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[HOWTOINVEST] Buying Darwins on a dip

CavaliereVerde

Senior member
Short term results are mostly random but Darwinex and other brokers show investors a non random sample of trackrecords but the luckiest.
Even when it is good stuff it is presented as invincible.
Those charts and articles by SKforex are very educational.
After a DD investors have a more realistic picture.
Brokers make money mostly from dumb investors with unrealistic expectations.
 

CavaliereVerde

Senior member
SUGinvestors.png

As we can see tha dumb money entered just after a lucky streak of green months, dreaming 30% per year and half of them exited after only 10% DD.
Smart money is still there but they are only 50/150 .
The main reason it is easier to make money with darwinia, dumb investors.
 
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Gargamel

Active member
Those charts and articles by SKforex are very educational.
I posted those links to his blog so that people who think I am inventing stuff can read from smart guy with very long and verifiable track-record.His top darwin is beautiful example of natural/realistic track-record and benefit of entering on DD.I wonder how many people actually clicked on those links :sleep:.
 

TLN

Well-known member
Also, on a dip you never know if the trader/strategy are burned out or is normal. It's riskier.
For this point, I think we can.
Basically, by comparing with the maximum drawdown and the usual drawdown of a darwinian, we can estimate the characteristic of the current DD.
Of course, we can not know the future, current DD might last longer and become new max DD.
But, investors can base on above and determine good entry.
Ex: Max DD of THA in 6 years is 10%.
It means all future DD within 10% is normal situation.
Smart investors can wait for normal DD of THA around 5-10% and enter.
Stop loss can be +10% DD. (15-20%).
 

FXforfun

Active member
@TrungLN No question about that. Anytime you're talking of Drawins as THA with 6 years history and its returns, I'd enter blind on it, at any time; up or down, my friend
 

FXforfun

Active member
Well, I would pick THA, SYO - it's kind of a bottom, and UYZ that it's kind of a top. I don't know if there are some other similar Darwins. But these 3 could make a hell of portfolio. I wouldn't care if they are on top or bottom. Too bad I'm not a financial advisor :)
 

CavaliereVerde

Senior member
An easy portfolio that would not work very long.
THA is mostly at full capacity.
UYZ has a conservative cap at 700k, IMO it is pessimistic but even with 2M capacity will be filled soon.
My 10 darwins portfolio is going strong but it took me a lot of time to collect all the hidden gems. ;)
 

CavaliereVerde

Senior member
I dont' like aggressive marketing and usually it is a bad sign but here we were speaking about the smartness/dumbness of investors, and it is beyond doubt that these ones are dumb.
It is diffcult to pick bottoms but but it is superstupid to buy after a lucky year at +30-40%
Maybe he is a good trader but the picture is lucky and incomplete.
 
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TLN

Well-known member
@Gargamel @CavaliereVerde
To show more evidence that enter a Darwin in normal DD is better than in the newer high. I suggest doing a test, a checking in the history of all outstanding Darwin. So, we can compare the profit/loss between these 2 entry method. Of course, enter in new high is applied in Darwin IA, and you already shown that it's not profitable.
 

Gargamel

Active member
@TrungLN My posts 11,23 and 24 in this thread are all that smart investor needs regarding entering on DD.Post 11 contains links to blog of one of the best traders at Darwinex,who is also educated,smart person.He did very good statistical analysis on this problem.Use google translate to read his blog posts.I am more 'common sense ' variety of analyst and I came to the same conclusion and strategy as him.
About psychological aspects of entering on High or DD I wrote everything that is needed,but it is scattered in many posts...
Unfortunately there will always be unscrupulous traders and impatient investors suggesting entering on highs is OK.When DD gets serious,they become silent and/or start panicking.For example provider of SUG was very aggressive in this and previous forum about entering on highs,but anybody entering now or more than a year ago in his darwin would be in the same spot.Well,not quite so:investor entering a year earlier would have paid taxes on profits that have evaporated since then,performance and management fees and suffered a bit of Divergence(that depends on each individual darwin-some are really problematic).
Sug1.png

Early investor,buying on highs a year ago when that darwin was hot,winning Darwinia and promoted would have what red line indicates(even less than that if you count taxes,but that depends how people are taxed in their countries...). Patient investor would start now and have what grey line indicates.

There is also opportunity cost:money invested in darwin during DD will start profiting very soon,while same money invested on Highs can spend 1 year earning nothing if darwin goes into DD .DD and climbing out of it can take 6-12 months easily.
My post 55 in thread Alternatives to Darwinex has a table of 50 elite traders(2019) on eToro investment platform:half of them were 12 or more months from their ATM(all time high). Such are realities about Draw-downs.
 
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