One of the most interesting brokers to evolve from copy trading into a unique asset management and investing solution for traders and investors, Darwinex, has announced a set of changes which could make its offering even more appealing.
The brokerage that started as a social trading operator has evolved into a hub where a number of asset managers can share their investment ideas with the community without actually exposing their particular strategies and trades.
Darwinex has created a form of investable approved, or what they call Dynamic And Risk Weighted Investment (DARWIN). The end product is presented to potential investors as an index in which clients can invest their funds only after it passes some rigorous testing and verification by the brokerage.
While in social trading the traders who follow a “leader” are able to copy his/her trades, this isn’t the case when using Darwinex. The intellectual property of the asset managers, i. e. their trades and strategies remain concealed from the public and the “investors” in the platform are simply following the performance of a given DARWIN.
The company has a financial advisor license from the U.K. Financial Conduct Authority, vigilantly assessing the risks associated with every strategy to filter the end product for the needs of the traders who choose their risk and performance profiles.
CFDs on Indices and Commodities
After the foreign exchange market developed, a number of brokers began offering traders access to CFDs (contracts for difference) on various indices and commodities. Up until now, Darwinex was left out of this trend due to the challenges associated with managing the risk on an investment in a given index that is not open for trading 24/5.
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After overcoming the set of challenges, Darwinex introduced a number of products that cater to the clients who actively trade CFDs. Finance Magnates’ reporters spoke to the company’s CEO Juan Colon about the challenges associated with the introduction of the new set of products.
“As such, introducing CFDs trading for a standard broker is reasonably straightforward, it’s merely a question of negotiating the right LP relationships and streaming,” he explained. However, in the case of Darwinex, the company had to come up with creative ways in order to be able to secure the DARWINs using CFDs before providing them to investors.
Elaborating on the challenges related to overcoming additional risks that come with a market that does not operate seven days a week, Mr. Colon explained, “On the one hand there’s the nature of the underlying instrument. The bigger issue is that we use sophisticated risk management algorithms that automatically manage the risk of our investor managed account offering (our DARWINs) to a constant level.”
“This requires frequent hedging interventions – and these are not possible if markets are not liquid 24/5 – that was the bigger challenge. The good news now is that our technology is now ready to accommodate other instruments with similar characteristics such as futures – which we’ll add to our offering in due course,” he concluded.
Darwinex also introduced some features which have been in demand by clients for some time, like corporate accounts, a new rebate program which pays back part of the commissions charged to the traders every month and a new visualization of a user’s profile.
Clicking on a trader’s profile now provides access to all of the user’s trading strategies, the number of investors he has, and the status of their past performance, etc.
The company has also changed the margin requirements on its MT4 platform with different margin levels applying to different pairs.