A Rule-Based Score for Ranking Trading Signals by Risk Profile
Summary
The article presents a tool for comparing available trading signals using five criteria: account leverage, weekly account growth, maximum drawdown, return on investment, and signal age. Each criterion contributes a score to a combined rating. The proposed mappings use linear interpolation between chosen thresholds, with negative growth and certain high-risk ranges assigned the lowest score. The resulting scale is intended to distinguish conservative, moderate, and risky profiles.
The article also describes a terminal interface that lists eligible signals, displays each category score and an aggregate visual indicator, and allows subscription to a selected signal. Its thresholds and weighting choices are subjective conventions, not validated measures of future performance. The author stresses that the color scale describes trading style rather than signal quality: a higher-risk signal can also imply greater potential gains. No empirical evidence is given that the rating predicts returns or prevents losses.
Key ideas
- The rating combines leverage, weekly growth, maximum drawdown, ROI, and signal lifetime.
- Scores use hand-set thresholds and linear interpolation to translate each measure to a common scale.
- The interface displays category scores and an aggregate rating for signals available to the current account.
- The rating categorizes trading style and risk, but does not demonstrate predictive power for future results.
- Thresholds reflect subjective assumptions and may not suit every trader.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.