Each player begins with an initial rating of 40 before their first tournament. After each event, a player's final placement (e.g. 1st, 2nd, 3rd, etc.) is converted to a percentile score.
The formula used is: (([Number of Players in the event]+0.5-[Placement])/[Number of Players in the event])*100
If the event was the World Championship, the tournament value is 20.
Otherwise, if the tournament has only one round, the tournament value is equal to the number of players in the event divided by 7, plus 2. If the event has more than one round, the tournament value is equal to the number of players in the event divided by 3.5, plus two. ( (#players/3.5)+2 ). However, the maximum tournament value for any non-world championship event is 15.
Events before 2001, with the exception of World Championships, have a tournament value of zero, meaning they have no effect on ratings. The theory is that results be based only on the last ten years of competitive play.
As an example of calculating new ratings, suppose a player enters an event with a rating of 55. Suppose also that they finish in 8th place out of 65 players. The player's percentile score is (65 + 0.5 - 8)/65 * 100 = 88.46. A 65 player event would have a tournament value of (65/3.5) +2 = 20.57. However, since the maximum tournament value is 15, that will be the value for this event. Therefore, this player's rating will move 15% of the distance from 55 to 88.46. The difference between 88.46 and 55 is 33.46. 15% of 33.46 is 5.019. Therefore, we add 5.019 points to this player's rating as a results of this event, meaning their rating increases from 55 to 60.019.