What is droi?

droi stands for "daily return on investment". It's a concept that you should become familiar with if you plan to grow your portfolio quickly.

If you have a small or a medium-sized portfolio like most traders on HSX, you won't be able to invest in every moviestock and starbond.  Instead, you will have to prioritise based on which investments you think will be the most profitable.

You can do this by estimating droi, which is a calculation to determine how good an investment is based on your expectations, taking into account the length of time that you will .  The formula for calculating droi is:

(expected value / current value) ^ (1 / days until expected value is realised) - 1

The obvious flaw with droi is that you don't have a time machine, so you can't go forward to see what the relevant price will be in the future.  This means you have to estimate what your expected gains are.

Not many websites are brave enough to predict the box office of movies that are weeks, if not months or years away from release - boxoffice.com's long-range predictions page is the exception.  Other tools you can use include looking at the box office of comparable movies, and also the prices those moviestocks reached on HSX.

For starbond adjusts, it is easy to find HSX fansites that have done the work for you. kaigee.com estimates droi using the current price of the relevant moviestock to approximate the future starbond adjusts, and if your own expectations differ from the HSX price, you can always recalculate the starbond adjust using your own box office predictions on the individual starbond pages at the site.

Knowing a security's expected droi also gives you a clue about how to other players are trading securities.  A high droi indicates that traders will be investing heavily, and the price should move in the predicted direction.  A low droi should mean low trader interest, and a long-term decline in price.

droi isn't the final word on investing and trading, because without that time machine we will never have complete information about future prices.  Movies regularly exceed, or fall under box office expectations.  Release dates change.  Prices don't move in a straight line, but have daily swings.  But so long as you respect the qualifiers, droi is an essential tool for growing your port.