Risk of the underlying strategy

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OneOfTheOne

Junior member
18 25
Here is my dilemma, probably every traders dilemma. What is the right balance or what is the reasonable balance (lets assume they are the same thing)?
You constantly hear that low risk is the key. Is it, if I want to grow my money and use my money, not just having them in my account, for sake of having lower drawdown and maybe attracting investors ?
Here is the real life example. It is one good calendar year of my portfolio, with relatively high drawdown and relatively high profit. Rik "x" and risk "x/2".
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I am using active money management and compounding effect and you can see that there is a big difference in the end of the year. The big problem with low risk is that the profit growth is exponential and the drawdown growth (with higher risk) is linear. In this case 3 times less capital with the higher risk will make the same profit in terms of $ amount. And what you risk, you risk twice as high max drawdown. If you convert this drawdown in to $ amount actually you are risking less money for making the same profit and you can have this money in your bank account for other needs .
What do you think about this? Which risk do you thing will look better on the Darwinex platform as a Darwin?
 

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OneOfTheOne

Junior member
18 25
The drawdown and risk profile of your trading account are not important for investors.

Your max DD could be 2% or 50% everything will be normalized to a darwin with a tipical max DD od 15%
Then why most of the darwins with good score and alot of investors are trading with so ridiculously low Var?
Is it just because you are not really risking your money and relying on other peoples money for profit?
 
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CavaliereVerde

Experienced member
1,518 1,942
Then why most of the darwins with good score and alot of investors are trading with so ridiculously low Var?
Is it just because you are not really risking your money and relying on other peoples money for profit?
SYO SRI and ULI are not low var.
Very low var makes me think you don't trust your strategy.
A decent low var between 2 an 6% is easier to keep stable, low variation of equity after winning or losing streaks.

For further reading:
->https://community.darwinex.com/t/what-is-the-best-var-for-the-underlying-strategy/6265
->https://community.darwinex.com/t/what-type-of-returns-do-investors-really-want-to-see/944/1
Let s notice that var was normalized to 20% in 2016 and to 10% in 2019, now it is normalized to 6.5%
 
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CavaliereVerde

Experienced member
1,518 1,942
If you want to go in depth about ERQ you have to search in the old community.
He should be also a PAMM manager and he should run also other accounts with normal risk profile.
In his case I think there are other reasons to trade very small sizes on Darwinex.
I am almost certain there are significant amounts of his money and from his familly invested in his trading.
 
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