Risk Management

Overview

Investing always carries some level of risk. At Eigen FinTech, we understand this and take risk management seriously. We carefully analyze financial data to assess the risks involved in trading and invest accordingly.

Methodology

Our risk management approach in the platform is multi-layered and utilizes various techniques and methods. It covers everything from fundamental risks and portfolio construction down to individual trades. By continuously monitoring the market and adjusting our strategies, we aim to minimize potential losses and maximize returns.

Risk Assessment

At the core of our risk management process is risk assessment, which involves conducting extensive analysis on market data. This data analysis is used to carefully evaluate and assess potential risks before making any investment decisions.

Fundamental Risks

Once the risks have been assessed thoroughly, we employ the following techniques to manage the fundamental risks:

• co-moving analysis:

We use advanced statistical models to determine the correlation between each asset and all other assets. Based on this analysis, we avoid including assets with high correlation in the same portfolio. This helps us effectively manage risk.

• Diversification:

We offer a wide range of markets on our platform to allow our clients to diversify their portfolios and reduce fundamental risks. By spreading investments across different markets and asset classes, clients can avoid putting all their eggs in one basket and potentially minimize the impact of any market volatility. Diversification also offers the potential for higher returns, as it allows clients to tap into multiple opportunities in different markets.

Stop Loss Limit

We utilize statistical models as well as technical analysis to provide custom-made stop loss strategies for each asset and interval. Stop loss is a technique used to limit losses in the event that an investment’s price moves against the desired direction. By setting stop loss orders, we can mitigate risk and minimize losses, while still allowing for potential gains. Our dynamic stop loss approach allows us to tailor the stop loss to the specific asset and trading interval, ensuring that it is optimized for each individual strategy. This further enhances our risk management capabilities.

Risk to Reward Ratio

Eigen FinTech provides an adjustable risk to reward ratio to accommodate clients with different risk preferences. The risk to reward ratio is a measure of the potential gain compared to the potential loss of an investment. It is calculated by dividing the expected profit by the expected loss. For example, if a client is willing to risk losing \(1 to potentially gain \)2, the risk to reward ratio would be 1:2. By offering an adjustable risk to reward ratio, clients can choose the ratio that aligns with their risk appetite and investment goals.

Our team employs various techniques to manage these risks, such as diversifying portfolios, using adjustable reward-to-risk ratios, and implementing dynamic stop loss and take profit strategies tailored to each asset and trading interval as exit strategies.

Moreover, we use sophisticated algorithms to implement techniques such as Value at Risk (VaR) and other risk management strategies to help protect our clients’ investments.