A.I.M. Users Bulletin Board

[Conrad]

Adam, your Hold Zone explanation needs some explanation

Hold zone %= U-L/( (U+L)/2 ) * 100 ...........A

Here you have two variables U and L which you can set independently and that gives you a third variable which only defines the relation between the two inputs. How do you select U and L rigidly from Equity information?

What is your definition of X= Hold zone % when U and L are ready chosen?

in other words I work out the mean of U and L and work out the Hold zone percent ????? of this mean.

Generally I want this to be 20% for ETFs, CEF, and mutual funds and for non volatile stocks. And close to 30% for volatile stocks.

Do you mean here that X = 20% for non-volatile stocks and X=30% for volatile stocks? You can still find an infinite number of numbers for U and L to get X as you wish it:

U= 100% then L/( (U+L)/2 ) * 100 = 80 or 70
L/(100+L)= 0,8. . . .L=80+0,8L. . . . .0,2L=80 . . .L= 80*5 =400

So, here the Lower Hold Zone = 400% below the Starting Point . . .This would mean negative stock prices

Obviously you have in mind some Upper limit for U and a lower limit for L . . .How do you arrive at that specifically?
And if you SET U and L at some arbitrary values then X is no longer 20% or 30% but some unknown number that falls out of Equation A

In closing you give an example with SAFE = 5% with, I presume. . .X = 20%!

Are you each time calculating al these numbers to get a match for the U and L AND X=20, based on an arbitrary SAFE = 5%. ? . .Why not a SAFE of 3% or 11% or 7% ?

For example in one of my stocks my Buy Safe is 30% and my Sell Safe is -10%. (1)

From this I gather you mean that X = U+L = 20! Right?

This would mean that the Trading Dead Zone = 40% from any particular Starting Point Stock Price, and then after that, each time from the Price at which a previous trade is executed... Right?

The question now is: "What do you call volatile?"
You have for a volatile equity X= 30. . .This means one sort of volatility but that is too simple. . . An equity2 can be twice as volatile as an equity1. . .would you then set X=60 perhaps? Would the value of X somehow depend on the Trading Range Spread? I would think that would be a good idea.

(1) A negative Sell SAFE. . .Interesting. . Is this not very similar to a Sell Function of

Sell = (V-PC) +0,1V = (V-PC)*Ms . . . with M= ((1-S)*V-PV)/(V-PC) . . .and S= -0,1. . . .?

By using a negative SAFE of 0,1 you in fact increase the Sell Amount by 0,2*V !
Using a negative SAFE of 0,2 you increase the Sell Amount by 0,4*V

Likewise one can use a negative Buy Safe and you would increase the Buy Amount in a similar manner:

Buy = (PC-V)* Mb

In essence from what I have read on the AIM Forum over the years there have been many suggestions to change the values of the Buy SAFE and the Sell SAFE in a rather arbitrary way, all based on particular personal responses to hoe the equity is behaving and othet market information, and with a rather wide range of values I might add.

Would it not be simpler to modify Standard AIM to this form:

Buy = (PC-V)*Mb
Sell= (V-PC)*Ms

and use the PC-Corrector in the same way as is done now?
A meaningful value for M, as brake or accelerator, as a fraction of the Price Difference =(PC-V) is much easier to comprehend than a reduction or multiplication factor on the Equity Value alone.

In effect nothing will be changed in the AIM functioning, except that the Buy and the Sell can be increases or decreases in a straight forward and meaningful way, instead of using the rather “fuzzy” SAFE as a fraction of the Equity Value.

With this modification even the controversial Lichello Feature of the Residual Buy would remain as it is.

If M=1 is too aggressive then one can simply use M= 0,97 or M= 0,85 and in order to increase the Trade Size for low volatility stocks M=2 . . .or even M=4 can be used!

The SAFE may even be renamed as Trading Aggression Factor . . .TAF