How It Works
Every EthicoIQ signal passes through the same disciplined pipeline: quantitative scoring, ethical screening, and probability validation. Here is exactly how it works.
1. The EthicoIQ Signal Engine
Each asset is evaluated against a proprietary 7-factor scoring model that combines momentum, mean-reversion, trend-following and risk signals into a single 0–100 Signal Strength score.
2. 7-Factor Scoring Model
- RSI (14) — overbought/oversold momentum.
- MACD — trend acceleration vs deceleration.
- Volume Surge — institutional participation gauge.
- ATR — volatility adjusted entry/stop spacing.
- EMA 20/50 — trend regime confirmation.
- R/R Quality — reward-to-risk ratio at proposed levels.
- Kelly Criterion — capital sizing edge.
3. Kelly Criterion Position Sizing
We use a half-Kelly cap so position sizes never exceed the lesser of (a) half the full Kelly fraction or (b) your declared risk per trade. This keeps drawdowns manageable while still expressing conviction.
4. R/R Gate
No trade reaches the signal output unless its risk/reward ratio is at least 1.5×. Sub-par setups are filtered automatically.
5. Ethics Screening Framework
Every asset is independently screened against our five ethical criteria — see the Ethical Investing Guide for the full rules. Non-compliant assets never enter the signal stream.
6. Monte Carlo Probability
For each long setup we run a Monte Carlo simulation against the symbol's historical return distribution to estimate the probability of hitting each target (T1, T2, T3) before the risk limit. This is displayed as the Historical Win Rate.
7. Data Sources and Limitations
Price & fundamental data: Yahoo Finance (delayed or near-live). Macro flows: NSE provisional FII/DII data. AI commentary: Anthropic Claude. Some prices may be estimated when upstream feeds are throttled. We never claim live tick-level execution accuracy.
8. Historical Accuracy Disclosure
Historical signal accuracy is computed on a rolling 12-month basis and is shown on each setup. Past performance does not guarantee future results. Markets evolve; signals can be wrong; capital is always at risk.