What it takes to have it

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Muiris

Active member
150 271
Just for the sake of crunching numbers. What chances would have a Darwin to make us rich? Or to make money for a living? Or just to make money enough to barely continuing trading?...

Well, I decided to make a break on my robots and crazy Forex ideas, and dive into the Darwin Universe to check for myself how is everyone struggling with the markets :)

First, Darwinex sample has 3.105 Darwins. Good enough for my taste. Let's move forward and play with some filters.
Simple exercice: I filtered the Darwins according its longevity - More than 1 year, 2, 3, >5 years.
After that, from those groups I checked their returns since the past 2 years. I would have preferred to measue the return since their origin but I didn't find the way. Anyway, I think the results would be more or less the same.

This is the table with some figures:
View attachment 308627

Could discuss my personal criteria. But I think that if in 2 years you don't get at least 10% return in total, the Darwin is worthless. I suppose that we could consider a Darwin that gives us between 10% to 20% return per year as the Darwin of our wet dreams. And those with more than 20% per year the Masters of the World.

On the table above:
  • Chances to get a Darwin that will provide money enough for a Living: 7% to 10%
  • Chances to get a Darwin that will make us rich and enjoy cocktails on a Caribean beach: 1%

Well, conclusions? I see a couple of obvious things:
i) Trading is fucking hard
ii) Numbers between Darwins with more than 1 year experience are quite similar to those who have a much longer longevity. In fact, after year 3, results are almost the same. So, from here: After 1 year your results should have confidence enough to predict the future, and after 3 years the results are pretty certain. I could be wrong but I see what I see...

On this business where everyone look like owning the definite truth but nobody look like knowing really nothing. Getting some conclusions and cold references I think is comforting.

And yes, I know. Of course there are exceptions and see a Darwin crushing after 3 or more successful years. We all have seen and discussed about some of those Darwins. But at the end of the day, statistically the numbers don't lie.
7-10% chance of getting a darwin to provide a living. sorry this just doesn't jive with reality of last 5 years
 

IlIlIlIlI

Established member
686 662
The point is that nobody knows who are this 7% of lucky survivors BEFORE they produce the positive return.
You need a process, a strategy to find the winners in time (and sell them in time if required).
And the winner have to compensate the ones which run into losses.

So you can try it with the 32 candidates of the "get rich" level of @FXforfun and look at the result in 1, 2 or 3 years.
 

FXforfun

Member
85 134
7-10% chance of getting a darwin to provide a living. sorry this just doesn't jive with reality of last 5 years
In order to start a discussion here we should define first what do you consider necessary to provide a living. From my point of view, if you achieve an engine that may increase your wealth by more than 10% a year. You have it. It's feasible. Well, 7-10% chances to get it say so.
Of course if you don't have any capital. You may have the engine but not even a 50% a year could provide you a living. And 50% a year is not feasible.
As I said on my post it's my personal criteria and each of us will have a different one and probably none of us will match. However most estraordinary hedge funds wordwide barely can get a 20% a year. And none of them are on Darwinex, aren't they?

My exercice was made from a trader perspective instead of an investor perspective:
As an investor I would like to be able to filter those Darwins with a real hedge.
As a trader I want to know if my Darwin has a real hedge.
Subtle difference here, but as trader I can start anticipating behavior from a year of results to Project on the next 5 years.

As an investor I wouldn't bet on the first 25 Darwins on the Get Rich level because those are just a number on a statistic. Probably those 25 will be replaced by another ones on the next year and they are going to rotate year by year.
Only thing I can extract from the table I made is that 1% is on the Get Rich Level. And this 1% probably is just noise. So, in my opinion the Get Rich Level is just a chimera.
 

CavaliereVerde

Experienced member
1,669 2,169
if you achieve an engine that may increase your wealth by more than 10% a year. You have it. It's feasible. Well, 7-10% chances to get it say so.
If "Get Rich" 20%+ is a chimera also 10% could be luck/chimera.
It is easier(more likely) to acheive 10% than 20% but also this class of traders is rotating.
Every amount of positive performance could be due to luck.
Also hedge funds are rotating, winners turn to losers and desappear from the rankings on websites.
 
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Muiris

Active member
150 271
In order to start a discussion here we should define first what do you consider necessary to provide a living. From my point of view, if you achieve an engine that may increase your wealth by more than 10% a year. You have it. It's feasible. Well, 7-10% chances to get it say so.
Of course if you don't have any capital. You may have the engine but not even a 50% a year could provide you a living. And 50% a year is not feasible.
As I said on my post it's my personal criteria and each of us will have a different one and probably none of us will match. However most estraordinary hedge funds wordwide barely can get a 20% a year. And none of them are on Darwinex, aren't they?

My exercice was made from a trader perspective instead of an investor perspective:
As an investor I would like to be able to filter those Darwins with a real hedge.
As a trader I want to know if my Darwin has a real hedge.
Subtle difference here, but as trader I can start anticipating behavior from a year of results to Project on the next 5 years.

As an investor I wouldn't bet on the first 25 Darwins on the Get Rich level because those are just a number on a statistic. Probably those 25 will be replaced by another ones on the next year and they are going to rotate year by year.
Only thing I can extract from the table I made is that 1% is on the Get Rich Level. And this 1% probably is just noise. So, in my opinion the Get Rich Level is just a chimera.
There has been about 10,000 darwins created since inception. i think the success rate of 10% average a year lies more closely at 1 in 2000 chance .

if there was a 10% chance of getting a 10% return machine every year, there would be a hell of a lot more profitable darwins here.

it is more likely that you have a 10% chance of getting a darwin returning 10% ONE YEAR ONLY
 

FXforfun

Member
85 134
There has been about 10,000 darwins created since inception
Mixing numbers here. I'm just looking at active Darwins older than 1 year. And numbers are quite uniform once your Darwin gets older than 1 year. By the way you didn't notice that >2 years have bigger %'s, and that's logical too ;)
But it's Ok, put it the way you want. Cold numbers, extract your conclusions. If there's anything to conclude :)
 
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CavaliereVerde

Experienced member
1,669 2,169
From my point of view, if you achieve an engine that may increase your wealth by more than 10% a year. You have it. It's feasible.
If you want to say that a system that generates 10% per year is likely to be more robust than one that generates 20% because 10% is closer to hedge funds I can agree, it can be.
The other point is that such systems are much more rare than 7-10% of total systems.
Active darwins is already a number flawed by survivorship bias.
As we can see from my monitoring ~30 darwins are created every week but despite it the numbers of active darwins is pretty stable, this means that ~30 darwins per week are closed or have gone inactive.
This is more or less the same since 2018, so we have ~5000 abandoned darwins in 3 years.
 

IlIlIlIlI

Established member
686 662
The problem always is that you are now looking only at the survivors of the last period(s).

If Darwinex would provide you with the data so that you clould setup your selection to the criteria a year ago you will see who disapperead during that period because it didn't survive it.

The survivors also have to compensate the losses of the others and the fees before they can make profit in your portfolio.
That's the challenge - and currently we can only test forward.
 

FXforfun

Member
85 134
Still mulling over the issue and assuming my previous statements, based on the table filtered by the seniority of the Darwin and its returns, were Ok. Let's give it one more thought and take a measure. The purpose is to try to predict the quality of a Darwin from a simple measue, just reading a value. That's a measure, right?.

What is the only measure we can extract from Darwinex?, aside from the atributes which almost by definition only give us a piece of information and are not intended to bring us the full picture. So, what is the only measure we've left from Darwinex? Yes D-Score. I'm not a fan of the D-Score, but it isn't a bad measure either, could be as good as any other.

So, back to the matter. The question is if we could classify a Darwin just with the result of its D-Score (again, a measure as any other). Let's turn the Excel machine on and this is what I've found:
Captura3.JPG


I think it's not bold to conclude just what the numbers say: A Darwin under D-Score of 66 - 67 is not worthy. Doesn't matter how much experience it has, the results are quite stable and uniform through the years.

I'll try to ellaborate a bit better on my little blog :)
 
 
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