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IRY - FedericoSellitti - Semi-Automated System

Hello traders and members of the community.
Today is the first day of February, so it’s time to talk about our previous month of trading.

You can watch the video here: Darwinex Account - Review of Trading Month January 2020

I start to have a few questions about my Darwin, so I will first go quickly through the analysis of what happened in January and then I will answer some of the questions.

Before starting, I would like to thank all the people who decided to invest in my Darwin and all the people who showed interest (and respect) in this project. Your trust is the most appreciated reward for what I’m doing here on Darwinex.

Performance
January has been another good month, with a return of +3.12% and an overall return (since October 2019) of +12.00%.

If we analyze the candlestick chart of my Darwin, for the month of January, we can appreciate the stability of the system:

Return of 3.12%, with a drawdown in the past month that has been -1.68%. No major swings, only 2 “big” red candles during a sudden spike in the first half of January and another “big” red candle on the 24th of January, due to a news that moved the price fast against our trade.
This last candle is the biggest loss we had in January, in a time frame of 4 hours. We are talking about -1.14% as our major downswing, so, regarding the risk and the return, I can say that I am pretty satisfied and happy about the behavior of the system for the month of January.

Darwinex attributes (related to investors)
In the past months, I have expressed several times my concern about Darwinex factors that could affect investors. In particular, I mentioned VaR and Divergence.
I have studied a lot, trying to be active in the community, watching the new amazing videos in English on Darwinex’ YouTube channel. I have also sent several emails to Darwinex support to ask for their help to monitor if everything is ok for investors of my Darwin (I must be the most annoying client for them :rofl: )
I believe that everything is under control, but I want to spend a few words about divergence.

divergence%20darwinex

You can see that monthly divergence increased to -0.51%, that is not something I would like to see.
This increment is mainly due to the activity in the last part of the month.
As you know, my system is based on GBP/USD. At the end of the month of January, we had the interest rate decision (on the 30th of January) and the Brexit day (on the 31st of January).
In particular, divergence increased dramatically with 2 positions I had on the 30th of January.
The first position hit the stop loss, but the stop loss for investors was executed 13.2 pips far from the real level (that worked for my personal account), resulting in a higher than expected loss.
The second position, was a stop entry order right were I had the stop loss for the previous position. Same story, this position was executed with an entry price that was 13.2 pips far from the real level, that, once again, worked for my personal account.
At the end, I closed that position with a profit of 163 pips, that has been a profit of 149.8 pips for my investors.
These two positions explain the increment of divergence that we had in January.

Overall, I don’t think that this one time episode is a symptom of a problem for my Darwin, but I will keep monitoring the situation in the following months, even thanks to the help and support of the Darwinex community and staff.

I would like to analyze some other points, but I think that I can do it through two good questions I received in the past month.

Question 1

first%20question

Good question and I would like to post a screenshot of my VaR so we can check what we are talking about:

Let’s exclude the kind of cloud that I had till the end of November, since it was the effect of the youth of my Darwin :slight_smile:
Recently, my VaR is going down, am I really decreasing the risk with my personal account? The answer is NO.
I believe that the VaR is going temporarily down due to 3 reasons:

  1. The calculation is made on 45 active trading days. The VaR calculation left the month of October 2019 (73 trades) to welcome the month of January 2020 (27 trades). Less trades means less volume and less risk exposure, according to the VaR calculation. Risk per trade for my system is calculated in the same way and there have been no changes in it;

  2. As mentioned in previous posts, I traded last period of December 2019 with a lower volume. This contributed to push the VaR down;

  3. We had an impressive positive streak in December 2019. The risk calculator for my system tends to slightly decrease the risk per position during exceptional streaks, whether they are positive or negative streaks.

So, my final answer is: no, I didn’d decrease my risk and I’m not planning to do it :slight_smile:

Question 2

darwinex%20question%202

This is a question that I’ve been waiting for a long time, so thank you :slight_smile:
We need to separate expectations from guarantee.
The system has been back-tested since 2013. For every single year, it gave a good profit.
In 2019, I have applied the system with my personal account and it has been another great year. Some students of my courses applied it and they had a great year.
I have applied it here on Darwinex since the second half of October 2019, and we are having good results.
Do I have a positive expectation based on real facts? Yes.
Can I guarantee that the system will be profitable in the future? Absolutely not.
I am a trader, not a magician. I cannot guarantee for the future.

I want to take advantage of this question to say something. I cannot promise to have a positive return in the future, I believe no one can.
My promise is that I will keep trading responsibly, keeping the risk low and without giving you swings of -10% in a single day or -20% in a single week. This allows you to have peace in your mind and evaluate whether or not to hold your investment in my Darwin on a weekly basis, without suffering major losses due to irresponsible risk management.

This is my analysis of the Darwin IRY for the month of January 2020.
As usual, if you have any question, feedback or criticism, you’re welcome to post it here in the thread for my Darwin.
I always try to reply at my best (unless your comments are about unwanted challenges :rofl: )

Enjoy the weekend and enjoy next trading month!

Federico

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Hello @FedericoSellitti congrats on your early success on your Darwin. With your current VAR being 3.41 does this mean each trade you risk 3.41 of equity or this total daily risk across all trades daily. Thanks Noel

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Hi @noeljames, thanks for your kind words :slight_smile:

VaR is a risk measurement.
It answers the question: “if we exclude any catastrophic case, what’s the maximum loss that the trader could have during that period?”.
3.41% is the answer.

The VaR has an interval (95% here on Darwinex) and a period, that is 1 month here.
So a VaR for my account of 3.41%, says that there was a 5% chance to lose 3.41% or more with my account, during the last trading month.
There was a 95% chance to perform better than -3.41%.

To put it in simple terms, the VaR says that a trader has 95% chance of performing better than that parameter over the next month.

I’m very far from these numbers regarding my risk per trade or my daily risk :slight_smile:
I use a software (that I created) to calculate risk per trade. It generally goes from 0.20 to 0.60% per trade. Very rare to see something higher than that.

Hope it answers your question!

Federico

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Thanks @FedericoSellitti for prompt response

I see you have a very impressive 62% successful trades at the moment. What variance have you found on this success rate on your trading in the past?

Thanks

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@FedericoSellitti does the Darwin platform not show the risk per trade taken by a trader or how would an investor know if the trader has really increased their risk (would this be reflected in the VAR value?) Thanks

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The real win% should be a bit lower than that. I sometimes reduce my exposure to the market, taking part of my profit. When I remove a small part of my position, it is counted as a win and it increases the win% here on Darwinex.
Real win% should be around 56%, that is still above 53% that is the long term win% expected for this system.
So, good results so far, but also helped by a slightly favorable period for the system :slight_smile:

I personally use 2 methods for that:

D-Leverage

You can find it right under the monthly results for the Darwin. It’s not a measure of a risk per trade, but I think it’s a good parameter to track the overall risk of the trading activity.

Rs and VaR

In the Darwinex attributes you see at the top, there is one called Rs. If you click on it and scroll down, you have a representation of the VaR as a form of cloud.

Generally this is another way to check the risk, but not the risk per trade. It is slower than checking the D-Leverage, because it might take a while for it to react when trader is increasing the risk.

Maybe some other good traders/investors here on Darwinex have other good ways to track the risk :slight_smile:

Regarding my Darwin, I share the investor password with everyone, so you can check all my trades live, even from your mobile phone. This video might help: https://www.youtube.com/watch?v=FTvxvzZ8z4o&t=51s

Federico

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Dear investors and members of the community,
here is an update for the trading month of February 2020.

You can watch the video here: https://www.youtube.com/watch?v=AQ_AOWknxao

Investors
A huge thank you, for all the people trusting my trading activity.
Currently 16 investors, some of them also getting in touch through Facebook or email, even just to say hi. Loving it and I promise I will keep doing my best and trading in a responsible way.

Performance
We closed February with a good +4.88% and an overall return above 17.00%.

But I would like to focus on a parameter that really stood out in the month of February: Drawdown.

Profit: +4.88%
Number of trades: 28
Wins: 18
Losses: 10
Drawdown: -0.68%

In a month in which we have talked a lot about sudden 2-digit falls, volatility increasing, Coronavirus altering the market… I believe that drawdown at 0.68% has been the most important result.

Divergence
In January, the Darwin reached a divergence of -0.51% and I commented reporting two exceptional positions that were responsible for that.
As I expected, they were two exceptions and the Darwin came back within normal parameters.

divergence

One of the goals for March is to monitor the Target VaR for investors.
It has been around 5.50% in February, dropped to 5% at the beginning of March and… guess what? We had a bad start of the month, right when Target VaR was at 5%.

I do understand that Darwinex does all of this to protect investors, but sometimes it still feels annoying. Risk management is a very important part of any trading strategy and I believe that this VaR mechanism helps to protect investors from bad traders and gamblers, but it is a restriction for good traders.
Since I believe I know what I’m doing and I have a very high respect for other people’s money, I would like to manage the risk the same way I manage it in the underlying strategy.
I guess it is not possible, we are on Darwinex, we play by their rules. So my goal is to monitor the target VaR in March and continue to pursue the best way to trade for my investors.

I have had several questions for the past trading month, but I already answered all of them. This makes my review of the month of February quite short :slight_smile:

For any question or criticism, feel free to post here. I always try to reply at my best.

Wishing you a great trading month.

Federico

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32 posts were split to a new topic: How to get the DARWIN manage the risk the same way I manage it in the underlying strategy

Hello traders,
a very quick update for all the investors in IRY.

The system is currently going thorugh one of the worst days of its history (from 2013):

  • -2.66% on the Darwin;
  • -1.64% on my own trading account;
  • 12 positions, with 10 losses and 2 wins (today’s win ratio = 16.67%)

Strong volatility combined with a poor win ratio and we have a very bad trading day.

Probably for some experienced investors here on Darwinex, -2.66% in one day is nothing. I consider this to be a very large number for just one day of trading, so I felt the need to write a few words for any investor that might be concerned about my Darwin’s management.

Everything is like before. I haven’t changed anything, the system is running with the same setup, same risk and same positive expectation.
On a personal level, I’m just normal, very calm, I have had hundreds of bad trading days in my career, not going to start to overtrade and revenge trade just today, that I also manage other people’s money :slight_smile:
As usual, if you have any concern, I invite you to drop me a message on my socials or here on Darwinex.

Best of luck!

Federico

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After an incredible start of the 2020, the ALM system (IRY) is going through some tough days.
Volatility is very high and I also don’t like to see so many movements in just one day, especially when these movements are against our system.

Do we have to be worried about it? I cannot see the future, so I can’t answer this question, although, talking about myself, I’m not worried at all.
What I can do is to give you some numbers in order to compare this period with other tough moments in the history of the system, so you can answer that question by yourself and decide what to do. It’s your money, your call :slight_smile:
Statistics are provided with 0.20% per progression (the one I use with my personal account on Darwinex, since November 2019):

Worst trading day before 2020: 16 June 2016 = -2.65%
Worst trading day ever: 16 March 2020 = -3.13%

Top 5 worst trading periods:

September-October 2015: -6.30%
June 2016: -5.86%
May-June 2018: -5.81%
August 2019: -4.21%
October-November 2019: -3.79%

Currently: -3.19%

Regarding my Darwin IRY, there is a ratio of 1.62 between my account and investors’ account. This ratio seems to be quite stable (going to share my research on it in the next monthly update). So figures for investors would be:

September-October 2015: -10.21%
June 2016: -9.49%
May-June 2018: -9.41%
August 2019: -6.82%
October-November 2019: -6.14%

Currently: -5.17%

Regarding the duration of the Drawdown, only June 2016 can be compared to this current drawdown. Also in June 2016, the drawdown was built in a few days, due to an extremely high volatility on GBP/USD, following the Brexit referendum.

Hope this will help investors to make better and more informed decisions, whether that means leaving or joining IRY.

Federico

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Hello traders and investors,
as discussed in the thread reported below, I’m forced to reduce the risk of my Darwin for the time being.

I decided to follow the option of trying to reduce the risk in the underlying strategy, reducing the VaR and trying my best to keep a stable ratio at 1.62 between my personal account and investors’ account.
Although I admit I’m not happy to do this, because I strongly believe in my system and in the countless hours of work I’ve put behind it (and continue to put through research), I believe this is the best choice for investors and the best path to follow during this unusual period of the markets.

Wish you all the best.

Federico

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WOW … 200k AUM… :sunglasses:
Congrats!
Impressive result with less than one year of trackrecord!
This mean you are a credible and serious teacher, trusted by students and friends.

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Thanks a lot @CavaliereVerde :slight_smile:
Some of the investors are traders who attended my course and they already know the system, so they have a longer track record to check.
Happy anyway to see people trusting me and my trading activity. It inspires me to do better in the future.

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Can you show it?

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It is an Excel file containing all the trades (trade by trade) since 2013, more than 4000 trades.
I announced that I was working on putting all the material together in June 2018 and I published the course in March 2019. It’s been a huge work and there are some things I prefer to keep in the course. Students paid $10 to have access to the strategy, the track record, software that I developed for the money management (I paid $2,200 to develop it) and EA coming for free in the next update.
I try to be 100% transparent even outside the courses, but I think it wouldn’t be fair for people who paid for it :slight_smile:

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Congrats indeed @FedericoSellitti !
Well earned and keep up the solid trading :+1:

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Hello traders,
the review of the month of March is coming tomorrow (a bit late, sorry about that).
It’s been a great month with many things to say and analyze, but, meanwhile, April has started in a very bad way and we are currently experiencing the worst drawdown of the system since it started this adventure on Darwinex.

Current Max drawdown for the system: -5.16%
Current Max drawdown for IRY: -8.36%

This is the 4th worst drawdown in the history of the system. Nothing new, I’ve been here before, but it is no joke and it needs to be taken seriously.
Luck was certainly not a factor that helped in this period. These are just two stop loss hit in this period:

Something that can happen and sometimes it also happens in favor, but certainly something no one wishes to see in a period of drawdown.

I trust the system 100% and nothing will be changed while facing this period of drawdown.

The only thing that changed is regarding my personal account. As the VaR went over 6.17%, I have been forced to increase my risk to compensate the ratio with investors going down, in order to give them the same curve I have with my personal account.
It’s something I don’t mind doing, I’m here for the investors and not for my personal account, so I’m ok with increasing my personal risk in order to keep stable conditions for investors in IRY.
What I mind and I have to admit I’m very disappointed in, is that while I have to struggle day by day with the VaR calculations to try to guarantee the best conditions for my investors, while I spend time to write a post providing evidence that the current VaR system does not help in this period, either some traders or their investors, Darwinex decided not to spend even 2 words about it, but preferred to talk about the fight against Wikipedia and why they are not just another MT4 broker.

Anyway, I’m always here for any question and concern and let’s hope this drawdown period will go away sooner than expected :slight_smile:

One last thing, some people asked me if this is the best period to invest in IRY, since it is having a bad drawdown.
Personally speaking, I have increased my investment in the system just this morning and I plan to spend my first performance fees to invest in IRY.
Having said that, you also have to consider that current drawdown is at -8.36% and, as I wrote in the description for the Darwin, a maximum drawdown of -16% is not only possible, but can also be expected based on previous results.
Please consider all the aspects, don’t rush your investments and invest only money you can afford to lose. If you have any doubt, contact me before investing.

Best of luck

Federico

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I’m fully with you on the risk manager issue. It’s supposed to protect and NOT multiply risk of responsible strategies. My underlying strategy is currently at <2% and I consider a range of 1% to 5% to be a reasonable risk profile if you are aiming at 20-30% annual return. I would argue that 10% VaR is only acceptable if you are aiming at 50%+.

I think Risk manager in a current state is a massive issue and butchers too many systems. I can post here examples of how underlying strategies seem to behave as usual, but Darwin blew up.

I do find it ridiculous that traders have to conform with some arbitrary number of 10% VaR or else they can be trapped like ERQ or lose control over their product with sporadic risk fluctuations. I understand the need to protect investors in some sort of way from gamblers and doomed strategies, but I don’t understand the need to hard limit the risk for other ppl, unless it’s done to avoid “milking” ? But if investors want to take more risk, they can choose another provider.

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40 days and 11 hours and… we are back to the top.

A sincere “thank you” and “well done” to all the investors that have decided to stay strong and sit tight during this period of drawdown.

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@FedericoSellitti
Congrats !!
Very well done.

Keep it up :+1:

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