How risk conditions change what a strategy holds
A strategy with a Risk-Off allocation configured holds two allocation profiles instead of one — Risk-On and Risk-Off, each with its own method and its own invested portion — and runs one or the other depending on whether a risk condition is currently triggered. See Risk conditions for what the two regimes are and Set up a risk condition for how you configure one. Fincanva doesn't tell you when to switch a strategy defensive or which condition to use — see Is this financial advice?.
What's the trade-off between reacting fast and whipsaw?
A condition that flips easily reacts to a real regime change quickly, but the same sensitivity also makes it flip on brief, temporary moves that reverse soon after — each reversal is a whipsaw, and a flip that reverses switches the strategy's allocation and back again for no lasting benefit. A condition that's harder to trigger avoids most whipsaws but also reacts more slowly to a genuine regime change, staying in the wrong regime longer while it waits for confirmation.
How does Confirmation delay change that trade-off?
Confirmation delay (weeks) tunes the fast-reaction-versus-whipsaw trade-off by setting how long a flipped condition must hold before the strategy acts on it, from 0 to 12 weeks — its hint reads "0 = act immediately." At 0, the strategy switches the moment the condition flips, favoring responsiveness. A longer delay requires the flip to persist before it counts, filtering out brief flips at the cost of reacting later to a flip that turns out to be real.
What's the cash drag when a strategy goes defensive?
Cash drag is the market return a defensive strategy gives up because more of its capital sits in cash instead of being invested. Going Risk-Off commonly pairs with a lower invested portion on the Risk-Off allocation profile, so more of the strategy's capital sits in cash and less is exposed to the market — see Invested capital and cash reserve. Less market exposure means smaller swings in both directions: the strategy is shielded from further declines, but it also captures less of any recovery while it stays defensive.
What's the trade-off with Auto-rebalance?
Auto-rebalance (the toggle on a condition, note "Trigger a rebalance when the condition flips.") trades immediacy against staying on schedule: with it on, the regime switch reaches your holdings right away through an off-schedule rebalance; with it off, the switch waits for the next scheduled rebalance. See How Risk-Off affects when your strategy rebalances for the mechanics.
Limits and edge cases
Configuring the Risk-Off allocation identically to Risk-On makes the condition a no-op — the strategy still flips, but nothing about what it holds actually changes. Fincanva doesn't currently notify you when a condition flips — see How you find out your strategy has gone Risk-Off. Position exits — take profit and stop loss — are a separate mechanism on their own card and don't interact with risk conditions; see Position exits.
Related
For what the two regimes are, read Risk conditions. To configure one, follow Set up a risk condition. For how a flip reaches your allocation, see How Risk-Off affects when your strategy rebalances.
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