At a very high level, your PT score is a value between 1 and 100 that consists of sub-scores based on two major components, Accuracy and Ambition.
Over time, an Analyst's PT Score will increase if they consistently prove that they not only make good stock picks, but they know
ahead of time how well those picks will perform.
Why PT Score?
We took this approach for several key reasons:
- Professional Wall St analysts always include specific targets and timeframes when they cover stocks,
- The incorrect picks of professional analysts are often swept under the rug at the next upgrade or downgrade. But what about all those bad predictions?
- Fantasy stock picking sites suffer from various limitations, such as new users going all-in and getting lucky, fortuitous timing based on users' join dates, lack of sensible justification for picks (both good and bad), and herdthink,
- Anyone can get one or two picks right, but still not know what they are talking about,
- A lucky investor can hoard perceived credibility without having to prove themselves in the current market,
- Some analysts and investment advisers can be too conservative, and indirectly cause tremendous opportunity cost to people who follow their advice.
How Does It Work?
Digging deeper into the PT Score, we learn that the scoring system is actually much more complex than just accuracy and ambition.
But let's start there, and work down into the details. Remember, we begin with two main components, accuracy and ambition.
We'll start with the accuracy component. What comprises this value? From the perspective of a PT Score, accuracy consists of three general concepts:
- How accurate your predictions are in comparison with others and the market
- How much gain or loss your predictions would gain an investor that follows your advice
- How often you are right vs how often you are wrong
For example, a very conservative investor, such as PT beta Analyst Nibbler Leela, can make several "nibbling" predictions, but must still be correct more often than not in order to gain a good score.
A conservative investor must also make fairly large unexpected gains in order to gain a higher PT score. By contrast, the all-in lucky analyst must still make between 5 and 7 more good predictions than bad ones before their score will start to suggest that their luck is actually skill.
Even then, both the spendthrift and the miserly analyst must exhibit confidence in their picks. This is where ambition comes in.
Based on a complex proprietary algorithm, your ambition level is determined immediately when you open a coverage. For example, in very basic terms, ProofTrader would consider you to be more ambitious if you were to open a new coverage predicting a 25% return over two weeks, than if you were to cover a stock at 11% over two years.
Your coverage will either live up to your level of ambition and increase your PT score, or it will fail to do so and your score will suffer.
Lastly, other realities of the financial world are factored into your PT Score. For example, you may be familiar with the interlinked concepts of Time Value of Money, Internal Rate of Return, and Inflation. These affect the PT Score of every person on the site, and at the same time the scores of your peers affect your score to some degree.
Oh, and in case you hadn't noticed, we've provided a slider bar on the article entry page for you to associate a confidence level to your prediction. This is factored into every score calculation as well.
So, now that you understand the PT Score, it is time for you to earn one. Use the entry form to the right to make your first coverage. You'll find this form on nearly every page on the site. Once you prove your prognosticative acumen, you will get to see how you stack up against everyone else.