Trading reliability level (TRL) is a score based on a Portfolio Manager’s trading performance. It is calculated after 30 days of a fund's first trade is opened based on the weighted average of two values:

• Safety score
  • The safety score shows how well a PM avoids losing capital in a fund, 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 specific fund.
• Value at risk (VaR) score
  • Value at risk (VaR) score shows how well a PM 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.

The TRL considers the funds in Portfolio Management and strategies in Social Trading. In brief, each account's VaR and safety scores are calculated and totaled daily.

Here’s an example:

A trader has three accounts:

1. First, the max equity for each account is noted in a 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 use the formula below to calculate each account's daily VaR score 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 stopouts with the formula below and total the stopout 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 the VaR 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.

About trading reliability level significance

When a PM has a significant TRL, the fund(s) they create 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 of open orders by the PM. Essentially, every open order contributes to the growth of the extent score. A higher margin-to-equity ratio and/or longer duration accelerates the development of this metric, but it also increases the associated risk. It is calculated by:

AUM 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 PM reaches an extent score of 10 over 10 trading days, their TRL becomes significant.