Penny Stock Promoter Ranking System

on July 13, 2013 Developers Blog with 0 comments

The Need for a Penny Stock Promoter Ranking System

The average stock promoter has a very poor track record when it comes to overall gains for their “picks” or "alerts". A stock promoter's "picks" lose most of their value soon after the campaign has started and the share price hardly ever recovers in value. This fact is not obvious because penny stock promoters do not display their track record for their newsletter subscribers to study. This type of information is actually very difficult to determine without some kind of historical record of all previous promotional campaigns by that particular stock promoter.

This lack of transparency leaves the penny stock investor to guess which stock promoter has the best track record and which stock promoters should be avoided. This is not easy considering new stock promoters appear on a weekly or monthly basis. Most penny stock promoters will operate under several aliases which make performance tracking even more difficult.

This is why OTC Dynamics has created a penny stock promoter ranking system. OTC Dynamics has been tracking penny stock promotions (and the resultant effects on share price) for several years. During this period, we have collected and maintained detailed performance records that show just how effective, or ineffective, any particular stock promoter has been. By using this historical data, we are able to rank penny stock promoters based on the total gain or loss at the end of any given stock promotion.

This does not mean that the highest ranked penny stock promoters always provide opportunities for profitable trades.

Consider a bag of apples - all of which have some form of bruising or spoiling. Upon examination, you will realize that none of the apples are perfect. However, there are some apples that are relatively better than the others in that they may have less bruising and less spoiling compared to the other apples. This is what our stock promoter ranking system does. The system ranks a stock promoter’s relative performance. In this case, relative to other stock promoters.

Our ranking system uses two statistical measurements to calculate a stock promoter’s rank. The first measurement is based the total gain or loss on the first day of a promotional campaign. This first day of the promotional campaign in known as the campaign initiating day and is abbreviated as cid on our website. The cid measures the performance on the first day of a promotional campaign by a particular stock promoter. The second measurement is based on the total gain or loss over the entire promotional period; which may be longer than a single day. This second metric is a measurement of performance over the entire term of the stock promotion and is therefore known as a term statistic.

The rank/score given to a promoter is a measurement of short term performance only. On average, this period of time is less than one day.

Since the average penny stock promotion lasts for a period of approximately one day (with exceptions), the rank system will assign a higher rank/score to a promoter who creates the most buying volume on the first day of a promotional campaign. Generally speaking, the more buy volume there is during a trading session, the higher the share price is likely to rise (this is a simplified rule of thumb that does not consider the share structure, dilution, or covering of shares sold short). Conversely, if a stock promoter is associated with a sustained selling of shares on the first day of a particular stock promotion, the ranking system will assign a lower rank/score to that stock promoter since stock promotions by that promoter are likely to “trap” traders in a so-called “pump and dump” campaigns.

Why bother with a ranking system?

Although penny stock promotions are a grey area of the stock market, they are not going away anytime soon. Therefore, the more informed penny stock investors are, the better they will be able to deal with penny stock promotions whenever they are encountered. Whether this means avoiding stock promotions altogether is for the individual investor to decide.