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Risk management score penalises improved risk management

My Darwin had a VAR over 90% in the early days as i was trialling Darwinex. I like Darwinex so decided to add more funds. My VAR greatly reduced as although I increased my trade size, the increase in the account size was proportionately larger.

So i went from a VAR > 90% to one now around 10%. My risk management score now sits at 1.5 having moved down from over 5 in the early days.

So this Risk mgt algo thinks it is better to have a consistent trade size as proportion of account size at over 90% VAR as opposed to having a sensible VAR around 10%.

Why am i penalised by reducing VAR from high risk to low risk?

I can understand if i took my VAR from 10% to 90% i would be penalised.

The answer cannot be the algo wants me to be consistent in trade size as surely this is what the consistency algo is measuring?


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You can reduce you risk profile but you have to do it gradually if you don’t want to acheive a very bad risk management score.
You can increase your equity at steps of +20%, not by x10.

Consistency doesn’t measure a consistent trade size, it measures the consistency of duration, return and losses in pips.


Thanks CavaliereVerde

So if i do not change my account size again and continue to trade in roughly the same trade size or increments of +/-20% will my RM score recover over time?

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I just analyzed your SKB.
Yes, now you have just to wait.
For the future try to keep the same equty/tradesize.
For example at the beginning of my LSC I was trading with 1000 and 0.01, then 3000 and 0.03, now 5000 and 0.05.
By the way congrats for the performance! Very promising!

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Here you can see VAR going from 80% to 8% in 5 months with a drop of only 1 point in risk management.

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I believe it analyzes just last month, so it should get better rather quickly.

the market is the best “algo” and the only one that evaluate accurately the systems!.

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Hey Cav, does this still stand for reloaded? I was literally about to triple the balance on my underlying so glad I read this topic. I have very highs scores for Ra and Rs so would hate to wreck them … it’s a better idea to slowly, but steadily add deposits?

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If you want to change your equity/lotsize rate you have to do it slowly.
If you want to reduce your risk profile I suggest you to add +20% per week, keeping an eye on Risk Stability chart ( “Var-ometer” )

Ahhh I completely misunderstood. So as my strategy’s MM is completely automated with lot sizes proportional to balance, I can add/withdraw funds as I please without adversely affecting Risk Stability?

I suggest you to be gradual and to try first.
If you ruin your chart and your score it could take it months to recover. :wink:

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Agreed, better safe than sorry!

Thanks mate, much appreciated.

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read too late :slight_smile:

Your Rs score is low not because of the increase in equity but because of the short trackrecord.
As you can se the VaR channel starts from 0% so it is not sigificative until you reach an experience of 4.
BTW no darwin is competitive before reaching experience 4… :wink:

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The Rs went down immediately after increasing equity, before they were mostly green. Of course the short track record does not allow the algos to calculate stable results. But it’s a little bit frustrating to read that the scores stay more stable if you cheat :wink:

Why cheat?
Rs is the only score you can control, Pf depends on your profitability and you cannot “decide” it.
Other scores depends on your trading style and they change only if you change your strategy, margin of improvement is very limited.

VaR can be controlled with lotsizes and moving money in and out from the account.
Here is full of people who believe to risk X and than realize to be risking Y.
Rs and VaR show your real risk and teach you how to control it.

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With ‘cheat’ I meant every certain procedure to take influence on the score without making sense for the intention of the trader or the investor. You described some of them :slight_smile:

I assume, originally the Rs of DHA were calculated with a VaR slightly above 20 % using a fictive account size of 200 % of the real account size. That complied with the performance cut to 50 % of the performance of the underlying account.
I expected that the account size is not taken in calculation when it exceeds the fictive account size. Similar is written in the description of some attributes. Now it looks like the Darwin’s performance is similar to the underlying account which is completely oversized to the lotsize traded. it looks like the last deposits have triggered a smaller earthquake on most attributes and the D-Score. The deposits are done know - and won’t be returned.

No, currently not. As I learned from you it will last about 2 months (45 days). And so, forgive me that I watch it know, shaking my head from time to time and believe, that it could be improved with - only in my opinion - small changes regarding standard behaviour of a trader like making a deposit without releasing an earthquake on the attributes and the D-Score.

Good morning!!

I´d like to cast some light on this topic :wink:


As long as the nominal leverage of an MT4 account (lot size/equity) remains equivalent as in the recent past, the Rs grade will NOT get affected either positively or negatively since our system will deem that the risk per position is exactly the same as before. It is identical for our system in terms of risk to open 1 lot in the EURUSD with a 10K account than to open 0.1 lot with a 1K account since both have a nominal leverage of 10:1.

Having said that, please take into account that VaR is not only calculated based on the nominal leverage. There are other variables Darwinex considers in order to gauge VaR which are the following:

-Market Volatility => the higher the volatility the higher the VaR and vice versa. FYI, we compare the volatility of any position with the EURUSD. Same as with the D-leverage

-Correlation => in case you keep 2 or more trades open simultaneously, Darwinex calculates the correlation amongst all of them. The higher the correlation the higher the VaR and vice versa.

-Number of positions => the more the greater the VaR and vice versa.

-Position duration => the higher the duration the higher the VaR.

Please, be reminded that we calculate VaR with the data of all the positions opened in the last 45 trading days -not market days-. Therefore, if a trader opens plenty of positions in the last 45 trading days, the weight of just 1 is not going to affect the final VaR figure much. But if they don’t trade much, 1 single position, specially if it gets affected by any of the variables I explained above, could affect the VaR.

May I wish you all a great day,



Hi Jesus,

Thank you very much for your detailed explanation.

I have a question about the calculation of VaR and the positions. I’ll use an example to illustrate my question. A trader enters the EURUSD market with 3 buy trades at different prices and timings, each with a nominal leverage of 1:1 (trade A enters at 8:00, trade B at 8:10, and trade C at 8:20). The trader exits trade A at 18:00, trade B at 19:00 and trade C at 20:00.

Between 8:00 and 8:10, we have position 1 lasting 10 minutes, with a nominal leverage of 1:1.

Between 8:10 and 8:20, we have position 2 lasting 10 minutes, with a nominal leverage of 2:1.

Between 8:20 and 18:00, we have position 3 lasting 9 hours 40 minutes, with a nominal leverage of 3:1.

Between 18:00 and 19:00, we have position 4 lasting 1 hour, with a nominal leverage of 2:1.

Between 19:00 and 20:00, we have position 5 lasting 1 hour, with a nominal leverage of 1:1.

In this example, the trader’s intention is to trade EURUSD with a nominal leverage of 3:1 and duration of about 10 hours. However, he enters and exits the multiple trades with different prices and at different timings for some reasons (e.g. better prices, take partial profits or cut partial losses).

Since VaR is calculated with the data of all the positions, and four out of the five positions have a lower nominal leverage and much shorter duration, will this strategy’s VaR calculated by Darwinex algorithms be smaller than it really is? Is it possible to calculate VaR with the top 50% (by nominal leverage) of all the positions?

Thank you!

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Goood morning @OakLadder ,

The VaR formula -the most basic version- is calculated with the summation (Σ) of the D-leverage of all positions opened in the last 45 trading days * sqrt (time) of all of them.

In your case, position 3 will have way more exposure -more D-leverage and duration-, and therefore weight in the final VaR %, than position 1, 2, 4 and 5.

BTW, congrats on ERQ. Impressive track record!!

Have a great weekend :wink: