Seeking Alpha

JustALittleGuy123's  Instablog

JustALittleGuy123
Send Message
Just exploring the market...
  • How To Read The Blockdesk BTF  9 comments
    May 24, 2014 6:29 PM

    A brief description of how to read a blockdesk.com BTF (Block Trader Forecast)

    All of the tools provided at blockdesk.com are derived from the data found below the BTF; Peter's Way's Intelligence Lists (top ten, etc.) are also based on the same data.

    The fundamental aspect of the information is a forecast price range. The location of the price (usually) within that range is called the Range Index. These values are marked with red in the example below.

    Everything else is derived from this essential information. Range Indexes of less than zero and greater than 100 can and do occur. They represent a very strong sentiment by Market Makers that the issue in question is either over- or under-valued.

    The historical/actuarial findings of how such forecasts made on prior days that were very much like today's Range Index turned out are marked by the blue rectangles.

    The profitability figures are based on peter's time-efficient risk management strategy (TERMD)of holding a position until the Sell Target (Range Forecast High) is reached, or 63 market Days, whichever comes first.

    The Sell Target Potential is the current MM's Predicted Upside Reward, (marked in green) and shows the current expectation (forecast) of the Market Makers.

    The %Payoff reports the performance record-keeping of how profitable the MM's predictions were on prior occurrences like today's Range Index. A comparison of those previous forecast outcomes against the current Sell Target Potential is the Credibility Ratio, marked with yellow.

    The Drawdown Exposure shows how much the price dipped on those prior occasions and helps you prepare for how far the price might sink after taking a long position before eventually recovering to (hopefully) make the sell target within 63 market days or less. The price frequently continues to drop at first, before reaching the target in less than 63 market days. There is a performance summary referenced in the FAQ page.

    (click to enlarge)
    So in this example, the Credibility Ratio suggests that the confidence level of this current MM outlook is fairly weak, at .5, whereas something much closer to a value of 1 would suggest more confidence in possibly attaining the current Upside Potential. While this candidate isn't a bust, there is no strong argument for taking a position with such a seemingly overstated upside on this example BTF forecast.

    The smaller thumbnail image is an historical distribution (somewhat like a bell curve) of Range Indexes for the available history of up to 5 years. This particular example is less, with 760 Market Days of history. A 28 RI is well near the low end, suggesting it is indeed underpriced. But with the weak Cred. Ratio, I'd look for a better prospect, if available.

    This is indeed a complex set of numbers and relationships, but all of them are absolutely necessary to ascertain the worthiness of a given candidate. Even so, nothing, including this exceptionally good information, can replace due diligence. You MUST perform your due diligence right up to the minute of taking an action, since even the MM's can make mistakes.

    The question has also been raised as to how the Odds-Weighted Score of column 15 in the Intelligence List is calculated, so here's a picture of the formula:

    (click to enlarge)Odds-Weighted Score formula

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Back To JustALittleGuy123's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (9)
Track new comments
  • drnova99
    , contributor
    Comments (3) | Send Message
     
    Thanks for the practical tips.

     

    I am new to this strategy and always appreciate insight from an individual with some experience.

     

    Thanks again.
    18 Aug 2014, 02:00 AM Reply Like
  • JustALittleGuy123
    , contributor
    Comments (94) | Send Message
     
    Author’s reply » drnova99,

     

    Glad to be of help. I have been familiar with Peter's analysis for a long time. Good luck in your investing.

     

    -JALG123
    20 Aug 2014, 09:44 PM Reply Like
  • MarketPassenger
    , contributor
    Comments (124) | Send Message
     
    Hi JALG123,

     

    I have been following Peter in SA for a while and intrigued by his analysis. I really appreciate this kind of rational, objective analysis that help investors to put aside their emotions. Along the way, I noticed that price of the items in the lists did overshoot to the downside, let's about 10% in those 3x ETFs. This makes the timing of entry critical for one to stay put on the positions if ever acted on the recommendation.

     

    Thanks for sharing your experience using BlockDesk BTF. How do you choose the stocks/ETFs on the 10 ten list to build your positions? Do you buy all of them with same amount of money allocated to each position? Or how do you choose to build the position size for each item? Do you buy the next day after the list is published? how long have you been using this BTF strategy and how has it treated you? Any insight is appreciated.
    17 Nov 2014, 12:19 AM Reply Like
  • JustALittleGuy123
    , contributor
    Comments (94) | Send Message
     
    Author’s reply » MP,

     

    Sorry for such a slow reply.

     

    Each investor has their own specific needs and comfort level with regard to risk. Doing exactly what I do might not be best to suit your needs, and/or might lead to heartburn.

     

    That aside, the general notion of spreading risk among multiple positions is common, and Peter also suggests spreading positions across time, as well.

     

    The amount of capital deployed per position would ideally be a small percentage of your total capital, especially if you can keep it under 5% so that no single position "feels" like as much is at risk. As one person described it, "It's a lot like running MY OWN mini-ETF."

     

    My personal familiarity with Peter's information over a longer time span helps me "know it when I see it" when I look at a BTF. But anyone willing to take a little time getting to know and understand what the BTF has to offer will also recognize it, too.

     

    Given the fact that freshness of the information is advantageous, making use of it on the next market day would be ideal; yet if one has the luxury of following a given prospect live during the next market day, it may be possible to watch the price settle even lower before taking the position. But that's a question of how much time one can spend at maintaining their portfolio. It's a matter of personal style that again, only you can arrive at what works for you.

     

    My opinion of the value of the information has little weight; you would do best to watch/review Peter's publicly shared Lists and see for yourself. It shouldn't take too long to formulate your own conclusion.
    23 Nov 2014, 08:48 PM Reply Like
  • thet0nzz
    , contributor
    Comments (35) | Send Message
     
    Hello JALG,

     

    Thanks for your assistance in understanding Peter's numbers. Three questions for you regarding his system:

     

    1. I've read Peter's explanation of the calculation of column 15 on the BTF and I still can't come up with his number. Can you please walk through it again?

     

    2. Does the 63 day clock start on the day the BTF is released or the day after?

     

    3. I am assuming that only active market days are counted and that holidays like MLK Day and President's Day are not included.

     

    Thank you for your reply.
    16 Feb, 10:45 PM Reply Like
  • JustALittleGuy123
    , contributor
    Comments (94) | Send Message
     
    Author’s reply » For #1, I'll need to post an image, because the math formula won't replicate in the comments feature, which understandably is to prevent unwanted code from executing without SA'a permission. I will revise the blog page to include it. In word form, it's:

     

    open paren open paren odds x upside x cred + open paren 100 - odds close paren x down close paren x sample divide by held close paren divide by 100

     

    (-gasp)

     

    2. The clock begins the Market Day *after* the forecast is generated, because position-taking based on the information isn't possible until the next Market Open.

     

    As a veracity measure, Peter's actuarial accounting uses the close price of the market day following the forecast, so there can be no quibbling about what possible purchase price was used for generating his numbers, and no grumbling about how quickly users are getting an opportunity to take a position. They get a whole market day to get in.

     

    3. Yes. The 63-day number refers to Market Days, and equates to roughly 3 calendar months.
    18 Feb, 05:14 PM Reply Like
  • thet0nzz
    , contributor
    Comments (35) | Send Message
     
    JALG,
    Thank you for your quick response and clarification...greatly appreciated.
    Best regards,
    tt
    18 Feb, 06:31 PM Reply Like
  • thet0nzz
    , contributor
    Comments (35) | Send Message
     
    JALG,

     

    Another question. Is it possible, using either of the subscription options, to get specific industry rankings like those Peter often provides in his SA articles? For example, he has recently created lists for the cyber security sector, bio-techs and auto companies.

     

    Or, are we limited to a single top 10 list and/or multiple individual BTFs and maps? I would love to be able to generate lists by industry sector the way Peter does.

     

    Thanks for your reply.
    3 Mar, 01:51 AM Reply Like
  • JustALittleGuy123
    , contributor
    Comments (94) | Send Message
     
    Author’s reply » Industry-focused Intelligence Lists are something Peter will be offering in the days ahead. I cannot say exactly how soon, but I'm confident it is one of his higher priorities. He knows there is a growing audience for such a product.
    3 Mar, 10:42 PM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Most Commented
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.