How to Compound Interest

[Constantino]

As an Investor on Darwinex, how do I Compound the gains of my Darwins?

In general, do I need to close my Darwins every x number of days and retrade them by re-allocating the gains again back to them?

 

[CavaliereVerde]

Exact, you have to decide an amount of open profit, at that point you sell the portfolio and rebuy it to restore the leverage.
Once per year would be a good compromise.

 

[Constantino]

Exact, you have to decide an amount of open profit, at that point you sell the portfolio and rebuy it to restore the leverage.
Once per year would be a good compromise.

How come you've chosen to go with once a year and not with something else like once a month?

 

[CavaliereVerde]

Every time you buy/sell darwins you waste money for spread and commissions of the replicated positions.
Once per year makes sense considering every darwin could be up +20% or down -10%.
Rebalancing and releveraging.

 

[QAVinversion]

Cada vez que compra/vende darwins, desperdicia dinero en spreads y comisiones de las posiciones replicadas.
Una vez al año tiene sentido teniendo en cuenta que cada darwin podría subir +20% o bajar -10%.
Reequilibrio y reapalancamiento.

• Does this only apply for open operations?

 

[AriaS]

Every time you buy/sell darwins you waste money for spread and commissions of the replicated positions.
Once per year makes sense considering every darwin could be up +20% or down -10%.
Rebalancing and releveraging.

Does this mean that you can simply tell your investors the exact hours or days when you never trade, so they could sell and re-buy without losing on spreads and commissions?

 

[CavaliereVerde]

This is not allowed, timing sugestion to investors would be an investment suggestion thaty requires a licence.
You can only describe your darwin, like describing a stock or a company is not an investment suggestion.

 

[AriaS]

This is not allowed, timing sugestion to investors would be an investment suggestion thaty requires a licence.
You can only describe your darwin, like describing a stock or a company is not an investment suggestion.

Thanks! Didn't think about it! But telling the investors how to compound in general is allowed, isn't it?

 

[CavaliereVerde]

Yes waiting for a darwin to be flat befor buying makes perfect sense but the majority of darwins are always at market.

 

[AriaS]

Yes waiting for a darwin to be flat befor buying makes perfect sense but the majority of darwins are always at market.

There's no way of 100% knowing whether the DARWIN has open trades or not? I used to think that it's "Open P&L", but it's not. And, btw, do you know how I can delete or edit an older post of mine? No such links appear.

 

[CavaliereVerde]

If the quote is not moving there are no open positions.

 

[AriaS]

If the quote is not moving there are no open positions.

I see. I thought it was updated with a delay. So would it be fine to tell your investors, "don't compound if you see the quote moving", or anything like that? 🙂

 

[QAVinversion]

¿Significa esto que simplemente puede decirles a sus inversores las horas o los días exactos en los que nunca operan, para que puedan vender y volver a comprar sin perder diferenciales y comisiones?

Sí, esperar a que un darwin sea plano antes de comprar tiene mucho sentido, pero la mayoría de los darwin siempre están en el mercado.

Cavaliere, and in case you know this, is it worth closing and buying back in with any profit?

 

[IlIlIlIlI]

Cavaliere, and in case you know this, is it worth closing and buying back in with any profit?

The Darwin is flat if you see no difference here on the buy screen:

If there are open positions, you see a difference and you see a warning that the Darwin has open position to the closed market:

If you close and reopen a position you pay an investor fee if you made profit (according to the more complicated rules of investor fee), after closing your account balance is reduced by this amount.

If you keep the position you lose the advantage of a higher leverage (currently 1:4, changed from 1:3, but unfortunately I don't know when the change was made and you can't change it for elder running portfolios with a 1:3 leverage), as you always buy a position in a Darwin with a 1:1 leverage.

The leverage multiplies the money available for investment in your portfolio, not the amount invested or position size.

So it is your choice 🙂

 

[AriaS]

The Darwin is flat or the market is closed (as now) if you see no difference here on the buy screen:
View attachment 320967

If you close and reopen a position you pay an investor fee if you made profit (according to the more complicated rules of investor fee), after closing your account balance is reduced by this amount.

If you keep the position you lose the advantage of a higher leverage (currently 1:4, changed from 1:3, but unfortunately I don't know when the change was made and you can't change it for elder running portfolios with a 1:3 leverage), as you always buy a position in a Darwin with a 1:1 leverage.

The leverage multiplies the money available for investment in your portfolio, not the amount invested or position size.

So it is your choice 🙂

Interesting! I was wondering today why I can't change the leverage of my old portfolio. As for the investor fee, we pay it anyway once in 3 months, and yes, if we sell a DARWIN it is deducted immediately. Could you explain the following more? "If you keep the position you lose the advantage of a higher leverage, as you always buy a position in a Darwin with a 1:1 leverage."
If my portfolio is leveraged from the beginning, then I always buy with that leverage. Why would it be 1:1?

 

[IlIlIlIlI]

Interesting! I was wondering today why I can't change the leverage of my old portfolio. As for the investor fee, we pay it anyway once in 3 months, and yes, if we sell a DARWIN it is deducted immediately. Could you explain the following more? "If you keep the position you lose the advantage of a higher leverage, as you always buy a position in a Darwin with a 1:1 leverage."
If my portfolio is leveraged from the beginning, then I always buy with that leverage. Why would it be 1:1?

if you decide to use higher leverage, you can only do it once and AFAIK you cannot change it back (for sure not without the Darwinex support).

If your friend started a 10k demo portfolio and decided to change to higher leverage, the amount available for investment is changed from 10k to 40k for a 10k deposit (, on my elder demo portfolio published here it got "only" 30k as it was opened when higher leverage was 1:3).
That's all - nothing more happens with higher leverage 🙂

If you buy a Darwin for 40k (from a 10k deposit), your investment amount now is 40k.

If the Darwin makes 25% profit, your investment amount stays 40k, but the equity is 50k now - deducted by the management fee. The management fee reduces the account balance daily, in this example to a negative value like on my demo portfolio:

When you sell now, you will get
50k for selling
- deducted by 2k for 20% investor fee out of 10k profit
- deducted by the management fee which was daily decreasing the account balance (and I take $500 for this example)

You account balance now is 17.5k out of the deposit of 10k.
Multiplied with a 1:4 leverage now you have 70k to (re-)invest.

IMO that's the dream of all Darwin investors 🙂

 

[AriaS]

Sounds good! My friend should see this, but she doesn't like calculations at all lol

 

[IlIlIlIlI]

Sounds good! My friend should see this, but she doesn't like calculations at all lol

She does not need to calculate, but she could take a simple rule:

If your Darwin made 2.5% or 1k profit on her portfolio and the Darwin is flat, sell and rebuy it immediately. After 10 steps like this and 25% profit on your Darwin I assume that the equity is higher than 70k. 🙂

Your job: make 25% on your Darwin after the portfolio started.

 

[QAVinversion]

to access 1:4 leverage, do i have to create a new account?

 

[AriaS]

I've just created a new live portfolio and it won't let me update to 1:4. Only to 1:3 🤔 The demo has 1:4.