The DarwinIA lottery demo portfolio supported by the Hall of Fame

[IlIlIlIlI]

Coming soon:
The DarwinIA lottery demo portfolio supported by the Hall of Fame

This portfolio should have the following advantages:
- no maintenance driven by criteria
- no exit rules, but a fix investment period limited to 6 month
- no filters with the disadvantages described here
- no snapshot taken to celebrate random results

Composition:
- The investment amount will be split into 60 shares
- Darwins will be bought if the trader received a DarwinIA allocation
- Darwin will stay there for 6 months, as long the trader can take profit of the DarwinIA allocation

Rules:
For the DarwinIA eligibility there are criteria to fill:

Additional rules for this portfolio:
- a Darwin must show more than 50% profit
- the trader must have made 1.000 EUR shown in the Hall of Fame. So he has proven that he can make money for investors

Analysis and Research behind this idea:
See next post.

 

[IlIlIlIlI]

Idea:
Darwinex pays about 20k per month to the 120 contest winners of the last months, in two rates every three months. I assume, that the majority of this money goes to the higher ranks as the prizes are betwenn 360k for the winner and 30k for rank 120.
These successful Darwins must also have made money for investors in the last 3 months if they get a DarwinIA payment.
The challenge is to identify enough successful Darwins to make profit in a portfolio.

The portfolio will be built with x3 leverage so that I have 30k to invest.

Analysis and Research:
I made an excel sheet where I identified the top 10 out of the DarwinIA ranking since February, who filled the criteria above.
For every rank in the top 10 I allocated 500 EUR in the following month after the contest, so 5k are allocated every month.
There are also listed the candidates from the todays ranking of August which appear the first time, but without any allocation.
As a result there are about 40 Darwins, also 16 with more than one 500 EUR allocation as they were found as top winners in more than one contest.

I did the same with the monthly return shown on the Darwin and calculated the gross profit on equity made in the last 6 months. Currently I see 651 EUR there. That is not the real figure, as I only look at the Darwins which would have been in the portfolio in August. Allocations of earlier months are not researched as I don't need them to run this portfolio.
In August I found about 60 EUR drawdown, which is taken as noise as I know from my own trading that August was a more difficult month than others.
August is the only month since March which shows a drawdown, but I would expect some increase on the portfolio value.

The following allocations from the February contest would be sold when the August allocations will be bought:

The performance shows an average of 4.84% profit for these allocations which looks nice for 6 months:

The column Performance shows the performance since beginning of March.
So the hypothetically invested 5k from the beginning of March should return about 5.15 to 5.2k after fees. What looks really great is that there is only one Darwin out of 10 which did not make money in the last 6 months. That makes me optimistic that this portfolio could work profitable as money is only made when a position is closed.

All figures visible today for August are not final, but I don't expect huge differences until the end of August.
The portfolio will be bought when the final DarwinIA results are available, I assume latest on September 2nd.

 

[CavaliereVerde]

The concept is very similar to the Darwinia Portfolio by @LongVision
>https://www.trade2win.com/threads/portfolio-darwinia-investment-by-longvision.240034/
Like him you are tracking those that won multiple times, while the earnings > 1000 helps to discard lucky newcomers and migrations.

 

[IlIlIlIlI]

Like him you are tracking those that won multiple times, while the earnings > 1000 helps to discard lucky newcomers and migrations.

It was my intention to eliminate traders changing their behaviour when investors or prizes show up.
I take every top 10 allocation in line with DarwinIA and my rules if the trader had proven that he and investors made money with his Darwin, also first allocations.
The payout of 1,000 are taken arbitrary as a rule, maybe 500 is enough. But I'll start with 1,000.
As Darwinex does not provide these data for each Darwin, which I would prefer, I have to take their data of the trader.
edit:
I just read @LongVision's portfolio thread and it looks like his rules are harder than mine.
Now I'm really curious about the results in the upcoming months.

 

[CavaliereVerde]

I really like very much this new strategy!
It is a good balance between action and patience.
A monthlly rotation with an holding time of 6 months.
Darwinia is the only way to automate uncorrelation.

4.8% is the gross performance, we can consider1/3 going away in fees and we have ~3%.
Seems not much but is calculated on the unleveraged allocation of 30k.
If we consider the equity of 10k it becomes 9% in six months that is very good!

 

[IlIlIlIlI]

I really like very much this new strategy!
It is a good balance between action and patience.
A monthlly rotation with an holding time of 6 months.
Darwinia is the only way to automate uncorrelation.

4.8% is the gross performance, we can consider1/3 going away in fees and we have ~3%.
Seems not much but is calulated on the unleveraged allocation of 30k.
If we consider the equity of 10k it becomes 9% in six months that is very good!

My conservative expectation is 6-12 % per year after deducting all fees for a 3x leverage portfolio with a max. temporary loss of less than 5% on the balance.
10-30 worse DD days on equity cannot be a problem during a whole year.
2:1 is a good profit/DD ratio and worth a deeper look on it.

 

[LongVision]

4.8% is the gross performance, we can consider1/3 going away in fees and we have ~3%

As 76% investors lose money so anything above 0% is good for investors.
If DarwinIA portfolio give positive results then it can works as a template for darwin selection for investment.

 

[LongVision]

Most of Darwins in my DareinIA portfolio is overlapping with this portfolio so I expect positive correlation for both DarwinIA portfolios.

 

[LongVision]

It seems to good strategy. But invested darwins are more than 40.

Is it good idea to invest on so many darwins?

Filter such as invest in a darwin with more than one allocation within 06 months can reduce number of invested darwins and filter out a lucky month for darwin. This filter reduce nos of invested darwins to approx.50%

@IlIlIlIlI Can you add this filter and show what is 06 month return of your backtest.

 

[IlIlIlIlI]

It seems to good strategy. But invested darwins are more than 40.

Is it good idea to invest on so many darwins?

Filter such as invest in a darwin with more than one allocation within 06 months can reduce number of invested darwins and filter out a lucky month for darwin. This filter reduce nos of invested darwins to approx.50%

@IlIlIlIlI Can you add this filter and show what is 06 month return of your backtest.

I don't have a filter, the selection is made manually top down from the DarwinIA Standings publication.
The result is transferred to an excel sheet.
I go down the list and take the top 10 Darwins which have a higher price than 150 and research manually in the hall of fame whether the trader received more than 1,000 EUR from investors and DarwinIA until now.
Unfortunately Darwinex does not offer a filter for these two functions to merge, so the workload is much higher because of manual investigations.
If you can do it with the API, you might be able to automate it and to calculate the past results, but I'm not an API programmer.
To reduce my effort, I didn't do that as it has no impact on the setup of this portfolio in the first days of September.

There are 60 shares for the last 6 closed competitions of DarwinIA and every share is an investment volume of 500 EUR for the next 6 months.
Each share weights 1.666 % of the portfolio value.

From the 37 Darwins currently in the selection for August, we would have
- 21 with an allocation of 500 EUR as they were once in the top 10 of my selection in the last 6 months
- 9 with an allocation of 1,000 EUR as they were twice in the top 10 of my selection in the last 6 months
- 7 with an allocation of 1,500 EUR as they were thre times in the top 10 of my selection in the last 6 months
So about 35% of the shares were added to an existing investment.

In the screenshots above there are also shown four estimated newcomers from the August contest, but that is not final yet.

This diversification should compensate the result of one or two losers which can usually wipe out the profit of months of the whole portfoflio as we also had it with the hero portfolio in August.
Her we also have one Darwin (DQB) in the portfolio which lost 15.29% in June immediately after his allocation - IMO a typical change of behaviour after the allocation from May - but the portfolio could compensate it as it cut the performance only by 0.25%.

I know that this composition can't be perfect, so we need a composition where perfection is not needed.

 

[IlIlIlIlI]

@LongVision If I would look up the 16 Darwins with more than one allocation, I see a DD of -0.18% per share in August while taking all 37 I see a DD of about -0.005% per share in August.
The Darwins with only one allocation show 0.13% profit on equity per share in August.
As this is only for one month, more investigations are needed to prove statistical significancy.

IMO at the end only the result of selling the share - the impact on the portfolio balance - counts.

 

[CavaliereVerde]

I just read @LongVision's portfolio thread and it looks like his rules are harder than mine.

Also your rules are pretty hard.
I have done some evaluations and your additional filters of high return and high earnings make you discard at least 30% of the top ranked darwins every month.
I think you have to go down until position 30 to find 10 compliant darwins .

 

[IlIlIlIlI]

I think you have to go down until position 30 to find 10 compliant darwins .

For sure to more than 20, and for some months 30 was not enough, more 40.

 

[LongVision]

Also your rules are pretty hard.
I have done some evaluations and your additional filters of high return and high earnings make you discard at least 30% of the top ranked darwins every month.

My Darwin TVS missed the boat two times. 😊

 

[IlIlIlIlI]

The portfolio was setup today between 13:10 and 13:20 MT4 time.
ZVQ could be bought only for $999.99 instead of $1,000 because of the Darwinex rounding metrix.
I expect some dillution by buying all at the same time today and with a different price than the original allocation price and I expect the highest impact of dillution from the performace fee payment after 3 months.

There are 40 Darwins in my final list for the allocation.
- 4 Darwins with $1,500 allocation
- 8 Darwins with $1,500 allocation
- 24 Darwins with $1,500 allocation

This is the first picture of the portfolio:

 

[CavaliereVerde]

You have to consider performance and management fees so you need some free cash.
You could reduce the allocation unit to 480 .

 

[IlIlIlIlI]

You have to consider performance and management fees so you need some free cash.

Management fee will be deducted from the sales of every month.
Performance fee will be taken when selling the allocation and after 3 months.
Fees cut the amounts of the new allocations.
It is planned to allocate about the full amount left, divided by 10 as new share size after the monthly sell tracations.
After a bad month or because of these fees that could also be less than 500.
Share sizes must not be stable for all months, I will continue to use my excel for the documentation so that I know easier which amount is to sell.

As it is not possible to reduce the size of the demo portfolio, I couldn't start only with the winners of August.
I decided to start fully invested as performance would be cut significantly if I would start only with the winners of August.

 

[IlIlIlIlI]

As I was just preparing my excel for the next month end and new allocations, I found out how much gross profit the new allocations of August made with there previous allocations until end of August.

In August there were 6 Darwins new in my top DarwinIA allocation list:
ICX, JTL, KGL,OLP, OOS, UAE

The other 4 Darwins made a total gross profit of 186.70 USD until end of August with their active previous allocations since April 2021 (allocations ending end of August 2021 are not included):

Profit calculated is in USD and not in EUR, but I didn't change that setting for the excel as it is just a working sheet.
Same is with allocations on the demo portfolio, $500 per share, so percentage data are true.

 

[morehastelessspeed]

How much negative divergence do you usually tolerate before selling a Darwin?

 

[IlIlIlIlI]

How much negative divergence do you usually tolerate before selling a Darwin?

Currently the only rule to sell a Darwin is after 6 month when the notional allocation of the DarwinIA prize is removed, after a Darwin had won a prize.
The DarwinIA eligibily criteria exclude Darwins with a divergence worse than -0.4 when the competition results are final. That could be a lucky snapshot.
So - currently - I would tolerate any divergence as long as the Darwin is in the portfolio, as a real investor I would not. There my tolerance values would be -0.3 or -0.5 depending on the return rate.