Trader's Total Equity

To calculate the Trader's Total Equity we take into account 2 criteria:

  1. Result of the sum between 1- trading account equity and 2- trader's investment in its own DARWIN, so that investors can compare the risk that each trader has invested in their strategy in a homogeneous way.

    This means that if you had 5,000 euros of equity in your strategy and 5,000 euros invested in your DARWIN, your Trader's Total Equity would be 10,000 euros.

  2. Normalize the equity of the underlying trading strategy to the risk of the DARWIN -6.5% VaR-, that is, the equity of your underlying strategy will be automatically converted to the risk level it would have if it were invested in your own DARWIN. 

Account equity (6.5%) = account equity * account VaR / DARWIN VaR

For example, if you had 2,000 euros of equity in your underlying account with a monthly VaR of 13% -2 times higher than in the DARWIN-, these 2,000 euros would be equivalent to 4,000 euros for the purpose of equity calculation. 

In case the VaR of the underlying trading account is higher than 32.5% -5 times the VaR of the DARWIN-, we will use 32.5% as a value so that DARWIN providers will be never incentivized to increase their VaR in order to rise their DarwiniA equity, as we consider that trading with a high VaR is detrimental to both the DARWIN provider and its potential investors.

Trader's Total Equity = Account equity (6.5%) + DARWIN self-investment

Note that equity is not equal to balance.

  1. Balance: Funds deposited plus profits and losses already realized
  2. Equity: Balance plus the floating profit/loss of open trades