A short-term strategy means also that positions are aimed to be open for short periods of time, taking advantage of short term opportunities in the currencies markets. This short term view means that positions are only held open for the time period whilst the trade setup parameters defined at the open of each trade are still valid and satisfied. When the defined trade setup limits are no longer satisfied, the trade is deemed as a bad traded and quickly closed. This feature avoids dragging losing open positions in time, hoping that at some point in time the market reverses. Such type of trading, frequently found in trading strategies, increases the risks of accumulating drawdown, giving back profits to market and increases transaction costs, such as swap costs.

New coming customers might also be interested to learn that a sound sign of the robustness of the strategy is the coherence between the wealth the strategy is able to capture from the market and how this corresponds to points or “pips” gained over time. Please check the figures and charts in the next section to verify that, month after month, there’s a very strong coherence between positive returns in account equity terms and positive returns in terms of points/pips obtained from the market. A red flag of strong warning should always be raised when a positive results track record doesn’t meet also a positive pips track record. Several causes can cause this type of divergence, but one of the most common is what is called “martingale trading”, where new and larger positions are added to an already losing position hoping for a market reversal and seeking a way out of a bad trade setup, that instead of being closed at the right time by following sound trade rules, was maintained alive and with increasing relevance and risk.

The strategy doesn’t follow also what is usually known as “grid trading”, which is a similar approach to martingale, but where new positions, opened with the objective to recover what was a bad trading setup from the beginning, have the same size of the initial position. Grid trading can be eventually a less risky strategy than pure martingale, but still encapsulates what is one of the most common flaws of simpler trading strategies, which is the approach to “add to losing positions” and thus increase risk immensely, hoping for a market reversal, instead of labeling what is a bad trade setup early in time. In average trade positions in Arion are closed within less than 24h of their open, which shows the targeted and consequent nature of the strategy.

Lastly, maybe one of the most distinctive aspects of Arion relies on the effort placed to balance the portfolio to achieve the best possible setup in terms of long term expected return with lowest possible short term risk. This is done by taking advantage of the diversified nature of the portfolio and. Regularly the settings, weight and composition of the portfolio are adjusted in order diversify its risk and to continue to provide the best long term prospects possible, but with a risk exposure (measured in terms of drawdown) within strategy targets. The rebalancing of the portfolio aims to allow both peace of mind to current investors and the ability to recover, within a reasonable amount of time, to investors who, by coincidence, enter the product at one of its local peaks.