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Adjustment to DARWIN VAR

In this post it has been discussed how the VAR, used to manage the risk of a DARWIN, can fall so low that instead of making a DARWIN less risky, it can do the contrary. It’s true that one can reduce or rise the VAR by rising or lowering the equity of the underlying strategy, but my point is that should be Darwinex to prevent such situation to happen in the first place. This could be achieved by setting a low bound for VAR (1% ?) and also a dynamic one (not below half of the highiest VAR of the last three months for example). Furthermore I think that also should be considered the idea of letting the trader decides wich is the lower bound for his own DARWIN (obviously only if above that decided by the algorithm).

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Thanks for your suggestion!

Since we launched the 10% VaR DARWINS, there is a minimum VaR in place (i.e. a max. replication multiplier, so yo say).

I hope this article proves useful:


Thank you Ignacio.
It’s possible to know wich is the minimum VaR ?

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5 posts were merged into an existing topic: The new RM, very accommodating? (Risk Adjustment)