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How to get the DARWIN manage the risk the same way I manage it in the underlying strategy

I don’t think so. You should have a 1:1 relation with a VaR of 10.
Your account size is too big for the trade size and frequency of your strategy. If you cut your account size to 1/3 of now, you will have a VaR of about 10 after about 6 weeks.

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If I cut my account by 1/3, keeping the same position size, this also means that my investors are risking 3 times more.
VaR ratio becomes approximately 1:1, from a current 1:1.60.
Risk per trade becomes 3 times bigger.
This means that, at the end, the total risk increases by 1.875.

In 2 normal bad trading days, like the first two trading days of March, my investors would have lost more than 3%. This is unacceptable for me, considering that they were two normal trading days, without any weird market behavior.
I would love to see IRY following the same risk structure of my underlying, but not at all costs.

No, no, no…your underlying strategy has lost only 0.45%, while your darwin 1.15%. This is because your VAR is lower than 10%. When your VAR is lower than 10%, you are risking more the investors money and less yours, that’s the reason your lost is higher on the darwin. So, if you want to replicate the same results on both, you have to trade at 10% VAR. The oposite would happen if your VAR is 20% :grinning:

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Yeah, I know, but let me ask you a question: how do I increase the VaR?
I’ve been here like dozens of times, even with Darwinex customer service :slight_smile:
The answer I always get is that I keep the same position size with a smaller account, or increase the position size with the same account.
Sorry for the word pun, but it seems that I have to increase the risk in order to increase the VaR to decrease my risk :laughing:

Example:
I’m trading with 0.20% per trade. My investors are trading with 0.32% per trade, since my VaR ratio is 1.60. I withdraw 1/3 of my account, keeping the same position size. VaR goes to 10%, now I have a ratio that is 1.
My risk is now 0.60% per trade, investors have the same risk.
Investors’ risk passed from 0.32% per trade to 0.60%.

Those two solutions seem good to increase the VaR, but don’t seem to keep the risk at the same level I have now, unless I’m missing something. I would be very happy to see someone telling me that I’m missing something and there is a very easy solution to all of this :slight_smile:

What risk you want to keep the same, your equity risk (underlying) or your darwin (your investors)?

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For investors. I trade the same strategy even with another account outside Darwinex, so here my focus is on investors’ money.
I understand that with a VaR at 10%, VaR ratio of 1, risk would be stable for investors. But if this means that I have to pass from 0.32% to 0.60% per trade for my investors, I prefer an “unstable” risk that varies a little around 0.32% than a stable risk that is double of what they’re having right now.

Let’s say it in a way that is easy to understand. If you had traded these two days at 10% VAR your darwin (your investors had lost only 0.45%…I understand it is because you don’t want to risk more of your equity the reason you don’t increase the VAR up to 10% (nothing wrong with that, some darwins use to trade at 0.20% VAR…)

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No, I don’t get this.
How can I trade at 10% VaR?

Another way to look at it:

Let’s say your trading account has equity of $10,000
You withdraw $3333 to your Darwinex wallet

Your position size, stops and targets remain the same.

Your monetary risk on each trade remains the same, therefore the risk percentage on your total equity (Wallet + trading account) remains the same.
(Obviously the percentage risk per trade in the trading account will rise).

Over a period of time (assuming the trade frequency remains the same) the VaR on the underlying account will rise. This will bring the risk difference between your equity, and the equity of your investors closer together.

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Yes, but do you agree that the risk for investors increases, since my risk per trade increases?
I don’t see any point in increasing the VaR if I have to increase my risk per trade to do so…

Just increasing the size of your trades. I suggest you keep everything the same, but putting a little bit more of your equity money in each trade. Do it little by little, and you’ll see how the VAR will start increasing…but go slow.

I just read SATFX post…and yes, there are two ways, or you withdraw part of your equity, or you increase the size position a little bit.

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So I assume that what I write here is wrong?

The rise in VaR on your trading account will counteract that as the VaR on your trading account and the Darwin converge. The Risk Manager will reduce the comparative position size of the Darwin as this happens.

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So, once again, what I wrote here is wrong?

If you don’t touch your equity, you just increase your trading positions, then at some point you’ll reach 10% VAR.
Ok, then when you get there (10% VAR), your investors risk will be HALF of what is currently (with your VAR at 5%), but YOUR risk (underline) will be DOUBLE than now.

So, from there on your risk would be same for both. You can do it both ways, withdrawing part of your equity and keep trading the same, or keeping same equity but increasing your trading size…

I hope it helps.

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But what I don’t get is why if I increase my risk per trade (increasing the VaR then), the risk per trade for my investors doesn’t increase…

A suggestion
I understand and admire how protective you are of your investors.

You could open another trading account, create a Darwin for it, then experiment with it to see the actual results. This way you may gain a lot of useful information without affecting or alarming your current investors.

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If you increase the risk per trade your investors risk will decrease. When you trade at 5% VAR, it is with your money. Darwinex risk manager take your position up to 10%, so thats why when you profit the darwin profit double than your underlying, same thing when you have a loss, the darwin loss double too.
Increasing the VAR (UP TO 10%) lower the risk of investors money. BUT, if your VAR is above 10%, everything is different, the risk manager will start minimizing your losses for the darwin, but your VAR will be what your underlying will risk.

As I said, try to increase your positions a LITTLE BIT to see what happen, or as SATFX has suggested, you can also open another account without investors, and try the same.

The best way to understand the challenges of the trail is walking it…

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Naaah, I’m not going to run tests with investors’ money :stuck_out_tongue:

Can you help me with this step by step?

First step: say that I’m risking 0.20% per trade right now. My VaR is 3.5%, investors VaR is 5.5%. Ratio is around 1.60. Investors are risking 0.32% per trade.
I do as you say, I start to trade with triple of my normal position size or I withdraw 2/3 of my account, keeping the same position size.
Would you agree that, at the moment, with the same VaR for me and investors (3.5% and 5.5%) I would only triple the risk per trade for my investors?

Second step: my VaR goes to 10%, same as investors’. Ratio is 1:1. Now investors are risking exactly what I’m risking. But I’m not risking anymore 0.20% per position, because, in order to increase VaR, I had to change my risk from 0.20% to 0.60% per trade.
So investors now are risking 0.60%.

Is there something wrong in my reasoning?

Please @bianka can we move this to another thread?
I appreciate the help by @SATFX and @Forexintradiadarwin, but I don’t want my investors to read dozens of posts about VaR and not about my Darwin :slight_smile:

Thanks!

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