REVIEW at 31st of JULY
Since the beginning of the year, Long Vision FX has continued with its philosophy based on a wide diversification of currencies, strategies and timeframes. As many of our followers already know, breakout volatility strategies have big weight in Long Vision FX and, by their nature, work better in high volatility markets. On these months we have obtained positive return also in a period where markets had a low volatility in general.
Darwin LVS has had a slightly higher return than the underlying strategy (Long Vision FX) because the VAR of the master account has been much lower than the Darwin (10%) during many weeks, increasing risks and positive results. The fact of fixed VAR has been widely discussed in forums. We prefer a 10% limiter than a fixed VAR that sometimes multiplies the risk to investors in comparison to our master account. In any case we do not worry too much because the risk of the master account will always be variable and sometimes it will be better for us and others it will not.
BDR y NTR
Regarding Darwins BDR and NTR, we prefer to analyse them together because these two portfolios have been created specifically for Darwinex.
After investment policy’s change at the end of 2017, both strategies have suffered the low volatility of markets. The underlying strategy of BDR (Building Dreams FX), which trades in the opposite direction of the breakouts, has had a negative performance (around -4%). Darwin BDR has amplified losses during this period because the VAR of the underlying account has been close to 5%. On the other hand, the underlying strategy of NTR (New Trading FX) has achieved a performance of +7% while Darwin NTR had +11%.
Although we are not satisfied with overall performance, we think that this lateral period does not override the strength of both portfolios. Anyway, we are reviewing both settings in order to improve them. Must take into account that these two portfolios are composed of a single kind of strategy unlike LVS. Individually, they are more suitable for short-term trading taking advantage of the cycles.
We believe that markets volatility will rise in the future from actual levels and when it happens the movements will be deeper.
Our way of managing, even in a fully automatic portfolio, takes into account several market factors. For that reason, our portfolios will always evolve without losing their initial philosophy.
Following our philosophy of small changes, we have added in LVS some sets on longer timeframes in several currencies according to these main ideas:
- Enhance trading in most liquid hours, i.e., during European and American sessions.
- Use longer timeframes to look for more significant movements, improving the R/R of the portfolio and taking advantage of a possible rise in volatility.
These improvements will help to maintain a high capacity of the strategy and a low divergence.
In the coming weeks we will also analyze the exit timing of some currencies to detect possible improvements, in particular of EURUSD and GBPUSD.
Regarding NTR and BDR, as said before, we are studying some improvements at several levels without modifying the philosophy of the portfolio. The strategies of those portfolios are more sensitive to markets volatility not only because they are composed of a single strategy, but also because they use mainly long timeframes sets (M30 and 1H). We will specify the changes we are going to implement in a forthcoming letter.
Finally, we would like to thank investors for their trust and do not hesitate to contact us for more information.
David y Enrico
Feycox Development S.L.