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Intermediate5 min readThe FoudaLens Method · 1/10

The Fouda Score: How Is It Calculated from 0 to 100?

Next to every stock on FoudaLens sits a number from 0 to 100 called the Fouda Score. It is not anyone's opinion; it is a fixed calculation: five technical factors from price and volume, then a separate deduction if the company's financial health is weak. We will walk through it step by step, and you will compute one by hand.

What you will learn

  • Know what the score is built from: five factors, their weights and the exhaustion deduction.
  • Compute a score yourself on a worked example.
  • Know what the number says, and what it does not.
In this lesson
  1. The idea in four steps
  2. A worked example
  3. When does the exhaustion deduction apply?
  4. The financial health deduction
  5. What does the number say?
  6. Check yourself
  7. Summary
  8. Related terms

The idea in four steps

  1. A score for each factorThere are five technical factors, each scored 0 to 100 from the stock's price and volume history.
  2. A fixed weight for eachTrend strength 25%, momentum 25%, volatility control 20%, relative strength 15% and volume confirmation 15%. They add up to 100%.
  3. The exhaustion deductionIf there are signs a rise is stretched, up to 20 points come off the total.
  4. The resultThe total after the exhaustion deduction is the technical score, never below zero, rounded to one decimal place.

A worked example

Take an invented stock, Al Wadi Industries. Each factor score is multiplied by its weight, and the results are added. Then the deduction comes off.

FactorScoreWeightPoints
Trend strength70× 25%17.50
Momentum60× 25%15.00
Volatility control80× 20%16.00
Relative strength55× 15%8.25
Volume confirmation50× 15%7.50
Weighted sum64.25
Exhaustion penalty (RSI at 80)-4.00
Technical score60.3
Invented scores. The sum is 64.25, the exhaustion deduction 4 points, so the technical score is 60.3.

Trend strength, for example: 70 × 25% = 17.50. The five contributions add up to 64.25. This stock's RSI stands at 80, so 4 points come off, and the technical score after the exhaustion deduction and before any financial health deduction is 60.3.

When does the exhaustion deduction apply?

RSI above 70The deduction grows steadily up to 12 points at an RSI of 100. Our 80 is a third of the way, so 4 points.
Price far above its averageIf the price is more than 15% above its 20-day average, up to 10 points come off.
A rise on thin volumeIf the price rose over the last 5 days while volume ran below 60% of its 20-day average, 5 points come off.

These deductions add up, but the total is capped at 20 points. A stock that rose too fast can show high factor scores, and the deduction balances that picture.

The financial health deduction

On the ranking and the stock page, the displayed score can lose a separate deduction if the company's financial health is weak: a net loss takes off 10 to 25 points depending on its size against market value, and a negative return on equity takes off another 5 to 10. With no financial data at all, 3 points come off, and with net profit unavailable, 2. The score never goes below zero. So if our example company carries a 10-point deduction, the displayed score is 60.3 − 10 = 50.3; with no deduction it stays 60.3. The backtest uses the technical score without this deduction.

Something that is not in the sumFoudaLens also computes a read called microstructure and shows it descriptively, but it is not part of the score until its calibration is finished.

What does the number say?

MythA high score means the stock is cheap.
RealityThe score is not fair value. The factors are technical, and financial data enters only as a deduction when the company makes a loss or its data is missing.
MythA high score means the price will rise.
RealityThe score describes the stock as of the latest data. It does not say where the price goes.
MythTwo stocks at 60 are alike.
RealityThe same number can come from very different factors. Open the factor breakdown.
Watch outThe weights above are the published model weights. The score describes the stock's state; it is not a recommendation to buy or sell.

See the calculation on real stocks

The methodology page lists the factors and weights, and the ranking page shows the score for every stock.

MethodologyStock ranking

Check yourself

1. A weighted sum of 70 and a 6-point deduction. What is the score?

The deduction is subtracted: 70 minus 6 = 64.

2. Which two factors carry the most weight?

Trend strength and momentum are 25% each.

Summary

  • Technical score = five factors times their weights minus an exhaustion deduction of up to 20 points; the displayed score can also lose a financial health deduction.
  • The weights: 25%, 25%, 20%, 15% and 15%.
  • The score describes the stock's state; it is not fair value and not a forecast.

Related terms

Moving averageRSIVolume

Related lessons

The FoudaLens MethodFoudaLens Descriptive Signals: What They Mean and What They Do NotReading ChartsWhat Is Technical Analysis, and Where Does It Stop?
Previous · 13Earnings Season: How Stocks React to SurprisesNext · 02The Fouda Score Factors: What Does Each One Measure?

Educational content only, not investment advice. Companies and figures in the examples are invented for illustration.