 5,000 euros of minimum equity in your strategy and 5,000 euros invested in your DARWIN, your final minimum equity to calculate the capital allocation would be 10,000 euros.
- Normalize the equity of the underlying trading strategy to the risk of the DARWIN -6.5% VaR-, that is, the equity of your underlying strategy will be automatically converted to the risk level it would have if it were invested in your own DARWIN.
Account equity (6.5%) = Account equity * account VaR / DARWIN VaR
For example, if you had 2,000 euros of equity in your underlying account with a monthly VaR of 13% -2 times higher than in the DARWIN-, these 2,000 euros would be equivalent to 4,000 euros for the purpose of equity calculation.
In case the VaR of the underlying trading account is higher than 32.5% -5 times the VaR of the DARWIN-, we will use 32.5% as a value so that DARWIN providers will be never incentivized to increase their VaR in order to rise their DarwiniA equity, as we consider that trading with a high VaR is detrimental to both the DARWIN provider and its potential investors.
Note that equity is not equal to balance.
- Balance: Funds deposited plus profits and losses already realized
- Equity: Balance plus the floating profit/loss of open trades
Prizes: 15% performance fee
From the profits generated by the DARWIN on the allocation, the trader obtains a 15% performance fee (calculated on a quarterly basis and taking into account a high-water mark criteria)
Eligibility criteria
DARWINs participate automatically in DarwinIA upon fulfilling the following eligibility criteria
- Monthly Divergence > -0.4%. Unless AuM is under $2,000.00.
- Correlation between DARWINs from the same provider < 0.5. Only the DARWIN with the higher D-Score will participate.
- Correlation between DARWINs from different providers < 0.8. Only the DARWIN with the higher D-Score will participate.
- Open to Buy. Must be open to new investment.
-
Rs > 3. To be ranked on the DarwinIA leaderboard, a DARWIN's Risk stability value must be 3 or higher.
-
Monthly return > 0%. To be ranked on the DarwinIA leaderboard, a DARWIN's monthly return must be positive.
-
DarwinIA allocation < € 600,000. To be ranked on the DarwinIA leaderboard, a DARWIN's current DarwinIA allocation must be lower than € 600,000.
Ranking Criteria
- D-Score. The most important criteria.
- Monthly Return. Measures the monthly return achieved by the DARWIN.
- Regularity (updated on a daily basis). Compares the DARWIN's activity for the current month with its activity over the previous five months.
Read more about the formula of the DarwinIA rating.
Frequently Asked Questions (FAQ)
These are some of the most frequently asked questions from our users.
- Does Darwinex hand out €10,000,000.00 in prizes? As shown above, Darwinex does not hand out €10,000,000.00 in prizes, but rather it allocates that maximum notional amount in the top ranking 150 DARWINs. Darwinex will pay to its traders 15% of the profits generated with such allocation.
- How often is the DarwinIA ranking updated? The DarwinIA ranking is updated every 4 hours. The DarwinIA page states the time remaining for the next update.
- What can I do if my DARWIN isn't eligible due to correlation? The correlation between the different DARWINs changes all the time. Although at one given point in time a DARWIN can be excluded from the contest, after the next update it may be included again. Strategies that are self-developed will have fewer chances of correlation than commercial robots which are widely used, even if these have been optimized with different parameters.
- Do I have to trade a certain number of times to have 100% regularity? In order to obtain a 100% in Regularity, a DARWIN's market exposure in the current month must reach at least 80% of its average market exposure in the previous 5 months. Market exposure for Regularity is calculated in the same way it is calculated for the Experience (Ex) Attribute. The only thing to bear in mind is that there is a degree of consistency in terms of the number of positions closed and their duration in the current month, and the average over the last five months. We are aware that algorithmic traders will have a much higher number of trades than manual traders. That said everybody can reach 100% regularity trading with a consistent frequency in their trading.