TRL is an indicator that represents how well strategy providers manage their trading risks. It is calculated by the average of two values: safety score and value at risk (VaR) score. It is based on the performance and trading activity in the last 12 months and represents a historical record of the strategy provider’s reliability. Investors are more likely to invest with strategy providers who have high TRL.

Finding the trading reliability level:

1. For strategy providers, log into your Personal Area (PA).
2. Open the Social trading tab.
3. Head to My strategies tab.
4. Your trading reliability level is shown below your bio (on the right).
5. Click the trading reliability level to display more information.

Note: The breakdown of the TRL shows the safety score and VaR score, as well as a customizable historical chart of the trading reliability level. You can customize the trading reliability history chart by time frame, with results calculated daily.

Safety score

The safety score shows how well a strategy provider avoids losing capital in a strategy, such as when equity drops to zero or below during trading. The lower the score, the more often a stop out has occurred in the strategy.

VaR score

Value at risk (VaR) score shows how well a strategy provider has managed drawdown, a single measurement of loss from peak to trough. The higher the VaR score, the less share of capital could be lost by the investor in worst-case scenarios.

About TRL scoring

A trading reliability level (TRL) is a number between 0 and 100. It is assigned to a strategy provider based on their trading performance. The higher the level, the more reliable the trading performance of that trader has been. TRL can only be calculated 30 days after the first trade is opened in a strategy/fund.

Here are the levels:

• 0-40: Low score
• 41-70: Medium score
• 71-100: High score

Note: TRL is based on historical data and does not predict future performance.

How is TRL calculated?

The score takes into account the strategies in Social Trading as well as funds and strategies in a Portfolio Management Solution. In brief, the VaR scores and safety scores for each account are calculated and totaled daily.

For example, a trader has 3 accounts:

1. First, the max equity for each account is noted in the 90 day period.

• Account 1 = 6000
• Account 2 = 150
• Account 3 = 500

Total max equity = (6000+150+500) = 6650

2. The max equity ratio of each account is:

• Account 1 = 6000/6650 = 0.9022
• Account 2 = 150/6650 = 0.022
• Account 3 = 500/6650 = 0.075

3. Next, we find out the daily VaR score for each account for each day with the formula below and total the respective account VaR score for each day.

Daily account VaR score = Drawdown x Max Equity Ratio

4. We do the same for stop outs with the formula below and total the stop out score for each day to get the safety score.

Daily account safety score = Stop Out x Max Equity Ratio

5. Next, we get the 2.5 percentile for the total column for both the VaR score and Safety Score.

VaR score = -0.3156

Safety score = -0.097

6. We normalize this score by this formula:

VaR score = 1 / 0.5 + e^3*VaR score

Safety score = 1 / 2 + e^3*Safety score

VaR score = 0.4875

Safety score = 0.8988

7. Finally, we use the formula below to calculate the TRL

TRL = 0.6 x VaR score + 0.4 x Safety score

= 0.6 * 0.4875 + 0.4 * 0.8988

= 0.65202

We then take the first two values after the decimal point which is 65. Therefore the TRL shown will be 65/100.

Note: The TRL score shows how well a strategy provider has avoided losing all of the strategy’s capital. The higher the score, the less probability of losing all the capital.

About trading reliability level significance

When a strategy provider has a significant trading reliability level (TRL), it becomes visible to investors. TRL significance is based on two factors: 

• Extent score: This score shows trading experience, considering the margin to equity share over the duration orders by the strategy provider are open. Essentially, every open order contributes to the growth of the extent score. A higher margin-to-equity ratio and/or longer duration accelerates the growth of this metric, but it also increases the associated risk. It is calculated by:

Total equity utilization x Duration

Here’s an example of how the extent score is calculated:

1. The equity and margin are recorded after every trade.

2. Next, equity and margin from all accounts are totaled respectively.
3. Exposure is calculated by margin sum/equity sum.
4. The time difference is defined as the seconds passed from the previous trade.
5. Extent raw is calculated by exposure x time difference.
6. The extent score is calculated by the extent cumulative sum normalized by 12000*.

We then round to the first value after the decimal point which is 1 and take it. Therefore, the extent score displayed will be 1/10.

• Trading days: The number of days with trading activity.

When the strategy provider reaches an extent score of 10 over 10 trading days, their TRL becomes significant.