Risk condition

Also seen as: trigger — the risk list reads "Go Risk-Off when any trigger fires:".

What does a risk condition do when it triggers?

A triggered risk condition switches the strategy to its Risk-Off allocation profile — and nothing else. It does not pause, halt, or stop the strategy: the strategy keeps running, keeps rebalancing, and keeps holding positions, just under the other allocation profile. It does not liquidate to cash either, unless the Risk-Off profile you configured is itself cash. The app states the mechanic directly in the risk step: "Define risk conditions that switch the strategy to its Risk-Off allocation when triggered." What actually changes when a condition fires is described in Risk-On and Risk-Off.

What is a risk condition made of?

Every risk condition is one watched series, one comparison, and two behaviour settings.

The two comparison shapes are covered in Condition types; the two behaviour settings in Confirmation delay and Auto-rebalance on flip. Both behaviour settings exist to damp whipsaw — the flip-and-flip-back a sensitive rule produces.

How does the trigger test read?

A risk condition asks for Risk-Off when its indicator satisfies the comparison you set.

where: $s_t$ is the value of the chosen indicator on the watched series at time $t$; $\square$ is the Operator you pick — "is greater than" or "is less than"; and $\theta$ is the number you type on the Risk-Off row. A Double series condition replaces $\theta$ with a second series' value, $s^{(2)}_t$. A Single series condition runs this same comparison twice — one threshold asks for Risk-Off, a second asks for Risk-On again — and Condition types covers that pair and why it exists.

Defaults in Fincanva

• With no condition configured a strategy stays in Risk-On permanently — the empty state reads "Without a condition, the strategy stays in Risk-On at all times."
• A strategy can carry at most two risk conditions, and they combine with OR: the list summarises this as "Any match → Risk-Off", so either one triggering is enough — see two-condition combination.
• Each condition carries its own Confirmation delay (weeks) and its own Auto-rebalance toggle — they are set per condition, not per strategy.
• Configuring the Risk-Off allocation identically to Risk-On is a no-op: there is nothing to switch to, so triggering changes nothing.
• The app does not notify you when a condition triggers — you see the current state by opening the strategy.
• Fincanva does not tell you when to go defensive, which series to watch, or what threshold to set. See Is this financial advice?.

Worked example

You want a strategy to turn defensive while a broad equity index is trading below its long-term trend. In the condition builder you pick Condition type "Double series", set Series 1 to SPY with the Indicator left at "Raw price", and set the Comparison series to SPY with the Indicator "Simple moving average" and a Period of 200 — SPY against its own 200-day simple moving average. The Operator reads "is less than". Finally you set Confirmation delay (weeks) to 2, so a two-day dip below the average is not enough.

The result: while SPY sits below its 200-day average for at least two weeks, the strategy runs its Risk-Off allocation; when SPY is back above the average, it runs Risk-On again. At no point does the strategy stop, and the only holdings that change are the ones the two allocation profiles differ on. A Single series condition would instead compare the indicator against two numbers you type — Condition types explains why there are two of them.

Learn more: Risk conditions