When should I use risk management in Fincanva?

You don't always need to enable risk management in Fincanva—but when you do, it can serve as a powerful tool for protecting your portfolio and optimizing decision-making. Use it when market conditions become volatile, or when you want your investment strategy to react automatically based on predefined, data-driven signals.

1. Use risk management when you want automatic protection against crashes. It helps reduce exposure to high-risk assets when the market shows signs of downturn.

2. Activate it if you prefer data-driven macro triggers over gut instincts. You can define specific signals (e.g., "VIX > 25") that trigger a shift to safer assets or cash.

3. It's ideal when you're aiming for less emotional decision-making. Instead of reacting impulsively to market noise, you can let rules guide your responses.

However, there are a few important limitations and tips to keep in mind:

• Risk management won’t “predict” market direction—it follows signals that you define.

• Avoid creating overly complex or conflicting rules, which may lead to poor performance or increased churn.

• Validate your setup through solid backtesting before relying on it in your live strategy.

• Be aware that using dynamic risk rules may increase rebalancing frequency, which can lead to higher transaction costs.

Fincanva makes it easy to configure these settings within each portfolio or model. You can define Risk Off and Risk On conditions, set a delay to reduce false signals, and even trigger rebalancing when these conditions change. This makes the platform ideal for building resilient, rules-based strategies.