---
title: "Risk condition"
description: "A risk condition is a rule that watches a market series and, when it triggers, switches a strategy from its Risk-On allocation to its Risk-Off allocation."
canonical_url: "https://fincanva.com/docs/strategies/risk-condition"
last_updated: "2026-08-02"
md_url: "https://fincanva.com/docs/strategies/risk-condition.md"
---

# Risk condition

A risk condition is a rule that watches a market series and, when it triggers, switches the strategy from its Risk-On allocation to its **Risk-Off** allocation — the more defensive profile you defined yourself. When the condition clears, the strategy switches back to Risk-On. A strategy can carry up to two risk conditions, and you build each one in the **Risk** card, described in the app as "Automatically de-risk when markets turn".

**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](/docs/strategies/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.

| Part | Control | What it sets |
|---|---|---|
| Watched series | **Instrument** | the ticker the rule watches |
| Transformation | **Indicator** | "Raw price", "Simple moving average", "Percent change", or "Average momentum" |
| Window | **Period** | how many periods the indicator covers — for the indicators that read over a window |
| Comparison | the **Template** you started from, plus **Operator** and **Thresholds** | Whether the series is compared to numbers you type or to a second series |
| Patience | **Confirmation delay (weeks)** | How long a flip must stand before the strategy acts on it |
| Timing | **Auto-rebalance** | Whether a flip forces an off-schedule rebalance |

The two comparison shapes are covered in [Condition types](/docs/strategies/condition-types); the two behaviour settings in [Confirmation delay](/docs/strategies/confirmation-delay) and [Auto-rebalance on flip](/docs/strategies/auto-rebalance-on-flip). Both behaviour settings exist to damp [whipsaw](/docs/strategies/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.

$$
\text{Risk-Off is requested when}\quad s_t \;\square\; \theta
$$

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](/docs/strategies/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](/docs/strategies/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?](/docs/investing-theory/is-this-financial-advice#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](/docs/strategies/simple-moving-average-sma). 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](/docs/strategies/condition-types) explains why there are two of them.

**Learn more:** [Risk conditions](/docs/strategies/risk-conditions)