Having been using Metatrader for more than 10 years, I've come across my fair share of brokers for trading forex. Metatrader is the most popular platform for retail forex traders and it's no surprise that there are hundreds, if not thousands, of brokers which offer this to their clientele. In this post, I want to tell you why I think the FCA regulated broker, Darwinex is a gamechanger in it's offering to successful retail traders.
Implementation
The Metatrader interface looks exactly the same for every customer but what you don't necesarily see is the backend, how everything is connected together to ensure correct execution of your trades which can make a world of difference to what results you end up getting. You may have bought trading algorithms where the vendor has shown fantastic results but when you run them yourselves, your results are no where like what the author has been getting. You shouldn't immediately dismiss the product, it's more likely that your broker isn't executing exactly the same as that of the vendor.. always try and use the same broker as that of the vendor (assuming it's an appropriately regulated broker - more on that later). You never really know what the execution is like until you test it. Darwinex is right up there in my opinion, more often than not it executes correctly compared with 99% of other brokers.
Regulation
As a rule of thumb, for all accounts where I have significant real money, I use tier1 regulated broker only. When I say tier1, this for me means not offshore, properly legitimate financial regulation.. FCA in the UK for example, ASIC in Australia. Of course, not all offshore brokers are bad.. but I rather start from a good place than find out the hard way. I had moved a lot of my accounts from the UK to IC Markets in Australia due to the ESMA regulation changes in 2018 which reduced the leverage a retail trader could play with. IC Markets could still offer 1:500 margin which is handy for aggressive trading strategies. However, it looks like IC Markets are also cutting leverage to 1:30 so it's time to move it all back to the UK and Darwinex is going to be that broker.
Protection
In the UK, the UK FSCS covers up to £85,000 for the protection of clients. Darwinex have provided an additional £1 million deposit protection for their clients. This insurance protects the client in case the broker goes out of business. I don't know any other broker that does this!
Trading
Besides excellent trade execution conditions, once your trading system has reached certain criteria, it it eligible to become a Darwin. What does this mean? It is essentially a newly created FCA regulated asset that derives it's value from your underlying trading account. What does this mean? It means that it becomes a legally investible regulated asset that can Darwinex can sell to investors (institutional or personal). This is a gamechanger.. this allows successful retail traders to trade other people's money legally albeit all through the Darwinex platform.
Traditionally, the other people who could trade other people's money are FCA regulated firms / people. As a retail trader, unless you're willing to sit exams and have a large amount of money to pay for the regulation, it's pretty much unreachable. Darwinex have been really smart in creating a 'derivative' off the back of a successful retail trader's account.
In order to ensure the assets are investible, they have had to dampen both risk and reward for each underlying system. The maximum risk per month is 6.5% of the account so even if the underlying account blows up, the max loss to the investor is 6.5%. They use some clever algorithms to model all this.
For example, here is the performance of my underlying strategy:
Overall, we are up over 200% over 2.5 years with the first two years in loss. In 2020, we overhauled the account entirely, replacing manual trading with algorithmic trading resulting in a 411% return on the account for the year.
Now the FCA investible asset, called a Darwin that was created, YFC, it's performance looks like this:
So as you can see, a similar shape equity growth chart but both risk and return are subdued. The Darwin was created only in April 2020 despite starting the acount in Sept 2018 since a Darwin is only created only after certain criteria has been obtained... this also acts as a filter for those whose accounts blow up or those wannabe traders that give up. Darwinex, have created a remarkable platform with one of the best reputations in this crowded business space so they are after those who are in this for the longer term.
Making Money on Multiple Fronts
Besides making money through normal trading activities, Darwinex offer other advantages which can significantly boost your income.
Above, I talked about your Darwin which is an investible asset. People, institutions can look at your profile and if they like what they see, they can invest in you. You make 15% of the profits past a high watermark. This is all legal and under the coverage of Darwinex's FCA (UK) asset management license.
Looking at the highest paid Darwin on the platform, HighFive, he has earnt over 200,000 Euros from performance fees alone.
He was earning some great additional income every month last year!
And then in my LinkedIn or Instagram posts, you may have been me talking about ranking in Darwinex. Every month, Darwinex have 7.5 million euros which they allocate to the top 120 Darwins (out of over 3600). The higher in the ranking you are, the more you are allocated with the max being 360,000 Euros. They give you the allocation for a period of 6 months and any profit you make on this, you take 15%.
Summary
So in summary, I think this is an excellent platform for retail traders not only in terms of execution but for the extra features. For those who are successful, the potential earnings are further amplified through the investment management options available. I believe this is a bridge from the retail trading world to the institutional world.
If you want to invest in my Darwin or just check it out, you can see it here: YFC Darwin by ForexAlgoTrading
If you are a trader and interested in joining for the additional features that Darwinex have to offer, you can visit them here via my link: Darwinex broker and Investment Management