Aggregating traders and trading strategies via social trading platforms to take on the hedge funds
Aggregating traders and trading strategies via social trading platforms to take on the hedge funds.
CNBC reports "Imagine you knew a friend of a friend who kept bragging about the killing they were making trading. You don't know where they were investing, all you know is that they are doing really well. But imagine if you could invest directly into that person's strategy and also make money like them. This is the premise of so-called "social trading" platforms that have been on the rise aiming to shake up the hedge fund industry.
Darwinex is one of the latest entrants in the space. The company allows traders to sign up and people can buy into their strategy. The trader's trades and strategy are wrapped into a "Darwin". Users can buy a Darwin which means that any money they invest will be traded exactly how the trader would do it. "There are traders who are better than your bank and financial advisor but you can't invest in any of them. We are here to turn those guys into an asset class you can then buy and whenever they win you make money along with them," Juan Colon, co-founder and CEO of Darwinex, told CNBC in a phone interview ahead of the Money 2020 conference in Copenhagen this week.
"The Darwin itself is like an ETF that you can buy and sell at any time." Colon describes it as a "matchmaking service" for investors and traders. "With hedge funds you are forced to date a guy and you don't know how it works out. But you don't know how it would have worked out if you dated 60 guys. You can lower your risk substantially by investing in more than one Darwin," Colon said."