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Stock Picks: An Introduction
Stock Picks: Making Picks - The Basics
Stock Picks: Making Picks - Advanced
Stock Picks: Calculation of Pick Returns – The Basics
Member Ratings: An Introduction
Member Ratings: Calculating Average Return
Member Ratings: Calculating Risk Rating
Member Ratings: Calculating Analysis Quality Rating
Member Ratings: Other measures
Member Ranking: An Introduction
Member Ranking: How it works
A pick is a specific recommendation to the community to buy or sell a certain stock at a certain point in time. We track the performance of the picks you make and the results are shown on your dashboard.
Please note that the picks that you see on MoneyVidya.com represent the opinions of the members themselves, and should not be construed as financial advice from MoneyVidya.com. These members may or may not hold positions in the shares that they are talking about.
A Buy pick is a recommendation to the community to buy a specific stock. For example, a Buy pick might say "Buy Reliance Power now, and sell 1 month from now".
If you think that the price of a stock is going to rise, you should make a buy pick for that stock.
A Sell pick is a recommendation to the community to sell a specific stock. For example, a sell pick might say “Sell Reliance Power now, rather than in 1 months time".
If you think that the price of a stock is going to fall, you should make a sell pick for that stock.
An intraday pick can either be a Buy or Sell recommendation.
An intraday buy pick is a recommendation to buy a specific stock immediately, and to sell it again at or before the end of trading on the same day.
n intraday Sell Pick is a recommendation to sell a specific stock immediately, rather than at a later point on the same day.
The status of a pick is like the stage of life which the pick is at, it tells you whether or not it is sensible to follow the recommendation and whether the results of the pick have been calculated. There are three statuses which a pick can have; Open, Stale and Historical
An Open pick can be followed, a Stale pick should not be followed but the results are not yet known and a Historical pick has fully completed and the return has been calculated.
Open is the first stage in the life of the pick, once a pick is made it has the status Open. This means that the recommendation is still valid and other users can follow the pick.
The length of time which a pick remains Open for is determined by the timeframe of the pick. A 2 year pick will have the Open staus for much longer than an intraday pick, which quickly becomes Stale.
Stale is the second stage in the life of the pick, once a pick ceases to be Open it becomes stale. When a pick is Stale, enough time has passed since it was made that other users should not be following the advice anymore because it may no longer be valid. However, the timeframe of the pick still has not passed so the results are not yet known.
For example, one year after a 2 year pick is made the pick will be Stale. Users should not follow the advice because it is a year old but there is still a year left until the pick is fully completed.
A Historical pick is one where the Timeframe of the pick has passed and we have calculated the Pick Return. This means that the pick is fully complete.
A one week pick will become (and remain) Historical after one week. If it is a Buy pick it can also become Historical earlier than one week after being posted if either the Target Price or Stop Loss Limit are met.
When you make a pick you only have to provide three pieces of information; the name of the stock, whether you recommend buying or selling and the timeframe of the pick.
While not necessary, we highly recommend you back up your pick with written analysis which clearly explains your reasoning. Doing so will lead to feedback, and improve your credibility and your personal rating.
You can also provide additional information such as a Target Price, Maximum Buy Price / Minimum Sell Price, and a Stop loss Limit- but that's completely optional.
For a buy pick the timeframe tells members when they should sell having bought the stock. For example, if you’ve chosen ‘Buy’ for ‘Reliance Capital’, and chosen ‘1 month’ as the timeframe then you are recommending, “Buy Reliance Capital now and sell it in 1 month”.
Sell picks are intended for members who own the stock and are suggestions to sell now rather than at the end of the specified timeframe. For example, if you’ve chosen ‘Sell’ for ‘ICICI Bank’ and chosen ‘1 year’ as the timeframe then you are recommending, “Sell ICICI Bank now rather than in 1 year”.
People reading your picks need to know (for example) how long to buy and hold a particular stock for. Just saying “buy this stock” but not giving a timeframe only tells half the story.
We have provided 6 ‘standard’ timeframes ranging from intraday to two years.
However, we know that sometimes people will want to be more specific in selecting their timeframe and recommend for example, that members buy a stock and sell in 5 weeks rather than in one month.
The “be more specific” link on the pick creation page allows people to do exactly that, be more specific about the timeframe of their picks.
A Maximum Buy Price is sometimes referred to as a Limit Order and is an optional feature for a Buy Pick. It is the highest price at which you would still recommend buying the stock. By setting a Maximum Buy Price you are saying "buy this stock today, as long as the price is still below X".
When calculating pick return we take the average price while the pick was Open as the “Buy Price”. If the price of the stock rises above the Maximum Buy Price, while the pick is Open, then these higher prices will be excluded from our calculations. This means that the “Buy Price” is lower and your pick return will be higher as a result of setting the Maximum Buy Price.
A Target Price is an optional feature for a Buy Pick. It is the highest price you think the stock will achieve within the timeframe of the pick. It is therefore the price you recommend other members sell at as soon as it is met.
When you set a Target Price you are saying “Buy this stock today and sell as soon as the price hits the Target Price.” When the Target Price is met, the buy Pick automatically becomes 'Historical'
A Stop Loss Limit is an optional featurefor Buy Picks.
Stop Loss Limits are used to limit losses from a particular stock if the market moves against you. Prior to purchasing a stock one sets a ‘Stop Loss Limit’ and commits to selling the stock if the market price goes below this limit.
If you choose to set a Stop Loss Limit then you are saying “Buy the stock now and sell it at the end of the specified timeframe, however if the price falls below the Stop Loss Limit, sell immediately.”
A Minimum Sell Price is sometimes referred to as a Limit Order.
A Minimum Sell Price is an optional feature for a Sell pick and is similar to a Maximum Buy Price on a Buy pick. It is the lowest price at which you would still recommend other members sell.
When you set a Minimum Sell Price you are saying “Sell the stock now, as long as the price is still above price the Minimum Sell Price”.
First we calculate the “Average Buy Price”, this is the average price during the period which the pick is Open.
Second we calculate the “Average Sell Price”, this is the average price around the time when the pick timeframe ends. If a Target Price or a Stop Loss Limit is met then we use this price instead.
Pick return is then the percentage growth (or decline) from Average Buy Price to Average Sell Price.
Annualisation is the process of converting a percentage profit which is earned over one period of time into an equivalent rate which would have been earned if the investment had lasted one whole year.
We annualise Pick Return because the picks which you make will all have different timeframes and in order to compare them in a fair way we need to express them over the same period of time.
For example, from a pure returns perspective, a 4% return generated over 2 days is better than a 5% return generated over 2 months. If we didn’t annualise the return, the fact that the lower percentage return over the short term is actually better than the slightly higher return over the long term would not be obvious.
Sell picks are made for a particular timeframe. When you make a recommendation to sell you are saying “Sell now rather than in X days because the price will be lower then”.
To calculate Pick Return we compare the “Average Sell Price” the average price while the pick is Open, with prices at the end of the pick timeframe and calculate a percentage gain (or loss).
Our analysis is based on the returns that would have been earned by members who followed the pick.
When a pick is posted it takes time for members to see it and complete a transaction, so we cannot be certain of the exact price they will trade at. Similarly, when you recommend selling on a specific day, members may sell at any price quoted that day. Because we cannot be certain of the exact prices which members following a pick will trade at, we use multiple prices when calculating the Pick Return.
If you would like to be more specific about the prices members should trade at, you can use the Maximum Buy Price(or Minimum Sell Price) and Target Sell Price features when making a pick.
A member’s rating is based on the previous performance of their picks. We calculate it so that you can quickly see who has the best track record when it comes to making picks.
The performance measures we publish on member dashboards summarise the performance of picks they have made in the past. We publish them so other members can gauge whether or not they have a history of picking good stocks.
We take into account the profitability of a member’s picks, how risky they were on average, and the average quality of the supporting analysis of their picks.
We publish member performance measures for two reasons.
Firstly, so you can track the performance of your own investment ideas and see whether they would have returned a profit even if you did not invest your own money. This allows you to monitor and (hopefully) improve your stock picking skills.
Secondly, so that other members can see what your track record is like when they are deciding whether to follow your picks.
The member performance measures are updated overnight each day.
The 5 star rating is a visual representation of how you compare to the overall community, when it comes to making picks.
Each star represents 20% of the total member population so a 5 star rating means you are ranked in the top 20% of the community. Similarly if you have a 1 star rating then you are in the top 80% (bottom 20%) of the community, according to our calculations.
Your Average Return is simply the average of the Pick Returns earned on your previous picks.
Yes Your Average Return, is one of the the best indicators of how well your picks have performed in the past and is therefore a crucial component of your overall rating.
A member’s Average Return tells you whether or not they have a track record of selecting stocks which make money. A high Average Return implies that they have a history of picking winners while a low (or negative) Average Return implies the do not have a history of picking winners.
As with all measures we publish, a member’s Average Return is based on the past performance of their stock picks and is independent of the stocks they are currently recommending. You should not assume that because a member has a high Average Return, the stocks they are currently recommending will yield a similar profit margin.
When we assess the performance of your picks we look at prices after the pick was made and around the recommended Sell date. We then calculate the lowest return which could have been earned by someone following your pick; this is the Minimum Return (for that pick).
We then take the average of the Minimum Returns for all of your picks. This is like your personal “risk free return” because it’s the absolute minimum that could have been earned by a member who had invested in your advice.
Your Risk Rating (Low, Medium or High) is determined by this average; the higher your average minimum returns is, the lower your Risk Rating will be (and vice versa).
Remember that (all things being equal) a low Risk Rating is preferable to a high one.
A member’s Risk Rating tells you how large the potential losses on their previous picks were. A high Risk Rating means that potential losses were larger than for a Low Risk Rating
A member’s Risk Rating should always be considered along side their Average Return for the following reasons;
If a member has a high Average Return and a High Risk Rating, then in the past they have made picks where people could have lost a lot of money, but which on average made a good return.
Similarly, if a member has a small negative Average Return and a Low Risk Rating, then in the past they have made picks where investors could not have lost a lot of money, but did on average make a small loss.
As with all measures we publish, a member’s Risk Rating is based on the past performance of their stock picks and is independent of the stock they are currently recommending. You should not assume that because a member has a low Risk Rating, the stocks they are currently recommending are low risk (and vice versa for High Risk Ratings).
When you write analysis which explains the reasons behind your picks, other members can provide feedback on the quality of this analysis by giving it a mark out of five. Your Analysis Quality Rating summarises this feedback.
We know that some members will tend to be more generous with their feedback than others. So we take account of this when calculating your Analysis Quality Rating.
When a member rates your analysis, we compare it to the average of the marks they have given in the past to see how you stack up in their eyes. We then adjust the mark up or down depending on whether they are typically a tough or generous marker. Your overall Analysis Quality Rating is based on these marks.
Because each member has their own investment style, the analysis you write when making a pick is very important because it helps other members decide if the pick is suitable for them. Good analysis therefore enhances the value of a pick to the community which is why we take account of your Analysis Quality Rating in the overall rating.
A member’s Analysis Quality Rating simply tells you whether the community thinks the analysis on their previous pick was well written.
Your Success Rate is the percentage of your picks which made money or had a positive Pick Return.
Your No Loss Rate is the percentage of your picks where it was impossible for members following it to make a loss.
Your Net Profitable Picks is the total number of picks which made money minus the total number of picks which lost money.
Your Target Sell Prices Met Rate is the percentage of times which the Target Sell Price was achieved on the buy picks that you made. If you have never set a Target Sell Price then this metric will be blank.
We rank members only on the basis of their stock picks and not on their overall contribution to the site via writing blogs or contributing other content. We do so in order to make it easy for other members to see who has the best track record when it comes to making stock picks.
The rating and ranking mechanism is based on what we think is valuable to the community. We reward members who make lots more profitable than unprofitable picks and who write good analysis to accompany them. We also take account of both risk and return when assessing the financial success of a pick.
Our aim was to develop a sensible way to rate the stock picking performance of members, in a manner which reflects the needs of the pick’s audience and rewards those who contribute most to the community.
The 5 star rating is a visual representation of how you rank compared to the overall community, when it comes to making picks.
Each star represents 20% of the total member population so a 5 star rating means you are ranked in the top 20% of the community. Similarly if you have a 1 star rating then you are in the top 80% (bottom 20%) of the community, according to our calculations.
We don’t reward pick volume unless the picks are profitable so the only way to boost your rating is to continue posting profitable picks with good analysis.
Your ranking is based on the performance of the stocks you recommend and feedback from other members about the analysis you write when making picks.
The four member performance measures which directly impact your rating are; the Average Returns (on all your picks), your Risk Rating, your Analysis Quality Rating and your Net Profitable Picks.
We update every member’s performance measures and the overall ranking overnight each day.
Because the ranking system is only related to picks made and not any other features on the site, members who have not made any picks are not ranked.
The minimum number of picks you need to be ranked is one. However, because of the way the ranking system works, the more profitable picks you have the higher you will be ranked, so one stellar pick will not get you 5 stars
