I wonder why a lower VAR than 10% is leveled to 10%. I understand higher VAR are lowering the darwin VAR to 10% to protect investors money, but why the opposit? So, if a Darwin want to lower the risk below 10% in the darwin, the solution is risking more in the underlying strategy? That´s really strange!
Maybe I didn´t explain well myself, so I am giving a easy example:
Darwin A: underlying strategy runs 30% VAR, then darwin is monitored to 10% VAR. As a result the risk of the darwin is 3 times less than underlying strategy. In SHORT: if the underlying strategy lost let´s say 3%, then the darwin lost only 1%.
Darwin B: underlying strategy runs only a 3% VAR, then darwin is monitered to 10% VAR. As a result the risk of the darwin is more than 3 times higher than underlying strategy. In SHORT: if the underlying stratey lost 3%, then the darwin lost 10%!!!
Wasn´t it the spirit of a 10% VAR to reduce the risk of investors? Then, why if a darwin reduce the VAR below 10% the outcome is the opposite? The reality is that strategies with higher VAR are safer for capital of investors!!! Of course, less safe for the trader capital.
So, why dont only monitor the VAR when is above 10% and leave it as it is when it is below 10%?
This is a question for Darwinex staff, but of course anyone can give an oppinion.