I want to invest in SMI
Do you want to invest in SMI? So let's go to the mess ...
I'm going to explain how you can do it! But first, I am going to detail step by step what happened every day as a real investor in the darwin SMI from July 7th, 2022 to September 30th, 2022 with an investment of €4,500. First of all the summary:
The profitability that has been obtained, as well as the detail of costs and commissions involved.
Results of the trading activity already discounted the purchase-sale commissions and the SWAPS during the period has been 6.67%, 28.92% annualized.
Net result as an investor after discounting the management and success fees during the period was 5.07%, 24.34 annualized.
2. The daily exposure, that is, the daily losses and profits that have been obtained as an investor.
Green shaded area corresponds to the 29 days that ended in profits and red shaded area to the 24 days that ended in losses.
Total profits of the days that we ended in profits amounted to €584.11, while the days that we ended in losses reached -€283.26
An example for the correct interpretation of the data:
12 days we ended up with losses between 0 and -10 and €.
Sum of all amounts lost during those 12 days was €41.1
Average daily loss in this section was €-3.4
3. Finally, a simple theoretical explanation of what it is to be an investor of a Darwin and how that investment can materialize.
You can expand the information on the type of trading that I do on the websites darwinxic.com and darwinsmi.com, 2 algorithmic portfolios of systems that I manage. In addition, on these websites, you can consult at any time the planning carried out for the current month and as an investor you can request a monthly monitoring report.
I have no idea of the potential Here you have final results as an investor ...
What I am going to detail cannot be extrapolated to other darwins because neither the strategies, nor the level of risk applied by the trader, nor the assets are comparable. Nor can it be extrapolated to the future behavior of the darwin SMI, since in my work as a manager and trader I rebalance both the strategies and the systems that operate and their risk whenever I consider it necessary. The fundamental part and that must be clear is that no matter to predict market behaviour. The Market is not predictable, so in no case past performance or results can be taken as future forecasts.
... SUMMARY OF RESULTS
On July 7th, I invested €4,500 as an investor in the darwin SMI, as any of you could have done since it is open to third-party investment. On September 30th my balance as an investor is €4,800.02 , it comes from:
Trading activity
Trading activity that Darwinex has replicated for me as an investor has generated 6.67% during these 2.766 months, 2.41% monthly, 28.92% annualized . This result, I consider optimal.
Returns as an investor
As you can see on this page, if you read it to the end, to obtain the net return as an investor we have to deduct 2 commissions:
Management fee was €11.82
Success fee was €60
Net return as an investor of 5.07% during this period, that is, 24.34% per year .
Internal objective with which we work is that investors obtain 10% per year, so I am very satisfied with the result obtained during this period.
Summary table
I have no idea about the risk OK let's see the reality between July 7th and September 30th, 2022...
... THE START-UP AS AN INVESTOR
On July 07th, 2022, I made the purchase of the darwin SMI for an amount of €4,500 , at that time it value was 109.66. This means that from its origin until June 1st, SMI has had a return of 9.66%.
From the first second after the purchase was made, Darwinex began to automatically replicate the SMI operations for me as an investor. As the robots that operate in SMI were opening or closing operations, Darwinex replicated them automatically. Depending on the evolution of the open operations, my investor account began to move.
The first day was positive winning €8.41
... DAY TO DAY AS AN INVESTOR
With accumulated data up to Septembre 30th, as SMI opens an average of 1,82 operations per day and keeps them open on average 2 days and almost 16 hours, every day and at all times (unless the market is closed) the account of invertor fluctuates, let's see 2 days example:
On the Y axis you can see the euros and on the X axis the evolution of the hours. As observed at all times, the daily result curve fluctuates up or down depending on the evolution of the results of open operations. More specifically, on September 7th the day ends (9:00 p.m. for Darwinex) at €17.02 and on September 8th at -€11.67. These closings are "artificial" because the market trades continuously from Monday to Friday.
In the DAY BY DAY section a little further down on this same page you will be able to see the graphic detail of the evolution of each of the 49 market days that have elapsed from July 7th to September 30th, which has been the time that I have monitored daily results (darwin did not operate for holidays between August 17th and September 1st). Now I summarize the main facts of what happened:
Trading results:
82 operations have been opened and closed at SMI, of which:
62% have been long operations (purchase operations) and 38% have been short operations (sale operations).
67% had profits and 33% had losses.
Trades have been opened in 10 different currency pairs, with the most traded pairs being USDJPY, EURCAD and EURSUD.
Results as an investor:
29 of the 49 days (59%) were winning days closing the day in profit
20 of the 49 days (41%) were losing days closed on the losing day.
Maximum daily loss was €63.34 and the maximum daily profit was €76.42
Green shaded area corresponds to the 29 days that ended in profits and red shaded area to the 24 days that ended in losses.
Total profits of the days that we ended in profits amounted to €584.11, while the days that we ended in losses reached -€283.26
An example for the correct interpretation of the data:
12 days we ended up with losses between 0 and -10 and €.
Sum of all amounts lost during those 12 days was €41.1
Average daily loss in this section was €-3.4
Below on the left you can see a scatter graph with the daily results in € for each of the days . On the right a graph of the distribution of daily results in € using the standard deviation to the average, showing a fantastic Gaussian Bell-shaped distribution of results, slightly shifted to the right (the area of positive results).
And so where do we start ? Well, for the beginning ...
...THE TRADING
First element we need is trading activity that will give rise to the darwin and especially a trader, in this case myself, José María Millas , who carries out a speculative activity that, basically and greatly simplifying, consists of buying an amount of one currency pair at a certain price, to sell it if all goes well a few days later more "expensive" than the purchase price, thus obtaining a profit.
In this case we buy the GBPJPY pair at a price close to 140.735 and 19 candles of 4 hours later (3.16 days) we sell at a price higher than approx. 141,650, which generates a profit of approx. of 0.65% . In this particular example, it is bought because we expect pound to appreciate against yen.
We can also sell a currency pair to buy it a few days later “cheaper” than sale price. It would be opposite of the previous example, in event that our forecast was that yen would appreciate against pound, we would have sold GBPJPY pair .
In case of system portfolios (a set of robots that operate automatically in XIC and SMI), only currencies are operated to achieve maximum decorrelation of stock markets, providing alpha to potential investor, both to diversify an existing portfolio and to be an investment per se .
Objective of this speculative activity is to make a profit after paying brokerage commissions to the broker who carries out transactions in market on my behalf. In this case Darwinex, a reliable and fully regulated provider.
How do we continue? Well with more concepts ...
... THE DARWIN
Darwin SMI is the way in which investor ends up replicating the operations of portfolio of automated algorithmic systems that I operate in SMI.
In addition to being a broker, Darwinex is a capital manager regulated by CMNV (Sapiens Markets EU Sociedad de Valores SA) and FCA (Tradeslide Trading Tech LTD), and darwin is a product that Darwinex packages and that, again simplifying, consists of replicating for investor speculative operations carried out by trader. In addition, Darwinex adds a layer of security, in such a way that if trader changed risk (volume, frequency, etc.) of his operations, Darwinex would limit investor's risk to 6.5% of VaR on his investment. You can expand this concept here, but basically it would replicate trader's operations for investor with a lower amount invested per operation so as not to exceed VaR of 6.5%.
In this way, an investor is carrying out speculative operations that replicate those carried out by a trader of his choice with confidence added by risk security filter guaranteed by Darwinex. All automatically and without investor having to intervene beyond decision to replicate or stop replicating trader's activity.
Investor wins or loses just as trader wins or loses with his operations once he decides to invest his capital in darwin.
The way in which Darwinex carries out this activity for investor is by creating a darwin, that darwin, just like a stock index or any other financial asset is quoted, that is, it goes up or down depending on profitability that trader obtains with his operations.
On a practical level, when Darwin starts trading at 100, in September 30th, 2022 Darwin SMI trades at 116.97 , which means that since its origin at end of July 2021 SMI has gained 16.97%
Ok, but how do I start investing? Well, back to the beginning ...
... THE INVESTMENT
Don't hesitate to contact me if you need help.
In order to replicate trading activity of a trader through his darwin, in this case SMI, first thing you will have to do is open an investor account in Darwinex and transfer funds to be able to operate.
Your investment with Darwinex will qualify for General Investment Guarantee Fund (FOGAIN), which currently protects you from insolvency of broker and manager with compensation of up to €100,000 per owner and entity; and insolvency of the bank with compensation of up to €100,000 per account holder and bank. Same coverage as any other financial institution regulated by CMNV.
Once you have funds in Darwinex wallet, you must make purchase of darwin SMI. Buying tdarwin is practical way in which you tell Darwinex to replicate operations carried out in SMI. At moment you sell it, on a practical level it is like telling Darwinex to close possible operations that you have open and to stop replicating operations carried out in SMI.
It is important to note that trader, in this case me, does not have access to your capital, at no time will I have availability of your funds, Dawinex through custodian banks, will receive your capital and use it to replicate my operations without any intervention by my part. You will have online access and you will see progress of the operations and you will be able to close all or part of your investment with a single click (as long as market is open, which is from Sunday 11:15 p.m. to Friday 10:55 p.m.). , if market is closed it is not possible to close an open positions , hence it cannot be closed outside these hours) .
You will be able to follow all operations through online investor area or a simple mobile app where you will see results completely online.
Yes, yes, but how much does it cost me? Well, I'm sorry, but you're going to have to read a little more ...
... THE COSTS
On a practical level, you will see that it is very simple, but allow me to detail all possible costs associated with an investment in my Darwins.
Deposit fees
Darwinex does not charge you anything but you must send funds, possible costs will be those that your financial institution charges you. If you want to make a credit card deposit of up to €10,000, there is no problem and it is free of charge.
Management fee (€11.82 detailed in first section)
To simplify, it is same concept as they charge you for an investment fund. It is 1.2% per year and is fixed. You will have to assume it win or lose in trading activity that you will replicate. You will pay it progressively until you pay 1.2% per year of your total investment in Darwin SMI.
Expenses derived from trading activity (these expenses are included in result of €5,160.97 since they are deducted in each operation)
As you are going to replicate SMI trading operations, you are going to carry out speculative operations like one detailed at the beginning, so the profit or loss will be:
If you make a buy trade:
[Sell price] – [buy price] – [buy & sell commission] – [buy SWAP]
If you make a a sale trade:
[Sell Price] – [Buy Price] – [Sell & Buy Fee] – [Sell SWAP]
In other words, broker for buying and selling currencies will charge you an intermediary commission (buy & sell or sell & buy) and a SWAP , a small financial cost that covers interest rate differential between two currencies that you are operating, SWAP varies in function of days that operation remains open. More on SWAP here .
Difference is that brokerage commission (buy-sale) is deducted directly from results of operations (that is, in your investor account you will directly see balance with this commission already deducted, while SWAPS are charged to you in count on Saturdays.
Success fee (€60 detailed in the first section)
Profit generated by replicating my trading activity is divided into 3 parts:
80% is for investor.
15% is for trader.
5% is for Darwinex capital manager.
So as an investor you must pay a success fee of 20% of what you earn, of course if you do not win you do not pay this fee. These commissions are paid quarterly, but if you close your investment, Darwinex will retain that 20% to meet your payment at time of settlement. You can expand on this concept here .
And what happens if I pay success fee and then there are losses?
Success fee is not returned, but as you will see in the previous link, you will not pay said commission again until additional profits are generated again thanks to calculation method (High Water Mark). More on this here .
Daily detail of results
... DAY BY DAY
