The risk score seen in any strategy is a metric that attempts to predict how a strategy might behave in future. Risk considers the free margin of a strategy: the lower the free margin, the higher the chance that the strategy triggers stop out, the higher the calculated risk score. Low free margin more easily results in a strategy’s equity becoming 0, which forces open trades in that strategy to automatically close - this process is known as stop out.
Although the risk score shown in a strategy is based on a 30-day weighted result, the calculation of risk happens daily, only increasing if the score climbs higher than the previous day’s result.
Risk Score Table:
The risk score is measured by a scale of 1-10.
So when you see a risk score of 6, the result indicates high risk. The higher the level, the lower the free margin available to the strategy, the more vulnerable it is predicted to be.
With regards to strategy metrics, Drawdown illustrates what has happened, while risk tries to predict what is to come.