When evaluating Signal Providers in FXTRADING.com's Social Trading platform, the risk score is a crucial metric that helps you assess potential risk before investing. This article explains how risk scores work and what they mean for your investment decisions.
What is the Risk Score?
The risk score is a numerical indicator displayed for Social Standard and Social Pro accounts that reflects the level of risk associated with a Signal Provider. It primarily considers the Signal Provider's free margin—the lower the free margin, the higher the risk of a stop out occurring, resulting in a higher risk score.
Note: Risk scores are not available for Professional accounts.
Risk Score Categories
Risk scores range from 1 to 10 and are categorized into three levels:
Risk Score | Level | Description |
1-5 | Moderate | Low probability of losing all capital in the short term |
6-8 | High | Requires caution; investors should accept responsibility for potential losses |
9-10* | Extra High | Extreme caution advised; only invest capital you can afford to lose |
*Important: Signal Providers with Extra High risk (9-10) are hidden by default and only visible to investors who specifically set their filters to "All" when browsing Signal Providers.
How Risk Scores are Calculated
The risk score displayed for a Signal Provider represents the highest risk level reached during that day. The system calculates risk scores every minute, updating the displayed score only when a higher value is detected.
A Signal Provider can improve their Signal Provider's risk score by consistently using a smaller portion of the Signal Provider's capital for trading over a 30-day period.
Risk Score vs. Drawdown
While drawdown shows historical performance (what has already happened), the risk score attempts to predict future vulnerability. A risk score of 6 or higher indicates significant risk, with higher scores suggesting lower free margin and greater vulnerability to market fluctuations.
Any Signal Provider that reaches a risk score of 9 or above is automatically hidden from standard search results to protect potential investors from extremely high-risk options.