Dear OldSchool, thanks for your response.
Just to clarify a few points:
Firstly, we are in agreement that high VaR is (1) often indicative of an immature trader (2) detrimental to long-term survival of an account (which does not necessarily equal "survival of a trader", see below). But when it comes to judging a Darwin, I would look to other things first.
Why? (a) Trader A may have 20k to trade with, but wires only 5k to Darwinex and trades this amount with higher leverage. In the event of a Black Swan, this trader will be down only 5k on his 20k trading funds (especially true with the upcoming negative balance protection) and will have another 15k to refund. The guy who played a 20k account on much smaller leverage may in fact lose more than the high-VaR-trader.
(b) What does it matter to the Darwinex-investor anyway? Everything else being equal, the Risk Manager will have normalized the exposure of both Darwins to 10% VaR so that both investors suffer the same loss.
(c) In case one of the traders goes broke whereas the other has just suffered a big drawdown (different DD in underlying account, same DD in Darwin), it isn't a huge concern to the investors either. If the investor survives, s/he can still take the loss and move on to the survivor, with the only disadvantage that s/he will have to pay performance fees.
Secondly, a last attempt as well to defend inverse RR: you can run certain strategies for 0.5 RR with a 75+% win rate, or for a 3 RR with a 35+% win rate. RR as such is irrelevant as long as your expectancy is positive. We should also note that, everything else being equal, the inverse RR trader will have been exposed to the market for a much shorter time, i.e. his risk is lower.
As I said I'm not a big fan of inverse RR either, but that is personal preference, as I can't deny that traders like NTI (and others I know) have done perfectly well with this approach. I also don't like high VaR, but there are exceptions where high leverage can be used strategically to mitigate other risks. I.e. in some cases high VaR is not what it seems (trader does not leave 100% his funds with the broker/trading account) or is irrelevant (Darwin normalizes risk anyway).