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Turning Traders Into Professionals

05/12/16

Just over 7 months ago I decided to test out an innovative PAMM fund platform from Darwinex broker.

What began as a challenge to prove a point that having a smaller account doesn't have to be a hindrance when it comes to social trading today is now turning into a very real and viable way for our students to grow with us as they themselves learn the concepts of institutional order flow trading.

Not everyone has a spare 20k to put into a trading account once they're ready to take a shot at being a professional independent trader. Proving to people that you can make a living out of trading by starting on accounts that are anywhere from 20k to 250k in size doesn't serve any purpose to the majority of traders who are seeking financial freedom but lack the seed funding to do so. For most, 20k is a hell of a lot of money. Most of the aspiring traders don't have a proven track record, nor do they have an MBA to go and trade for a large bank. And those who do, already have droves of people offering them funds left right and center.

In these days of historically low and practically non-existent interest rates, managed funds offer an alternative to getting a usable return on your investments. However the difficulty lies in finding traders who actually know what they're doing. It's a sad fact that most of the "signal providers" out there use highly suspect practices of Martingale strategies (doubling up on each losing position which usually leads to blown accounts very quickly when things go wrong), grid trading (similar strategy that also adds on losing or winning positions every x number of pips), people are naturally protective of their hard earned cash.

Enter Darwinex with their ridiculously well-thought out platform for investors and traders alike. Rather than letting users micro-manage positions, each trading account eventually gets assigned a "Darwin" which is a stock-like product based on the underlying account that the trader is using their strategy on. Darwinex then assesses the trader's performance through a number of "investable attributes" that calculates the system's D-score. It then assigns a yield to the system's ticker symbol (ours is DOG), dependent heavily on how the trader behaves: risk management, consistency, scalability to large accounts, timing of the trades etc. Darwinex also limits the investor's risk to maximum 20%, regardless of the risk the underlying account has taken, further protecting investors from dodgy practices and traders losing their cool.

Most importantly, whether you start trading with $200, $2000 or $200,000 is completely irrelevant here. And this is the genius behind Darwinex internal exchange. Trade well and you will get onto some of their leaderboards, people will notice you and they will invest. But you do need some decent numbers. So get journalling to improve your results!

The performance fee the trader receives is about 20% of generated profits from the investors capital, which is pretty much a standard in any serious prop trading company.

If a prop company is offering you anything more than a 30% split in your favour, it's likely that the room for growth is very limited and the company in question has other income revenues rather than the trading profits. If you're allowed to trade a million dollar account for a bank, they for sure won't give you an 80% split. You'd be lucky if you walk away with 10% plus a bonus.

But if someone gives you 1k then they can easily afford to part ways with the resulting profits as high as 80% split - because all they ever risked was a mere $1,000. The larger the account you're allowed to manage, the less profit split you should expect right off the bat. And I agree with this business model.

Now, back to our fund - it now holds over $100,000 in investor's capital and this number is rising rapidly.

For any trader strapped for trading capital, I highly suggest choosing Darwinex as your platform. Darwinex is leading the way into a new world order for independent traders. And I'm proud to be the part of the select few bringing awareness of their service to investors and traders alike.

In early 2017 we are moving completely towards the Darwinex fund and we will be discontinuing the signal service due to people micro-managing their positions, over-leveraging and also acting as self-assigned risk managers each time the signal experiences any drawdown. Previously, we displayed the results of one of our trading accounts at the top of the page, but due to very nasty comments regarding our decisions that was very disruptive to our active traders in Blahtech, the signal is not available for public use any longer. This move comes as the right to protect our intellectual property regarding our method that is only available to current students and mentees.