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Upcoming changes to the Risk Manager

The thing is that when i first listened to the Spanish program I understood that the Darwin Var will follow the underlying strategy´s Var regardless the trader´s will but seeing the answers here my feeling is that i understood wrong…
If the trader is in total control of the darwin´s Var is ok for me.
But will the trader be in total contro of the darwin´s Var (restricted to a 3% to 10% boundary) or will the Darwin´s Var move along with the underlying strategy´s Var?
That is the question that i want to be answered :slight_smile:
Anyone understood this risk manager change the same way as Sterso7?

In my opinion the Provider will control the darwin’s var.

The idea is letting provider, for example to low the var in periods of low volatility when they think that their results will be worst. Today it is not possible, they low their var in the underlying strategy, but the darwin amplify the factor to get the var 10%.

I understood it in the podcasts and in the reading information.

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If that is the case, then i think it is a good change.

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Now comes to my mind this question: How will Darwinex compare all Darwins? With this change, there will be a lot of Darwins with different Var, so it will be impossible to compare Darwins with different Var between each other. It will be like compare an apple with an apricot… Until now it was like compare apples with apples.
In my opinion this change will make things much difficult for the investors and much easier for the traders.

I don’t think so. They are compared with the results of the VaR. That’s the same what’s done now with the fix VaR.
Investors will have to learn to look at both VaRs.
Edit: what should be done is to document the history of the Target VaR and not only the history of the trader‘s VAR visible under the Rs attribute.

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I don´t see how investors could be affected if the darwins had different VAR among them. Investors will evaluate darwins regarding their performance and behavior, same thing they do now. Some darwins will run their accounts with more risk than others, but now it happens too (the risk manager adjust the underlying strategy to the 10% VAR, what change the risk of every darwin differently). In other hand the VAR will be visible, so I don´t see any problem on that side.
In other hand, it will be more confortable for darwins to choose the VAR that fit better for each one.
What I don´t like is the reason Darwinex is doing this change, just to help some specific darwins like LVS, and even worse they said they will give special more flexible VAR to a few darwins, what in my opinion is unfair for the rest of darwins.
Rules should be the same for all.

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Completely agree. If the reason to this change is to help certain Darwins It is totally unfair for those who have done the homework and knows how to trade in the underliying strategy to avoid certain behaviour in the Darwin.

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I think a better solution would be to set a minimum VaR of 1 or higher for the Darwin to calculate the Darwin’s VaR.

The trader of Darwins with a micro VaR like ERQ have a lot if restrictions when they can open or close a trade because of the investor‘s volume. I remember that this Darwin is moving 60 lots on investor‘s accounts while it is trading microlots on a 10k account. Markets like LMAX usually offer about 3 lots on the best price. That effect is only smoothed but not solved with a flexible VaR set by the trader.

the goal here is to MAKE MONEY for INVESTORS. not who best can alter strat to suit darwin

if the current VAR punishes traders that know when the market doesn’t suit their strat and reduce trading and consequently the VAR drops and increases risk in Darwin. This is neither good for investors or trader

If the fix allows more flexibility as said above, then this is great move by darwinex

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From my point of view if you are a Darwin provider you have to care not only for your own money but also for your investors money and if you know that bad times are coming and thus you reduce your risk in your underlying strategy you have to know that maybe this is good for your own money but not as good for your investors money because that will amplify the potencial losses in your Darwin.

I understand what you mean, and this change will let the provider to low the var of the darwin when, exactly as you say, he thinks that bad times are coming and avoiding this potential losses amplified.

This is the theorical explanation, and we will see the practical in the future if this change improves the DD and the ratio return/DD in the best darwins as predicted.

I don’t see to be contrarian with this change, because all the darwin’s Var would be below <10%, and they can be compared with this feature.

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If I KNOW that bad times are coming I don’t trade. Against other platforms Darwinex does not pay per successful trade, so there’s no reason to loose own and investors money intentionally.

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Does anyone really know when the bad/good times will come? Or when low/high volatility will happen? It just happens and you see it in hindsight.

I like the VAR changes if it simply allows ALL traders to choose to set the Darwin VAR between 4-10. This way, if your underlying strategy VAR falls into that range, the Darwin results won’t change.

But we can’t know for sure until they launch I guess.

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if less volatile market, maybe you don’t get same set ups = less trading. maybe you are sitting in long term positions and it isn’t moving. all the while VAR creeps down. then when you go get set ups, you either have to trade lower on underlying to keep Darwin trading same or trade normal size and have more volatile Darwin.

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Hence why a blanket/forced flexible 4-10% VAR makes sense. When market conditions cause the strategy VAR to fall from 11 to 6 for instance, there won’t be major changes if VAR kicks back up from that 6 to 10.

Making it in such a way that traders can move between the current VAR regime and the flexible one willy nilly on the other hand, is just one more headache for everyone involved but we’ll see how it goes when it is implemented and the rules.

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Not trying to be a smart-ass here but if you are a discretionary trader it’s very easy to know when bad times will come (almost guaranteed).

Examples:
You decide to keep on trading although…

  • you are sick
  • you barely slept last night
  • you are still angry at someone
  • you are already in a losing streak
    etc. etc.

As for volatility, some markets are clearly more volatile than others, you can choose to trade those, you can trade higher timeframes, you can study Donald’s tweets timetable, etc. etc.

Many options available. :wink:

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You are talking about special cases…Bad times I meant are purely market movement related. And forgive me if I don’t see how it is logical to flip the VAR button because you fell ill/quarreling with the missus and so on. Even at that, you don’t know exactly when you will fall sick etc. It just happens. Even in a losing streak, you don’t know when it will end/start assuming you are following your system.

To the other points, the whole point of discretionary trading is that there are no universal rules. The rules for discretionary trader A won’t be the same for B. So while it makes sense to you that trader A should watch Donald Trump’s Twitter or stop trading NZDUSD for Gold in a quiet week, it won’t make sense to another. Some discretionary traders only trade the same 2-3 pairs regardless.

We probably have different definitions but yeah, anyone that can predict bad results should be able to predict good results right? In that case they can switch to higher risk and “kill” the market no?

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The VaR of the trader is not touched so it will go up and down for the reasons described above. The trader can adjust the Darwin’s volatility by changing its VaR in line with his VaR changes. Changing the account size is an option for that which is available today.

As DarwinIA prices are linked to the account size most traders don’t want to reduce it even if they trade with a hazardous low VaR. Now they will get an option to trade the investor accounts with less volatility, and we will see how intensively it will be used.

“quarreling with the missus” That was funny :joy: I never heard that expression before.

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Totally agree.

I think nobody knows but one might have the opinion or might think that bad times are coming and so act accordingly.

Totally agree but having said that i would not touch anything. I would leave the risk manager as it is now. Introducing changes in such an important matter would create more confusion among investors and traders.