This document lists all trading rules applicable to Diabolo traders. They are not contractual obligations but any violation may lead to an end of cooperation between Diabolo and the trader.
These rules don’t apply to systematic trading
Drawdown and high watermark
Positions and PL are monitored by the risk manager with Diabolo proprietary tools. The trader actual drawdown is computed using the high watermark method on a daily basis. The golden rule is this one: the trader portfolio must be flat before the drawdown reach a 35 % level.
Diabolo will not accept any break of this rule and will cover all positions at market price in case this milestone is breached.
Before such a situation occurs, there are two drawdown levels which will trigger some action: 15 and 25 %. The idea is to gradually reduce risk exposure before the trading has to be halted.
The 15 % drawdown threshold
First rules are taken as soon as the drawdown exceed 15%:
- Number of positions shall not exceed 5
- Token in the portfolio shall belong to the first 500 market caps as listed by the website coinmarketcap
- Each trade with a loss greater then 25% must be closed
Above rules will be lifted once the drawdown fell below 15%
The 25 % drwadown threshold
This is the second and last level which can avoid the close of the portfolio. At this stage there is still a 10% flexibility, but trading in this zone needs a lot of attention. Below rules will apply:
- A mandatory call with the risk manager shall help to understand the situation and set the method to reduce the drawdown
- Number of positions shall not exceed 3
- Token in the portfolio shall belong to the first 100 market caps as listed by the website coinmarketcap
- Each trade with a loss greater then 15% must be closed
- Each open position shall be protected by a stop loss
- The risk manager may ask the trader to close any position seen as unsecured
Above rules will be lifted once the drawdown fell below 20% and first level rules will be in force.
Any loss greater than 30% may mark an end to the cooperation between Diabolo and the trader