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See Technical Discussion on AIM Users Bulletin Board on simplification of Standard AIM towards the form of Vortex AIM
Buy = (PC-V)*Mb
Sell =(V-PC)*Ms
The PC-Corrector would remain applicable for only after a Buy, as it is now for AIM.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=79695183
On the AIM bulletin Board I have placed an interesting discussion on making an algorithm for finding the best parameter settings for:
Holding Zones
Aggression Factors
in response to what daisy42 has done for the Lichello AIM.
In response this I have proposed, to start with, that to prevent setting the trading parameters must be set in Vortex AIM so that one incurs no losses on up-down round-robin trading cycles, within a Trading Range.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=79684681
I guess I am truly.
Toofuzzy
Toofuzzy, the low starting torque is partly compensated by the washers that hold the Discs Pack together via the impact principle by which airfoil shaped blades of a turbine wheel get their good starting torque. In cases where the turbine can start unloaded and "clutched" to a load this is not a problem but if it is directly coupled to s generator the start-up time is much longer but at the target speed a Disc Pack is theoretically more efficient. In practice however the typical Tesla Turbines build by amateurs have not realised the high efficiency that was promised . . .various design deficiencies are the cause of that, resulting in more turbulence than hoped for as well in un-optimised units.
I can see where it would have low starting torque. I wonder if a grooved (vortexed) surface would help.
This, with superficial look at things appears a reasonable option to consider. but it is not. The Tesla turbine derives its torque form laminar flow surface drag. . .not turbulent friction such as occurs in almost all flow devices and turbulence is present all turbines. The Tesla Torque results from the presumed laminar tangential flow over the disc surface while the fluid spirals in a restrained vortex motion to the disc's central outlet. So, a fluid element is forced to flow in a spiral form by the presence of the fluid surrounding it as the initially tangential injection flow must change to partially a radial inward flow.
Should one create spiral channels, even in the exact general average spiral path that the fluid will move between unproved plates, you still totally destroy the tangential flow component that is present between the smooth discs! This way you will in effect have created an impact flow turbine by which torque is created by the rate of change of momentum of the flow in a curved duct. . . this is the type of process that happens in the Heron Turbine and in fact also in conventional webbed radial flow turbines like used in Turbo Charges.. .It would not be Tesla Type Turbine.
In addition that fundamental difference there is much more against that idea. If you have grooved discs then as the turbine would have to operate at a specific constant speed AND at a constant flow AND at constant torque. . .if load variations would occur then the fluid flow has to change and the spiral grooves will have the wrong shape and be useless as torque generators. The flow will want spill over the groove boundaries and this will defeat the grove concept. . .the nature of the groove design would have the specific purpose of containing the fluid in the groove. . .if that does not happen it destroys the curved channel flow and at the same time if the channels ribs are very narrow the fluid can not create surface drag torque at all at other speeds.
So a Tesla Turbine must have smooth discs. All sorts of Disc Types Turbines with vanes on them have been suggested and Patented but they are not Tesla Turbines.
The modification Vortex had created for the Vortex Combined Disc Turbine(VCDT) still retains the smooth discc Tesla Concept. . .That is a critical feature to hold on to.
I have yet to see a book that can not be turned in to two pages. People write 200 pages to justify selling a book.
>>>>It might be an idea for me though to sell reproductions of the book but then I have to "remove al my personal remarks I wrote in it. Something like that would have to be checked out in regards to Copyright. . .if the original Copyright is held by a person or company <<<<
I did that with the AIM formula and directions.
Toofuzzy
I can see where it would have low starting torque. I wonder if a grooved (vortexed) surface would help.
Toofuzzy
Hi Heartland99
You are quite welcome to present your findings and Suggestion on the Vortex Forum. . .after al it was The Money Spinner that got me into AIMing in the first place!
Of course that's fair, I didn't mean to take over your forum with Money Spinner!
So please feel free to continue posting the findings and suggestions you think are interesting to AIMers in general. . .the extra activity would be good. I just wanted to make it clear that personally I have no plan to develop the Money Spinner in any way as I have no time for it.
It might be an idea for me though to sell reproductions of the book but then I have to "remove al my personal remarks I wrote in it. Something like that would have to be checked out in regards to Copyright. . .if the original Copyright is held by a person or company
Do you think it will Sell????
From this point forwards I am not going to be involved any more in developing details on making the Money Spinner adaptable to make an automated version of it than I have already done in the Last Report.
Of course that's fair, I didn't mean to take over your forum with Money Spinner!
Thanks again for your time in digging up the details. I look forward to doing more work with these AIM variations and with Vortex.
Just not a problem
Ooops! I made a mistake in shares purchased in my example:
As I said it is not really my intention to dive into more Money Spinner Details. I did not check your calculation
I will peruse the rest of the manual and if I see anything interesting I will report it here.
Regards,
Hi Heartland99.
I have provided the stepwise procedures form the Money Spinner and noted that there is no Smooth Buying algorithm based on a gradual stock price difference but that fixed price differentials are used. I am not so much interested in trying to understand the Money Spinner for making a reading system for it so that it can be used for any price level. For example I do not want to test it further for all sorts of different price level. My suggestion was, based on the similarity that was suggested for different prices and that was the Minimum Trade Interval (MTI) Calculations and I suggested the Formulas:
(1+0,1)*N1 + N1/10 = X= Share Update to calculate Next Buy Price
(1-0,1)*N1 - N1/10 = Y= Share Update to calculate Next Sell Price
This would be like the 1,2*N1 and the 0,8*N1 as you suggested but how does this work out for Penny Stocks at a price of 5 cents? I was not about to do any more testing on this
My suggestion was to use this for every Staring price for the Purchased Equity=PC. . .but does thus give reasonable MTI for Penny Stocks or if the price = 500?
Then the question I still have is: Why is it for the Money Spinner that the first buy after the first price drop is set at 100 Shares??? Why not 125 pr 80 ????. This would appear quite arbitrary but there may be a reason.
Suppose you start with PC1= 2000 instead and with 4000 Total Investment instead(or even 9000 Total . . .(Who cares how much Reserve you use for the start anyway? It does not matter anyway!! )
Would then the number of shares after a price drop be 40 shares in proportion. . . and why if you say Yes????
Example with Share price =5
2000/5= 40 Star-up Quantity= N1
PC=2000
X=1.1*40+40/10 = 48
Next Buy Ptice = 2000/48= 4.17
Obviously just as before because the formula is proportional. . .But what now???
Buy 40*1.17 = 167 Shares. . .Thus is a ridiculously low amount to buy and one would not do it for normal shares, but it would be OK in one buys Mutual Fund Participation @ 1% trading costs. So you hav to Introduce here to the Min Buy Amount. . .like you do in AIM anyhow.
What I can foresee that that if more people would want to start using the Money Spinner as an serious alternative to AIM they would have to considerer all the aspects in regard to the advantages and the disafvantages and the modifications that one would think is necessary in a particular case.
One would get in a 10-year long Discussion like happened on AIM. I do not want to get involved in that. At ever point one can ask: "Why not use 13% instead or 10% or 8% or one might as well do this:
X=(1+a)*(N1)+ N1/b and Buy1 = N1/c
Y=(1-d)*(N1)- N1/e and Buy1 = N1/f
And these variables would come also back in the following after each Trade. Sure you could automate all that
Then using a Variable CER and one ends up with 7 variables that one could play with and adjust in the same way I do in Vortex with 5 variables(6 variables if I count the Cash Limiting Factor).
I would rather not get involved in that. Perhaps you could address your suggestions on the AIM User Forum. . .I have given the links to our Money Spinner Discussions on that Forum. . . .Up to now no one has even responded in the contents. . . .possibly no one is interested.
It is perfectly OK to post your result on this Vortex Forum if the AIM Forum people are not interested in it at all, as Tribute to the Money Spinner But I do not want to get onto the details in the sense I want to use it.
In that sense you do not need to report on everything you are doing on this but you do so and in case people are interested to discuss it that is just fine. . .maybe then I will sell more Vortex programs
Dit nog:
However, I do not agree with the idea of buying "on the way up" (for example buying 10 more shares when the price returns to 83.333). I think Vortex/AIM have the right idea about selling when stock value exceeds a determined Portfolio Control level.
I can not place this remarks. Are you perhaps referring to Ocroft’s Uptrend Method in which he waits for a dip and then Buys the stock at a bit higher price? That method is quite OK but requires good study on the stock. One can sell on the up-trend at a level one is happy with. . .or one could sell in steps and that is fine too.
Just a quick Reply. . .will comment of your Money Spinner Calculations later. . pressed for time now
How come no one has done anything with the Tesla steam disk turbine?
That is not the case. A lot of people have done a LOTS of work on it over the years and Many Many amateurs have build these turbine, even very big ones.
The problem is that Professional Turbine builders have not dealt with this design because of fundamental drawbacks (low starting torque, and narrow operating range for optimised running close to the to torque point). When the speed falls below the top Torque Point it stalls quickly. . .opening the steam supply will be too late then. This would require operating the turbine beyond the Maximum Efficiency Point and that is not s good. If speed of operation can be held constant. . .low load variation. . .then we can compete perhaps
Various reason that commercial development has not progresses. . the competition beats it in terms op Power in a Small Package.
My idea is a deviation of the basis concept that I think takes away some of the drawbacks of the simple Tesla design but it more difficult to manufacture (more $$$$). For small applications I think I have an edge but to prove that I need money to demonstrate it. . .and there is stiff completion in this field too.
The CFD Modelling did NOR take Place. . L
Regards,
How come no one has done anything with the Telsa steam disk turbine? It looks so much simpler to build than modern turbines with all their vanes. From what I read it seemed like a lot of power from a small space.
Toofuzzy
Ooops! I made a mistake in shares purchased in my example:
A= 10416.66/66.667 = 156.25
B= 10416.66/(N*1.2) = 10416.66/(110*1.2)= 78.9
A-B = 156.25-78.9= 77.35 shares bought
77.35 shares bought*$66.667 = $5156.69 invested
It should be:
A= 10416.66/66.667 = 156.25
B= N*1.1 = 110 * 1.1 = 121
A-B = 156.25 - 121= 35.25 shares purchased
35.25 shares purchased * $66.667= $2350 invested
This is still a progressive buy, but not as exaggerated as my original calculation.
Conrad said:
I would suspect that maybe instead of adding 100 shares in the calculation one might instead try to add 1/10 of the shares, just like is done for the case with N1 > 1000.
Here's what I propose:
i) New Buying Price= N*1.2
ii)New Selling Price= N*0.8
If you do this, you get the progressive holding zones (16.6%, 19.9%, ...) from the original example!
For instance, you asked what would happen with a stock price = $100 and a initial equity investment = $10000:
PC = 10000
N= 100
New Buying Price = 10000/(100*1.2) = 83.333
New Selling Price= 10000/(100*0.8) = 125.0
This results in a Minimum Buying Increment of 16.666, which of course is 16.666% of the initial stock price of $100. And the Minimum Sell Increment of $25 is 25% of the initial stock price. These numbers are proportionally the same as Chakrapani's example in the $5 stock.
I realize that this Hold Zone is arbitrary, but it does seem like a reasonable parameter to apply across stocks of varying price levels.
It also preserves the progressive buying amounts at lower levels, as seen here (after the first buy of 10 shares at 83.333):
B2 = $83.333 - $16.666 = $66.667
PC2= 10000 + 833.33/2 = 10416.66
A= 10416.66/66.667 = 156.25
B= 10416.66/(N*1.2) = 10416.66/(110*1.2)= 78.9
A-B = 156.25-78.9= 77.35 shares bought
77.35 shares bought*$66.667 = $5156.69 invested
And you would get increased buying at the next level down, too...
This seems to me like a reasonable way to delay buying until the price level reaches "bargain" levels.
However, I do not agree with the idea of buying "on the way up" (for example buying 10 more shares when the price returns to 83.333). I think Vortex/AIM have the right idea about selling when stock value exceeds a determined Portfolio Control level.
More on the Money Spinner!
Having outlined the main features of the Money Spinner, and having stated that perhaps more subtle information may be extracted from it I have started to read the rest of the manual again, and tried to find items that may not immediately be obvious from the basic stepwise procedure for finding Next Trade Prices. Indeed there are some remarks that are made by Chakrapani that are not immediately obvious from the basic procedures. These are, for now. . .take note, this text is mine. It is an interpretation of the Charkrapani advice:
1 Stick with low priced stocks initially. Although this recommendation is a bit fuzzy. . .AIMer Toofuzzy would love this. . . part of the reason is obvious and is true for AIM and VORTEX: Low value shares have. . .especially penny-valued shares. . . a much greater relative price movement than high value shares, if they do move! A share costing 1 penny going to 2 penny represents a 100% relative increase. A share costing $100 moving $ 10 moves only 10% relative value and if the Hold Zone would be set at 11 % AIM nor VORTEX would advise trading. . .This is a general issue in regards to the Volatility Preference when AIMing. Chakrapani adds to this on Page 54:
"Unless you have a lot of money to begin with, high-priced stocks are much less suitable for the Money Spinner Program compared to low-priced stocks".
This appears to state that if you have a lot of money to start with volatility is no longer a preferable feature for a stock to work just as well with the Money Spinner as volatility would do for an investor with only a little money as Start Capital. I think I know what Chakrapani meant. . .but he did not explain it here. In regards to this it is certainly true that dynamic investing with large trading volumes is burdened with much lower trading costs than low volume trading. I know that for example if I buy € 10 worth of shares here in Holland it will cost me € 10 on trading fees. . .unless I buy House Fund Participations from my bank. . . then the minimum I could buy is € 50 worth and that would cost me about 50 or 60 cents! In that sense Chakrapani is correct. . .but could it be that he means something else altogether? . . .Perhaps, would the Money Spinner work very different when large amounts are traded? If so, then I will find it IF it is explained someplace in the Manual.
2 Chakrapani's example was to start with a Share Price(SP)of 5 and the quantity of shares 1000----> Initial Equity = 5000.
Suppose now an investor has a lot more money available and wants to start with 3 or 4 times as much. . .Does the Money Spinner then simply turn out 3 or 4 times the Results? Essentially the important thing here is this: "Would you make more profit proportionally to a larger Starting Capital". . .Perhaps this is the clue to the unexplained issue in (1) above.
Chakrapani answers this with: No! and on Page 83-84 he goes into that issue in more detail:
A SPECIAL NOTE TO THOSE WHO WANT TO START WITH A LARGE NUMBER OF SHARES
Suppose one starts with 3000 shares at the price of 5, @ 50% CER the total Start Capital is then already 30000 instead of 10000. But why would that make any difference? Consider the AIM and Vortex Trade Advice Generators receptively for a particular Holding Zone:
AIM Trade =(PC-V)-x*V. . . . x is the SAFE
Vortex Trade =(PC-V)*M . . . M is a Multiplication Factor
If x=0 and M=1 then both AIM and Vortex are Ratio Systems. So, if you increases the initial investment Y-fold relative to a Small Start-up then after an up-down cycle with a Sell in it, the Profit for that cycle is also Y-fold relative to the Small Start-up. . .if trading costs are disregarded for now. Chakrapani states this about that:
“The main problem here is that your MSI (Minimum Sell Interval) and MBI (Minimum Buy Interval) could be so small that a but or sell order could be triggered when it is not really profitable. To avoid this we suggest you do the following (when you initial number of shares exceed 1000)”
Here I summarise that advice in short*:
3 Round up the number of shares from what you intended to buy to start with to the next 1000-multiple. . for example 2500-------> 3000 and so on;
4 For the fowling trades buy or sell no less than 1/10 th of the starting share quantity (in this example 300). . . .Set up the MSI and the MBI accordingly as instructed before;
5 In the required stepwise calculations for calculating the MSI and the MBI, as well as calculations for the Number of shares to buy or sell, after a Buy or Sell has been executed, substitute the number of shares that was 100 in the Instructions with the 300 as in (4) above. . .should you have started your Money Spinner with 5000 shares and Total Capital of 50000 instead of 10000, then use 500 shares in these calculations. . . .This procedure is said to be particularly critical when trading penny stocks.
· Charkrapani did not explain, up to this point, what to do if one selects to trade stock that are say $ 100/share or more. Possibly other than the fact that these high priced stocks would trigger trades rather less frequently because of the normally lower percentage price changes no other changes are required. These recommendations here appear to be only for share quantities greater that 1000.
· The last remark for this procedure being especially critical for penny stocks is not explained. I wonder why that is. Maybe it is for the reason that when starts trading high value stocks in great quantities the Money Spinner mechanism is no longer relevant as other financial criteria for professional trading are more important than those that are meant for Amateur Investors.
In conclusion, this additional information at least demonstrates that the Money Spinner is certainly not a Ratio System like Vortex is. . .It appears to be highly non-linear in regards to both share price level and share quantity magnitude. This would make it rather difficult to change the Money Spinner into an Automatic Investment Manager that can be applied to stocks at any arbitrary share price and arbitrary trade volumes.
To which extend the Money Spinner is comparable to AIM is rather less obvious to me, as for AIM when the SAFE x is not zero, it deviates from the Ratio System Principle in the sense that it's Buy & Sell Magnitudes are reduced in proportion to the Safe Value x. . . The Lichello Brake. . .It would appear however that the Money Spinner does this with the principle of these Algorithms in which N1 is the initial number of shares that are bought with 50% of the Total Capital:
A) Calculating (+/-)0,1*N (+/-) 100 shares for finding the next Trade Price for cases in which is started with N1<=1000 shares.
and
B) Calculating (+/-)0,1*N (+/-) N1/10 shares for finding the next Trade Price for cases in which is started with N1 > 1000 shares and using for N1 multiples of 1000 shares.
Let's call that The Chakrapani Brake
It would appear from this that the Chakrapani Brake is a much stronger Brake than the AIM Brake.
6 An interesting question remains: If one would want to start with s CER other than 50/50. . let's assume 80% Cash. . .how would this effect the Money Spinner?
From what I have seen so far it would possibly have a negative effect in the outcome because if one would start out with 10000 Capital and a Price of $5 the Initial Equity and PC would be only 2000 N1 would be 400 instead of 1000, and the next buy Price would the be calculated as follows:
i Shares owned =400
ii Add 10% = 440
iii Add 100 Shares-----> B= 540
Buying Price = PC/B = 2000/540 = 3.70
MBI = 5 - 3.70 = 1.30 This compared to 0.83 is very different.
It would translate to Hold Zone 1 = 26 %
The Buy Order would be 100*3.70 = 370 as compares to 417 before
It could be that at the next buy price of 3.7-1.3 = 2.4 the Buy would be large enough so that everything would come out OK. Lets try':
PC2 = 2000 + 370/2 = 2185
A=2185/2.40 = 910
N2= 400 + 100 = 500
N2+10% = B = 550
To Buy @ 2,4 = A - B = 910 - 550 = 360 compares to ~ 390 before!
And the Buy = 360*2.40 = 864 as compared to 1203 before. Thus with this approach the Reserve of 8000 is not well used at that low price and the with the MBI of 1.3 one would have to wait far longer than if one had started with 1000 shares to the next price of 2.4-1.3 = 1.1. . .which is a 54% drop from 2.4 and 78% drop from 5.
Obviously this is NOT a reasonable approach. . .Unless one uses Ocrofts Up-trend Method
I would suspect that maybe instead of adding 100 shares in the calculation one might instead try to add 1/10 of the shares, just like is done for the case with N1 > 1000.
Maybe that would work out much better and creates larger Buy Orders to more effectively use the Reserve of 8000. . .but I am not going to work that out right now
Finally, the fact that the Money Spinner has an identical PC-Correction Formula this leads me to think that fundamentally AIM and the Money Spinner are genetically identical, almost like they are Identical Twins. . .in the execution of their daily lives they have their own peculiarities, on the detail level
Some results on Vortex Aiming Penny Stocks
-Dry Runs. All Funds in Penny Stock Portfolio.
-All Funds Vortex AIMed individually
-Interest on Reserve = 3% annual basis. . compounded every trade
-Trading cost is estimated
-Fb =0,7
-Fs =0,5 for all funds and is Constant for the Trading Period
-Holding Zones vary per fund and are adapted to provide enough
trading activity on price changes. . on the range between 20% to 8 %
-Trading Period = 16-02-12 to 24-08-12
-Money investment added arbitrarily at different times when needed
-Values in Euro
Ticker-ROTAC Yield %
amt............33
antonov........5823
nedsense.......-9
pharming.......-99,5
rood...........-7
sopheon........36
spyker.........107
tie.hold.......3,4
tiscali.nlnl...-31
vivenda.medi...36
Portfolio Results
Cash Injections = 502000
Reserve . . . . = 139629
Invested cash . = 362371
Time Aver Inv . = 52598 *
Equity Value. . = 1208679
Portfolio PV. . = 1348308
Profit. . . . . = 846308
ROTAC Yield . . = 1609 %
Interest earned = 2309
Trading Costs . .= 2091
…..Based on Average Investment this = 4%
….Based on Money Injected this = 0,42 $
The large average Yield id of course mostly determined by the Antonov Stock that repeatedly cycled between 1 penny and 2 pennies.
Hi Heartland99:
I can see right away the similarities between AIM and Money Spinner. I do like the idea of a Minimum Buy Increment proposed by Chakrapani--and this is easily incorporated into any AIM system. It corrects what you call the "Lichello flaw" of residual buying at the same price level. It also preserves cash for deeper corrections, which I feel we may be on the cusp of right now.
Interesting point you made there. From the step-wise procedure . . .from the fact that there is no iterative algorithm . . .one never gets even confronted with a Buy-algorithm at any price in tern of a fixed Holding Zone. . . The procedure simply gives a lower price using the Initial Price Interval. In this case the
(5-4,17)/5 = 0,83/5 = 0,166 and would amount to a Hold Zone 1 = 16,6 %
and with the next step this is = 0,83/4,17 = 0,199 or a Hold Zone 2 = 19,9 %
the next step 0,83/3,34 ----> Hold Zone 3 = 24,9%
from which is becomes quite clear that the Hold Zone automatically increases as the price goes down. This indeed is an interesting method for Trade Delaying and it happens to be a simple Progressive Method at that: based on the Constant Exponential Decrement principle.
This is a good feature.
The other conclusion I draw from the Step-wise Buying is that at the depressed price there is a good Buying Opportunity the Money Spinner calls again for buying 100 shares at a price of 4,17. . just like the Initial Buy at Price=5. This is not a good feature compared to say buying low priced shares with a fixed amount of money. . .or buying the shares with a Progressive Buy Amount. I refer here to the powerful AIM principle of the Skewing feature: Buying at progressively lower prices gives progressively greater Share quantities into the Portfolio.
But at the next step downwards at a price 3,34 the procedure calls for Buying 390 Shares. This is a significant increase!!! It means that this works out very similar to what happens in Vortex and AIM at a progressively larger Buy Hold Zone!
The Delaying tactic present in the Money Spinner looks a lot like various other schemes we have discussed on the AIM Forums, among others Clive's various proportional and progressive Ladders!
What I developed for Vortex years ago was an Exponentially Progressive Buy. . .essentially identical to what happens the Money Spinner with a very simple technique. I have not managed to make my Exponential Buy idea easy to implement because I attempted to tie into the variable Trading Ranges that would occur in practice. . as a trading range widens or narrows the hold zones should move with then, based on some Reference Hold Zone that would be defined and in this way not only the Vortex Buys would be progressive but the holding zone would also be progressive.
The constant Min Buy Interval in the Money Spinner is rather arbitrarily selected it would seem and based on the $5 Starting Price, not at all to a variable Trading Range width. How does this technique work for a stock price of 100 to start with???? I have no idea as yet. . . I need to read more of the Money Spinner
Thus, if one would use an Automatic Delay Feature for increasing the Holding Zone as a function of a dropping price and retain the progressive Automatic Buy-structure resulting from that Trade Delay then it would for sure become a very powerful AIM-derivative.
And it appears, thus far, that the Money Spinner has these features in itself already, except it is, not necessarily, automatically applicable to other price levels, nor to a variable Trading Range.
Automation techniques for this have been proposed before, and possibly the methods Clive suggested before may well be executable in the form of automatic adaptive equations, but it appears no one has achieved to implement these yet. As for myself I have found it rather difficult and problematic to attempt such an automation. Needless to say there would have to be various new parameters added to the ones we already have. . . .Will an AIM with 10 variable parameters be actually workable, other that for a few people?
I doubt it.
Wow! Thank you for the wealth of great information, Conrad. This will be a great help to others as well, I am sure.
I have a lot to take in before I can give you an intelligent reply...but I wanted to acknowledge your hard work! :)
I can see right away the similarities between AIM and Money Spinner. I do like the idea of a Minimum Buy Increment proposed by Chakrapani--and this is easily incorporated into any AIM system. It corrects what you call the "Lichello flaw" of residual buying at the same price level. It also preserves cash for deeper corrections, which I feel we may be on the cusp of right now.
Let me ponder your Vortex answers for a little while longer...
A new day has arrived Heartland99!
I have been reading about Vortex and have a question about which value for Fb and Fs (the buying and selling factors) you use in your personal trading.
You mention that a value of >0.8 results in very aggressive trading. I agree that it could lead to investing very large sums after relatively small market declines. Do you use this aggressive approach in your personal trading? I am thinking of using a value of 0.1-0.3.
Also, I was curious what kind of Hold Zone you use with Vortex?
All the settings in an Vortex Portfolio are very much dependent on the stock behaviour. There is no Standard Vortex but there is a Default Vortex. . .This is the way it comes when it is downloaded(Free for the Full program).
The Aggression Factors Fb & Fs are set to 0 and both Hold Zones are set to 10%. This is a conservative setting that produces trades compared to Standard AIM just a little higher than Standard AIM. I compared the performance of AIM and Vortex in the Run Clive presented:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=77298802
See also my post:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=77297792
As you notice the Fb had to be set at –0,6666666 or – 2/3. to get a Buy of 1200 for
P1= 100 and P2= 80. . .Buy Hold Zone = 20 % and the First Buy was $ 1200. The reason hat the Fb is exactly – 2/3 is interesting but not really relevant. It is a result of the incidental setting of with a Hold Zone of 20 and a Safe pf 10% I believe it was.
The complexities of relating the value of the Fb and Fs to a certain stock behaviour are beyond a rigorous formal mathematical analysis. One would have to model a good number of historical cases that would indicate certain identifiable trend that would make sense to investors. One such case would be for example the Lichello Test Series. I can optimise for that(and I did) and from this an optimised set of parameters results. I looked it up. Here are the Optimised Parameters:
Investment cash + Equity = 20.000. . .(I use commas as the decimal point & point as 1000 separator).
ECR = 16.288/3.772 = 4,318134 or CER =3772/16288 = 0,231582
In term of total investment Cash % = 16.288/20.000 = 0,8414 or 84,14%
Trading cost = 0
Interest on Cash= 2% Annually based but compounded at every Trade
Buy Hold Zone = 0,6 . . .fraction…= 60 % J
Sell Hold Zone =1,5 . . . fraction. . .=150% JJ
Remark: this is a consequence of the fact that the price between the 100% defined Trading Limits in this case from 4 to 10 is a rise of 6/4 = 1,5 or 150% . For this case this Hold Zones can be calculated but in practical cases one would have to find the best points either by analysing, for example the Bollinger Bands or simply by Optimising them from trial & error in the program. . I can do that with Vortex Excel but nor with Vortex Windows. . .(Making an Optimisation program for Vortex Windows is beyond our present perspective).
Fb= 0,81132
Fs= 0,21106
Buy Cash Factor = BCF = 1.00
Remark: this is present only in Vortex Excel. It is introduced for optimisation purposes, and allows the allocation of cash to a purchase when the Reserve < Buy Advice. This allows in general cases the remaining reserve to be stretched out for a price that drops more. In this case the trading occurs @ the extreme limits. . .when the price = 4 we know there is no more price droppingJ
With these settings Vortex is optimised. . .one can not get a penny more out of it.
Run time =1278,38 Days. . .= 3,50 year bases on 365,25 days /yr
PV= 3.862.857
R= 2.374.708
V= 1.488.149
Interest earned= 17.135
The reason that no trading cost were used was because that was so decided in the Test Competition.
ROI Yield = 5490 % . . Annually. . . . Bases on 20.000 being invested
ROTAI Yield = 227 % Annually Bases on Time Averaged Investment of 483.966
Remark: In this case I have only used the accumulated + equity buys over the years as the actual investment and averages that over the 3,5 year. At the time we ran this I had not developed the ROTAI Yield equation properly yet.. In the final ROTAI calculation the Sells are seen as negative investments that are dumped into the Reserve and because of that the average invested amount becomes much smaller. This makes the ROTAY yield always considerably higher that the ROI.
So with a great deal of experimentation one could get a feel for roughly the best settings. Also Common sense will help. Generally I tend to invest aggressively(when I am investing) but also I would really “dig into a stock: to make me feel safe it will not disappear, and like most AIMers I like Funds, but then the more volatile ones like I used to invest in: Latin American Equity Fund. .based on the entire Latin American Continent. . .it will not go to zero like en Enron did. Currently I am not investing. . .complex reasons that I have explained various times on the AIM Forum. . .but I am always running Dry Portfolios. . .for example SPY and a Penny Stock Portfolio with Dutch Penny Stock . . .That one will blow you mind. On the SPY run I hold myself as if I am actually investing. I started SPY Demo some years ago when it was rather volatile. I did a 10 year Optimisation Run and came up with the optimised values. The high volatility was not repeated. The original SPY run must be in my Files and are also published on my AIMing Forum. . . See Post 491
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=61045289
Note the Holding Zones I started with:
17,5% Buy
18% Sell
Fb=0,8
Fs =0,6
See Post #496: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=70888762
Holding zones were changed due to low volatility to both 7%.
I have been running SPY from 03-01-2011 up to now and the parameters have again been changed to match the trend. . .SPY is almost “dead in the water” now. The settings and details are as of 24-August 2012:
Buy HZ = 2%
Sell HZ= 3%
Aggressively has been increased
Fb= 0,9
Fs= 08
And still very few trades are triggered.
Current price =141,51. . .I use automatic downloaded prices every time I look at the situation. I do not enter prices every day but I look at then almost every day so I know what is happening.
At the moment he SPY Chart looks like a Flat Liner. . . almost.
Results are:
PV= 22.112
R= 15.208
V= 6.905
Profit = 1.622
Interest earned = 450
Trading Costs = 131. .Trades are 11,95 each . . .12 trades total in 1 year and 8 months.
Dividend = 44
Total investment in equity = 5.042
ROTAC Yield = 6,3 % . . .Base Capital allocated 20.000
ROTAI Yield = 15 %. . .Time Averaged Investment 6.218
Remarks
1 In spite of the aggressively being high. . .and the Holding Zones quite low. . .the low Volatility at the time, which has already been like this for quite a while I get very few trades;
2 The ROTAC yield in Vortex is a change in definition from the simple ROI. The Cash Injections & Withdrawals for the Portfolio are Time Averaged to account for time dependent additions. In that sense 1) Interest earned is Added Capital and 2) Dividend is Added Capital. . . .it makes the Average Cash Inlay larger over time;
3 Investment Costs are Investments. So, any costs necessary to maintain the Portfolio are seen as investment and added in the Time Averaged calculation. Also when equity is sold that is a withdrawal from the equity. . this makes the Investment Base smaller. This reflects reality in terms of Yield very accurately. . .it looks at the Average Capital at Risk.;
4 When a Dividend is executed as a Share Issue I have to manually enter the details of it. . In fact it is a Share Purchase are zero cost (apart from possibly and administrative fee). This is not provided for automatically. What I do is: Virtually Receive the value of the Dividend, add it to the Capital Inlay( with gets larger) and the I buy the shares that were received as Dividend. The Reserve remains unaltered but the both the equity Value rises and the Capital Investment rises. This is done appropriately different for the ROTAC Version and for the ROTAI Version.
The question as to setting the parameters are to a large extend intuitively learned from experience but there are practical guidelines. With out doing an optimisation with historical data I do as follows. . .Al things you do know being equal:
A Decide on the type of Portfolio you are setting up:
Future Growth Portfoli: This requires buying something and letting it ride- Set the Buy Hold Zone(BHZ) higher that the Sell Hold Zone(SHZ) at say
BHZ =8%
ZHZ = 10% . . .adapt this on the hand of what the Trading zones would be.
Fb = 0,6
Fs = 0,4. . .This would during an average rising trend accumulate value by buying strong in the Dip and selling weak on the rise. . .If these are too aggressive for you then use
Fb= 0,3
Fs =0,2 . . . or even 0,1 as you suggested yourself!!!!! Being aggressive and the volatility is nothing to write home about then use
Fb = 0,8
Fs= 0,6 . . as I have don for the SPY Fund.
Retirement Portfolio. . .This, in case you need to draw say every month some money from it to add to you pension income. . .It would be silly to let the money grow till the day you die . . .unless you want the money to go to the children J
This option does not work well for an identified down trend. . .it requires investing and you may not have the money for it. Waiting for an Up-trend is then only an option if you have enough Reserve to invest it.
BHZ = 10%
SHZ = 8% or lower the more often you need money. . .this operate toward selling on the rise but if the price drops you invest a bit ad you reap the profit of the Dip. The equity must be a safe one. . . being retired and not be rich requires restraint on investing what you have for it.
Fb = 0,4
Fs = 0,6. . . .or both a bit higher or both a bit lower depending on how aggressive an Old Man that is not rich dares to be J.
This mode allows you to do moderate buys at the bottom of the trading range and reap good profits on the top of the trading range. In general this mode the Portfolio would slowly run it self empty on a horizontal trading range. . .quite appropriate for a retiring person. On the down-trend the depletion goes fast and on the up-trend the depletion goes slow. As the trend changes you can adapt the settings to your needs. For a down-trend that gets worse you might even do well to Bail Out with what you have and go on a holiday with the money you rescued, or wait for an up-trend. . .You Are The Boss!
Never let the money in equity if you do not feel OK with it.
This is what I advice. . .the less aggressive an investor you are the lower the FB ought to be and the Fs could be left reasonably high. . it will be a Safety Mode to assure your money is taken out as the market goes to its top. Of course, if you let it tide you will have more profit. . .IF you sell in time at the top. . .that might NOT work. Your Sell Order may be standing at the end of the Queue and the Sell will occur near a new Bottom. .
With the Fb=Fs=0 . . (Default values) your trading will be more aggressive than Standard AIM because of the SAFE.
AIM Algorithm = Trade = (PC-V) – x*V. . . . .x= Safe Fraction
Vortex Algorithm= Trade = (PC-V)*1 for fb=fs=0. . . .No Safe
For x=0 Aim would be identical to Vortex at the Start.
Here you can see one of the differences between AIM and Vortex.. The other Difference is that Vortex Updates the PC for Buys as well as for Sells and in such a manner that after a Trade PC=V.
Remark on Start-up CER
For this you could very well use the AIM Recommended V-Wave. . .unless you have a better guideline. Personally I like to keep myself understanding the nature of the equity behaviour and I analyse it:
For a down-trend that is serious. . .wait for an up-trend. . .invest nothing yet. . not even a penny.
If the down-trend has bottoms out and the trend goes horizontal go for Equity-Cash 80-20. . .or wait till a certain up-trend of say 15 or 20% and dump ALL your money at once. Then AIM yourself out of equity stepwise on the rise.
For an up-trend that has lasted a long time already use Equity-Cash = 20-80. . or bet on that it will rise more and buy 80% equity.
If you have no clue which way prices going and it is cycling a bit horizontally go for 80-20 at the bottom of the Trading Range or for 20-80 at the top of the Trading Range.
The 50/50 is for cases that you know nothing about the trend nor about the prices at the moment. . .then two things you should know to jump in at 50/50. Ask yourself (for the clueless ones)J:
· Is the equity a safe one?
· How much money am I prepared to lose from the money I can afford to lose?
The jump in with a smile when you know the answers. . or keep your mony in your ban account. . .if the Bank is a safe one. . . that is.
One more note on Aggressive investing with Fb and Fs being high. As you can see with Fb=0,9 and Fs= 0,8 in the Spy Portfolio you do not have to deplete your Cash when the price drops more than you expected. As the price drops all of sudden very much you can SEE it and then you can intervene. . .do not buy right-a-way but wait till you see what is happening and understand IT. Then when you are ready to buy on a low price you do it. . .or you wait for an up-trend again.
The End
(Some more tomorrow on my Penny Stock Portfolio)
Hi Heartland99
I searched the attic and found all sorts of documents but not the Money Spinner . . .I saved almost everything that I wrote and have drawn. . . When I die it will be a disaster to sort it out. I found several items on my Investing activities and writings in 3 different places. . .The organization of all that has not been optimised.
Then I moved to the bedroom in which boxes are put temporarily for when I had a party. . .finally I found it . . . One box I have not looked in yet. . .I wonder what is in it.
OK. .I am opening the Money Spinner right now. . .my hands are trembling. . .It feels like I am opening a long lost secret document and I almost expect to find a page with a Chart with an X marked on it where the treasure is buried.
This Book is published by:
International Self-Council Press.
Copyright by Standard Research Systems Inc.
2249 Young Street Suite 303,
Toronto, Ontario M4S 2B1, Canada.
It cost me C$ 14,95 in 1980. . .
The Manual is 7 mm thick. There are 126 pages but some pages are blanc Exercise pages.
I will sell it to you for. . .ehhh. . . let's say € 300. That looks fair to me
OK. . .I am just joking!
This is going to be difficult: There is no well defined Algorithm, just worked out examples. I will illustrate without copying all the concise verbiage. . .or maybe you better buy my book? Then I will watch the Telly instead. . .
Still kidding!
Setting the Program
1-Start Capital= 10000
2-Reserve = 5000
3-Share Price = 5
4-Flow Limit = 5000. . .Obviously this is apparently the Start Equity.
5-Flow Limit = 5000 [color = red. . .It is actually used as the PC in AIM as was discovered in the analysis of the method below[/color]
7-N1 = 1000
8-V1 = 5000
9a-Next Buy Price
This going to take some time. . .Would you maybe like to buy Vortex now? That is faster . . . OK, I am not serious! I don't want to be pushy! Where was I? Aha. . .
i N1= 1000
ii Add 10% = 100
Sub Total = 1100
iii Add 100 = 1200----> B= 1200
Buying Price=Flow Limit/B . . . Aha. . A Formula!
-----> =5000/1200 = 4.16
My Excel says this is 4.166666.... So it should be 4,17
9bNext Sell Price
i N1= 1000
ii Subtract 10% = -100
Sub Total = 900
iii Subtract 100 = 800----> S= 800
Sell Price = Flow Limit/S
-----> 5000/800 = 6.25
10-Call Broker
GTC:
Buy 100 Shares @ 4.17
Sell 100 Shares @ 6.25
Here is a detail that I had also not remembered:
Min Buy Interval Ref. Start price 5: MBI = 5- 4.17 = 0.83
In all following buys the price should at least drop 0.83
Remark: In the example prices were rounded to Inch-fractional units:
Buy Price = 4-1/8. . . Sell price = 6-1/4.
By this truncation method the MBI in the example became 0.875 instead of 0,83. I will ignore such difference. . .The general method is what you want.
Min Sell interval = MSI = 6.26 - 5 = 1.25
11-Order is executed
Aha. . I now note that Flow Limit = Portfolio Control = PC. So PC1 = 5000. I now will use the AIM notation for as far as this is identical to the Money Spinner usage
If a buy: Buy = 100*4.17 = 417
PC2=PC1 + 1/2 Buy = 5000 + 4.17/2 = ----> PC2 = 5208.50
N2= 1000 + 100 = 1100
V2= 5000 + 417 = 6417
If a Sell: Sell = 100*6.25 = 625
Do not change the PC:
PC= 5000
N2 = 1000 - 100 = 900
V2 = 5000 - 626 = 4374
12 Calculating new Buy Price
Repeat Step 9a i to iii
This Buy2 price = B2 must be at least equal to 4.17 - MBI
----> B2 = 6.17- 0.83 = 3.34
If B2 > 3.34 then the B2 is too high.
Use B22 = 3.34
PC2/B22 = 5208.50/3,34 = 1959.43 . . . .use 1600
Shares N2 +10% = 1100 + 110 = 1210
Shares to be bought = 1590 - 1210 = 390
Buying GTC Order = 390*3.34 = 1302,2-----> 1302
13 Calculating New sell Price (if Sell at price 6.25 was executed)
Repeat Step 9b i to iii
This Sell2 price = S2 must be at least equal to 6.25 + MSI
----> B2 = 6.17+ 1.25 = 7.42
If S2 < 7.42 then S2 is too low. Do not use S2
Use S22= 7.42
PC2/S22 = 5000/7.42 = 673,85 . . . .use 674
Shares N2 -10% = 900 - 90 = 810
Shares to be sold = 810 - 674 = 136
Sell GTC Order = 136*7.42 = 1009.12-----> 1009
From here on the process is iterative and you repeat the same steps as you do in AIM.
The rest of the Money Spinner is like it was for Lichello's Book and my Book The Vortex Method. . al sorts of advice on What to do IF. . . . on Volatility and many more things.
Something I had completely forgotten is this. . I just read it:
On Page 57 Chakrapani discusses a method that he says would increase yield by up to 300%. This is what he said:
"Suppose your income is relatively high and in an emergency you can get cash(or use a credit Card or take out a Loan, etc.). . . .This procedure will increase the power of your investment FOUR TIMES".
This is his method:
Invest only 2500
-Set Up the Money Spinner @ 10000 and use the 50/50 CER Principle as before. You pretend that you have put 5000 in a Savings Account as Reserve. In the course of time you ought to be able to raise that 5000 you may need in the future to buy the recommended equity.
- Then buy 5000 worth of stock on margin for 2500 and you operate your Money Spinner as if you had 10000 made available at the start!
Of course, what Chakrapani states here is true. We all know it. If the prices stay nicely within the range that the investor only needs to draw on the extra money that needs to be raise later does not exceed 5000 he is OK, and as the prices start rising he will have a 4-fold leverage on his Money Spinner. . .on his selling as advised. . .this is no secret. If prices dive however he need to shove more money to the Margin Broker and that will carry extra costs that he should be prepared to carry. The assumption here is that he can
Buying stocks on margin remains a risky activity but if one does not spend more money than the intended 10000 total he was prepared to spend anyway then the only extra burden is the high brokerage cost for buying on margin. It would be quite different if one buys on Margin when prices are rising. . .if the prices drop suddenly one could end up with all the invested money being lost and ending up with zero shares.
On your questions on Vortex I will answer you tomorrow. . .I have been working on this for about 4 hours J
Zzzzz
Thank you, Conrad, I look forward to reading the results after you find the Money Spinner Manual!
I have been reading about Vortex and have a question about which value for Fb and Fs (the buying and selling factors) you use in your personal trading.
You mention that a value of >0.8 results in very aggressive trading. I agree that it could lead to investing very large sums after relatively small market declines. Do you use this aggressive approach in your personal trading? I am thinking of using a value of 0.1-0.3.
Also, I was curious what kind of Hold Zone you use with Vortex?
Thanks, and good luck searching through the attic! :)
Hi Heartland99
I still have the manual I bought in 1980, I am sure, I have to get it out of the Attic.
I can tell you this though: For normal price ranges for stock say from say $5 and upwards that did not drop in price drastically the Money Spinner Algorithm was identical to Standard AIM possibly varying the Hold Zones values but I remember then as all if them being 10%.
Also I think he calculated Share Trade quantities and from that the Buy or Sell amounts But some AIMser do that also.
The only thing is Chakrapani did something different for rather small stock prices, such as penny stocks and when a $ 5 price dropped to under 1$ or so. For this he Introduced a Trade Limit or an Amount Limit. . .I forgot what that was and the ratio factor
he used.
Logic tells me that for Penny stocks you need a Min Quantity to get a reasonable Trade size. . .if you use a Min Trade Amount then one can get number of shares to buy, of course.
I remember I did not really think that additional calculation was important as I did not do any trading then, and when I got serious I developed Vortex AIM.
I will find the Manual and report on it.
Thanks^2 PraveenP
A second Part"?
Did I promise a Part 2?
I have to check out my promises once in a while
I get sometime suggestions like yours and one reader said:
“I will pay good money for a book on your life, your short stories about it are great!”
I asked him for an Advance but then he chickened out.
A Blog ???? How does one start one . . or start two?
Is there a Blog-Site some place?
I write a lot on Face Book . . .I run out of time all the time. . .
Once I claimed: “Time does not exist”.
It is a Lie.
Cio.
Thanks PraveenP,
I ought to standardize that story but never get around to it, so I happen to write it each time from scratch. . .each time with a bit different "flavour".
Such achievement certainly feels sweet! I tend to keep working on that "level". . .new things. . .new tinkering. The downside is that one never becomes a real expert. . .but the upside is bigger. . .at less income I must say.
At the present I am working on new type of Gas/Steam Turbine:
Vortex Combined Disc Turbine. . .VCDT.
Tomorrow. . .actually today. . .It is 3 AM already. . .the first CFD Model will be tested. . .new things. . If it is as good as expected it will be. . .well, SWEET
I perused you link and your system description has features like Vortex AIM . . .The PC is updated for buying and for selling.
When I have more time I might look at you system more closely. . .Now I have to hit the hay!
Regards,
The story was really entertaining - reminds me of my first job out of college, and the first time I worked on a real world computer project and succeeded - it felt so sweet!
Conrad,
You should write a book or blog - you are a really good story-teller! Your story hooked me, and I can't wait to read the second part.
Praveen
Money Spinner Question
Hi Conrad, I've been reading about AIM and Vortex and am getting ready to start my own programs, but I had a question about the Money Spinner formula developed by Chakrapani. I have not been able to find the algorithm anywhere on the internet, and unfortunately a used copy of the book costs over $500!!
Is there any way you could post the algorithm (without violating any intellecual property laws, of course), or direct me to somewhere else where I may find it? I'd really like to learn more about it.
Thanks for all the work you have contributed to AIM and to Vortex!
Section 2 on changing the settings of a Control System.
Continued from Section 1
The 10” Liquor Feed Line had a 6” Equal Percentage Control Valve to control the liquor flow to the Chip Chute (CC). . .Upon inspecting the design specifications I concluded that this valve was more than big enough and it operated at less that 50% open at the design flow for 750 TPD. . . add 50 % flow capacity. . .which would get the valve to be 50-60 % open or so. . . and the mill would run at 750 + 375 = 1125 TPD and there would be room for running to 1200 or maybe 1250 TPD, on that 6 inch valve. . .and if that would not be the case then an 8-inch valve would be required at the very most. A 10” valve would have a flow capacity of 278 % of the 6”valve capacity and the Huge Chip Cute Pump would not be able to handle that much flow. I advised the CO of this and he said:
“I would tend to believe you on account of what you have already achieved, but the Instrument Man says the 10" valve would solve the level control problem, so we are just going to replace it. . .we have a spare 10” valve so it will cost only cost some time to install it in a few days. . .the work is planned already for the next Maintenance Stop.
I was freaked out a bit by this. . .The Instrument Man obvious knew nothing about Control Systems and Flow Systems. So, I took the initiative to look at the 6” valve in more detail: The air pressure driven actuator was fed via a Spool Valve. . .for most of you this will be irrelevant, in regards to how that works, but the information I got out of the specifications was that the air feed and the orifice diameter was 1/8-inch and that was good enough to let enough air through it to operate the valve. . and do so fast enough. . . to allow the multi million Dollar digester to run at 950 TPD. . .a tiny hole of 1/8 “in diameter!!!!. So I looked at the Spool Valve and it was about 7 @ 8 mm thick and I figured this. . .the Liquid Level in the Chip Chute changes too fast for the valve to provide enough response to adjust the Flow variations fast enough. . .so the level goes too high or too low. . .suppose now that I make that 1/8” hole to be a 1/4“ hole. . .it will allow the air to enter the Actuator at a theoretical 400 % greater rate. . .and this will make the actuator respond left & right a great deal faster, maybe ever 300% faster. . .THAT should solve the problem!
To have more ammunition to convince the CO that the 10” Bal Valve would NOT solve the level control problem, I went to the Instrument shop where the 10” Fischer Ball valve was standing ready on the table for installation in 1-1/2 days. I asked a technician to hook up the Fischer Monster to an air supply at the same pressure as was used in the Mill and I tested this valve on an instant ON- sequence withy the valve 100% closed. It took ~10 seconds to 100% open. . . .
Slow as hell . . . but that is not the main issue. I checked how far the valve was open for a flow representative for 1000 TPD and I discovered that the valve would be less than 10% open. . .and at that point the Flow Curve for dQ/dx was almost horizontal . . . (x=1 is 100% open). . .a tangent of almost 0. . .and THAT was the critical thing. At the target flow at which the control would have maximised symmetric dQ/dx flow deviation response. . .the dQ/dx-line would be about 45 degrees instead of about 2 degrees at it was at 10% open. The result of installing the 10”valve would be that the Digester would not be able to operate at all, and that the entire Pulp Mill would stop running until the 6”valve would be put back!. . .I showed the CO the drawing I had made of the Equal Percentage Flow Curve for the 10” valve. . . .and that this valve would take 3 to 4 seconds to open enough to create a positive dQ to prevent the pump from running dry and about 1 second to close it to prevent the liquor from overflowing the mixing vessel. . which would prevent flooding the Digester Basement. The 10” valve would solve only 1/2 of the problem. . .This operational and control information was the result of knowing and understanding the details of the system and what would result if the settings were very wrong. . . As long as they were running on a “straight road” @ 750 TPD everything was fine. . .even the “wrong settings” of the control system allowed the production of 750 TPD but with my adjustments of the settings of the control system the Mill could run at 950 TPD easily.
The CO saw the light I showed him: “Holy Smokes. . .I believe you. . it is obvious that you are right. . .we ought to educate our the Instrument Man on how System Control ought to be done! I will cancel the Work Order on the big valve, but how do we get the 6” valve to move faster in such a short time?”. . I said: “That’s a Piece of Cake. . .you give me authorization to let the machine shop people make a new Spool Valve with 1/4” orifices. . .I will make a sketch for it. . .and you write out a Work Order that this Spool Valve is to be installed in the 6”control valve Actuator, using a 1/4” supply fitting on the air feed tubing. . .I am 100% sure the internal tubing from the Spool Valve to the Actuator piston is large enough to make this work for perfect Chip Chute Level Control, with the settings on the controller we have now, or even tuned a bit better”. . .The CO appeared convinced:. . .”Damn. . .I will get on it right-away. . .it makes perfect sense to me”. . .And so it happened! Making the new Spool valve was easy and was done quickly, and its installation during the Stop that night took no more than 30 minutes total. . .I was told afterwards.
In the morning after the Maintenance Stop at 8 AM I entered the Control Room and the “boys” there were sitting there doing nothing, leaning at ease in their chairs an looking content. . .the Digester was on line. . .purring like satisfied cat, not a thing was stirring. . .
The red trace on the Lever Controller Chart was gently moving up and down between a less than 1,5 cm range. . the Digester was running at 950 TPD. The boys welcomed me and gave me the Thumbs Up Signal. . .I was pleased I made it so!. . .I fine-tuned the controller a bit more . . .especially the D-knob I tweaked. . . and the range of the up-down level movement reduced to. . .I kid you not. . about 7 @ 8 mm. . .the red trace average very slowly moving a bit up/down indicating that the level average showed only a small cyclic deviation form the Set Point . . . Evidently the proportional, the integral and the derivative settings were virtually perfect. Then the CO appeared for his day Shift at 8:30 and he first checked the TPD rate which stood at 950 and then came right over to the level controller where I was. . .he looked at it and said:
“Surely you are faking this somehow. . I do not believe this can be what is happening in the Chip Chute in the Basement. . .”
I assured him that it was reality that he was looking at. The little 2-bit Spool valve, plus my fingespitzengeful http://en.wikipedia.org/wiki/Fingerspitzengef%C3%BChl had done the trick! The CO said then: “This is a tremendous achievement! I would not have believed this was possible if I had not seen this with my own eyes. . .my compliments. . .We are going for the 1000 TPD today!”
I went on with my normal work there for the Vancouer Consulting Company I worked for and some time later I inquired how “things were going” with the Digester and was told they were operating at the fringes of 1250 TPD. . .without making any more fundamental changes to the basic system. . . Maybe they had done a bit more fine-tuning on the Level Controller for the Chip Chute to get to the 1250 TPD, but I have no information on that.
This experience was the Cherry on the Cake for my engineering experience. Many people say things that are not true and when I hear such falsehoods I jump on them to try to make it clear to them that looking beyond the length of their noses to learn more is very useful, but also it makes life exiting. . .one can escape the confines of boring box that one might be in.
This is the Short Version of my story
Chapter 1: My Story on Changing Settings of a Control System.
Response to remarks made by Tom Veale in http://investorshub.advfn.com/boards/read_msg.aspx?message_id=78405650
Good to hear from The Old Man(TOM)once in a while
I remember when I first got in contact with you on this Forum we had a lively discussion on Control Systems in general and that an AIM in fact is control system for investing money in a particular way. . .and a feature of control systems is that they have a number of "knobs" on them that can be rotated left and right by an operator. . .we never had any discussion on why these "dials" were there. . . we both knew why they are there: they are to be adjusted in response to system changes and external influences. I may even have told you about the time I was in the Digester Control Room of the Grande Prairie Pulp Mill in Alberta. The operators had a great problem with the Chip Chute Liquor Level. . .It is the Mixing vessel for wood chips and liquor mixing in order to pump the mixture at high pressure into a huge Kamyr Digester of about 50 m high. . . The CC either overflowed or the pump went dry any time they wanted to “run the mill a bit faster” than it was designed for (750 Tons/day of pulp). Proctor & Gamble wanted to run the mill faster so they set op a De-bottlenecking Program: This was the Instruction to all the operators: “Make everything run faster and when things go haywire and break down. . fix the bloody haywire and keep making the mill run faster again until Hell Freezes Over. . .I was the luckiest engineer on earth, almost fresh out of school, to be assigned to that mill . . .It was not my function to be in that Control Room at all. . .I just roamed the mill now ant then out of curiosity. . .Each time the Chip Chute (CC) System went off-line sirens went of. . .this was normal MO there. . .all the operators were turning knobs left, right and back on all the knobs they could find and I thought: “Hey this is a great place to be. . .things are happening here!!!” The Chief Operator. . .a young guy of I bet no older that 28 or so, explained to me: “This Mill is designed for 750 TPD and we got it running at 900 now but we have reached a bottleneck: the level of the CC can not be controlled and the Chief Instrumentation Man says the Level Controller can not handle it. . .look at this red level trace on the chart. . .it looks like an elevation profile of the Rocky Mountains just to the east of us here. . .we can not fix it”. I asked him: “Would it be OK if I try to adjust the settings to tune the controller a bit?”. . .the guy said: “ No problem. . .you could not make it worse that it is. . .The Chief Instrumentation Man has tried it too but he could not get the level stabalised”. So, I went at work on this PID Level controller. . .I was a greenhorn on this. . .it was the first Level Controller that I had ever faced outside of the university! . .So, I looked at the knobs, my fingers were itching to turn something. . .Knobs are made for Turning, and that’s what I will make them do, I thought . . .(Nancy Sinatra was standing behind me. . I swear it. . . urging me onwards. . .her boots were drumming their beat. . .in my head).
”Hey Man look at this”, I said, “The D-knob stands at zero. That’s not good at all. . .at zero it does noting! D stand for Derivative!” . . .The Chief Operator (CO) came looking and said: “I’ll be damned! What the hell is a derivative for???? The Chief Instrument Man has set it probably at 0. . . he has fiddled many times with this controller. . what does it do?”. . .I saw the writing on the wall. . .these people missed a bit of control theory, so I began to see the possibilities for me to let Nancy Sinatra push me further. . . An entire pulp mill De-bottlenecking Project would fall into my hands if I had my way. . .they obviously depended on me . . .So I did what came natural to me and explained: ”A derivative feature on a controller is a “rate of change” sensor for a variable in a process . . .in this case it is for measuring the time rate of change of the fluid level in the Chip Chute Level. . .most people would call it the “velocity” at which the fluid level rises or falls. Thwe controller would adapt the control valve opening time-shift to make it open more or less at the right time”. . .
”You got to be kidding me!” said the CO. . “how do you know all that?”. . .At D=0 it does probably not measure anything and do noting!”. . .The CO was obvious not an idiot. . .that was promising. . . So I told him that I will try a few things with different setting on the PID-controller and I did so. . . and in a short time the red line on the controller chart was already less “jittery” than before. The CO said: “We were told not to touch these knobs, but I see that you have already achieved a better level control setting. Obviously the fluid velocity changes in the CC are great and the Control System does not react fast enough to correct the flow if it is wrong. . .I got to leave now, my shift is ending. . .do what you can. . . you have my blessing!”. . .and he left. . . I felt like King Salomon. . .I had the Power to make things better. . .or to make a bloody mess of it. . . I had a multi million Dollar Kamyr Digester in my hands! It might as well have been The World . . . I felt like a Little God. . after all, I was a greenhorn facing to attack my first Level Controller in Real Life. . and I went to work! . . .A few times the bells started ringing when the P-knob was turned to much and the system went OUT. . .it was not en emotional reaction. . .it was simple a trial and error level control experiment. . .getting the fingerspitzengefühl of it in my hands. . .No problem. . .the boys at the other knobs knew how to get the Digestor on line again. . .everything was normal. . .this happened routinely every time when they turned the knobs.
I adjusted the PID-settings in a great many variety of relative positions and got to a situation at which the red liquid-level-trace jittery had been reduced to a 3 cm narrow range on a scale of +/- 5 cm chart. . .The D-knob stood at some non-zero position. Then, I started fine-tuning and got to the point the red up-down trace had about a 2 cm bandwidth and I went home. . . it was midnight. The next day I went to visit and the CO was as happy as a pig in shit: “I am amazed at what you to have achieved last night. . .You must have magical power in you hands. . .we are running at 950 TPD and all is well and the liquor level is stable, but at 975 TPD the system knocks itself out again. . .we want to go to at least 1000 TPD now. I have given a Work Order to install a bigger control valve. . .the 6” Bal Valve in the feed line will be replaced by a 10" Fischer Ball Valve in a few days".
I did a bit more fine-tuning but could not get the trace jitter much narrower than the 2cm range. . .I thought: “I have to check out that 6”ball valve . . .A 10” valve in a 10” pipeline is going to be a problem. . . I think.
***************
When we step in a cockpit of an aircraft there are a few knobs to be seen. . .If they were there just for the fun of it and not be connected to anything, then we could conclude that that aircraft is a sophisticated autonomous machine that could fly itself under any weather circumstance, and get to the instructed destination without the pilot doing anything at all. . . .all the knobs would be there only to entertain the Pseudo Pilot so that he would not become bored wile being there . . and not only that the pseudo pilot would only be there to make the passengers feel that they were in safe hands. . .An aircraft without “control knobs” to turn during the flight is an absolute impossibility. . . .ever. . .it must have an active control system(CS) in order to adapt to weather changes.
Any discussion on the proposition of not adjusting the settings on a control system(CS) is completely idiotic and therefore pointless. That is so for a CS in a chemical factory and that is so for an AIM Investment system. If CS knobs would have to be fixed and left alone then anything more that is said about it are wasted words. . .and in that light you would have to conclude that everything that has been discussed on AIM on this Forum, since its inception, on changing the values of a Hold Zone, the SAFE, the Update Fraction other than 0,5 of the PC, and all the other AIM-settings and adaptations that have been suggested to be useful, has been a waste of time. . . and current discussions on the subject would also be just as pointless. . . it would have been meaningless chatter that had no purpose other than to fill the Forum pages with nonsense and to spend time doing so because there was noting more useful to do...If that is the collective consensus of the readers of the AIM Forum in regards to AIM-setting changes then AIM Users might better join a Knitting Club. . .at least they would have something useful to do then.
Why talk about AIM-settings ever, if they are not to be changed? I will answer this with the ending of my Grand Prairie Chip Chute Control System Story.
Continued in Section 2
Interesting Vortex AIMing resuls on my Dutch Demo Penny Stock Portfolio.
Run time: 16-02-12 to 9-8-12. . . Euro Equities
Number of Penny Stocks = 10
ROTAC Yield = 1121 % . . .based on Time averaged Capital Inlay Base
ROTAI Yield = 5479 % . . .based on Time Averaged Equity Acquisition Base
One of the stocks: Antonov Transmissions, kept cycling between 1 Penny and 2 Pennies;
End prices
8 Stocks were less than 10 cents
1 Stock was 14 cents
1 Stock was 33 cents
ROTAC Yield for each stock
AMT= 1358 %
ANTONIV = 3855 %
NEDSENSE = -22 %
PHARMING = -95 %
ROOD = -37 %
SOPHEON = 9 %
SPYKER = 147 %
TIE.HOLD = 3%
TISCALI.NLNL = -34 %
VIVENDI.MEDI = 43
ROTAC Portfolio End Results in €
Investment Total = 432000
Sum Interest @ 2% = 2009
Equity Value = 457877
Reserve = 512493. . . .CER is close to 50/50
Profit = 537370
PV = 969370
TAC = Time Averaged Capital = Profit/Yield Ratio 537370/11,21
TAC = 47937
I wish I had put in some real money in AMT and ANTONOV
**********************************************************
The effective average capital at risk in the Portfolio during the +6 months of the Run Time is just a little more than 1/10th of the total Investment Inlay. . .meaning that a great portion of the capital was added after the start of the Portfolio when it was needed for the equity acquisitions.
I many cases investors do not have a constant capital inlay and add capital at some later date to the Portfolio when needed. When this is done the Total Capital Inlay is a very poor base figure for calculating Portfolio Yield.
This is the reason that in Vortex AIM the ROTAC Principle for yield calculation is used IF an investor sees the Capital Inlay as The Investment. . . Money is in this application not differentiated from Equity.
With the ROTAI Yield calculation method the money is not considered an Investment until equity is bought for it. . .Only after equity is bought is it capital at risk and these equity purchases are Time Averaged Investments. . .TAI.
With the ROTAI Method in Vortex AIM The Reserve plays no role other than that the investor can see it as a limit for how much money he is willing to invest. The profit for the Portfolio is then calculated on the value increase of the purchased equity only.
In the Vortex program the investor can switch between ROTAC and ROTAI simply by clicking a button!
Some AIM History. . .Part 2
The essence of my AIMing Paper was to start with the DCA method as an example of a periodic investment technique with a $ 100/month purchase of shares:
Month/Price/No.Shares
1.......10......10
2.......14......7,14
3.......10......10,00
4.......8.......12,50
5.......6.......16,67
6.......8.......12,50
7.......10......10,00
The obvious result here is that when the price peaks at 14 one only gets 7,14 shares and when the price returns to the average of 10 the value of the equity package at 14 is reduced to 71,40 and that is a loss of 28,6% over a relatively short period!
I demonstrated that this loss due to buying at high prices of a volatile equity is a bone of contention in the DCA Method!
In contrast when the price has dropped to 6 one gets 16,67 shares for his $ 100 instead of 10 and when the price returns to 10 the value of that cheap package has increased to 166,70. . a whopping 66.7% profit!!! This is the great advantage of the DCA Method. The objective is, I made it clear, to eliminate the Disadvantage and to capture the Advantage of DCA.
A slight change in the investment technique would increase the profit significantly. I suggested first that when the price rose to above the average of 10 the investor should not buy any shares but keep the $ 100 in Reserve. Then next month if the price of 10 would return he could buy $ 200 worth of shares!!! He would be on even keel. . .not having lost anything relative to the price of 10. Alternatively, I pointed out, instead of buying for $ 200 worth at 10 he could wait till the price dropped to 8 and then buy $ 300 worth of shares. . . he would get 37,5 shares at a low price and when the price returned to 10 he would have a value of 375 of that package. The benefit of that strategy would be obvious to any reader. Alternatively if the investor would have waited for the price to drop to 6 he would have $400 to buy at 6 -------> 66.667 shares!!!!! . . . and when the price goes back to 10 he would have a package worth 666,67!!!!! In my original presentation I added up the profits for several complete cycles ro show the improvement relative to the DCA, and that was clearly demonstrated.
The profit potential of this technique is obviously much greater than for spending $ 100 every month irregardless of equity price, and any kid would understand it. Having achieved that I pointed out the next possible improvement: The possibility that when the price hit 14 instead of not buying the investor could Sell a package of shares worth $100!!!! . . .Sell High. . . .and he would sell only 100/14=7,14 shares, instead of buying only 7,14 shares, and he would have $ 100 extra to spend if the price drops to below 10. . .He then would, for example, have $ 500 instead of $ 400 to buy at the price of 6. . .500/6 = 83,330 shares, and at a price of 10 this package would be worth 833,33. . .a profit of 83,33 % relative to the buy @ $ 400 at 6!!!!. . .
The selling of a small package of 7,14 shares at a price of 14 has provided for increasing the profit of buying at 6 by 16,67%. . .Selling some equity at high prices is a powerful tool for leveraging the profit due to buying extra equity at low prices. This is The Magic of AIMing!
Showing this basic methodology of periodically selling high and buying low being the essence of the AIM Method made it obvious that for volatile equities in the form of Mutual Funds, or in the form of "safe" single equities, made it clear that this methodology provides great potential for realizing very high returns, relative to simple periodic buying with a constant amount each month, by which the advantage of buying low would be almost wiped out due to continued buying at high prices.
I also made it obvious that the examples were only illustrative and that the investor could adapt the examples I provided to create his own strategy for selling at high prices and buying at low prices. . .That would simply be a refinement to make the method suit the investor's style . . .he could be aggressive in doing so, or be conservative, but this method would retain the extra profit potential of the AIM strategy.
An interesting example of such a "buy & sell" strategy variation, other than Regular AIM and Vortex AIM, are the periodic Investment Plans created by Lost Cowboy. . .see The AIM Users Forum. . . in which the monthly investment values are adapted + and – in response to - and + equity prices, which would create similar “buy low & sell high” benefits that are inherrent of AIMing.
As a closing argument I asserted that it should be obvious to anyone that studies large professional investment companies that they use this periodic “buy low & sell high” strategy almost invariably: When the equity process have inceased for a period of time they sell portions of their Portfolios. . .they call this Increasing their Portfolio’s Liquid Asset Position and when prices drop significantly they buy extra equity and call it an Opportunity Buying to achieve Optimisation of the Portfolio’s Equity Positions. . . .They are careful not to call it AIMing . . .but THAT is what they do: Periodically selling of high priced equities and periodically buying low priced equities
Manno van den Berg pretended to have presented something new for Amateur Investors with his Spreading through Time idea but in fact he presented something already terribly old. He would have been better off to present any one of the AIMing Methods that are used every day by AIMers, and give credit where credit is due.
Some AIM History. . .Part 1
Frequently on the AIM Forums the specifics of the AIM Methods are being discussed. On the one hand this is a logical development for AIMers as in the Investment world the AIM method is not openly considered a "serious" investment method in the professional investment circles. On the other hand is such a very simple and logical system as AIM to create profits with a natural feature of equity prices that is invariably an aspect of any commodity that one can think of: Volatility!. . .The Friend of the AIM Investor. . .even though some people are definitely afraid of volatility when they consider getting into investing.
Considering that Buying Low - Selling High is such an obvious investment objective the really surprising thing is that in the main so few people actually do that as a principal feature of their investment activity. . .It is well known that the bulk of the non professional investors. . .the Amateurs. . .wait far too long to step into the Market, and here I want to quote something The God Father of the AIM Investing, Robert Lichello, has written in his book on AIMing:
"The worst thing an investor can do is not to me In the Market."
Although one can, with the right market know-how, take exception to this wisdom to some extend, it is an excellent observation from the point of view that volatility is the Investor's Friend. . .This has been true since the day that investing was invented. . .a few years ago, when primordial creatures crawled out of the mud and developed into humans. . .they invented the idea of profit by buying goods when prices were low and sold them when the prices were high. . .it was the logical thing to do. . . in a volatile world.
In respect of the above you might join me being surprised at an investment article in the Financial Section of the Dutch Telegraaf newspaper, on July 28th of 2012, which was presented with a heading in large bold letters:
Spreading Througth Time
with sub-heading
Periodic investing reduces the risk of bad timing
as if it was something the writer had discovered a day earlier! I could hardly believe it. . .an Old Topic taken out of an Investment Museum, dusted off and declared to be the Egg of Columbus for investors! In it first various banes of investing like buying too late when equity prices had been rising for a long time and the "impossibility" of predicting when prices were right for buying. . .Obviously the writer addressing the general public as he ignored the fact that many investors were consistently doing that which he presumed to be impossible: Investing with skill so that the buying is done at low prices and the selling was done at high prices.
Clearly the author of the article, Manno van den Berg, had never heard of AIMing and he offered a solution for reducing loses in a volatile market by suggesting that periodic investing was the "sliced bread" he had to offer! Investing in Mutual Funds or Bank Funds with a fixed small amount each month would presumably solve the problem of buying at the wrong time. He suggested that over time when prices had dipped low, and then due to volatility the investor would benefit from periodically occurring low prices if he faithfully continued to keep buying equity every month. . .when the prices are low, he explained, the investor would get extra equity shares and that would handsomely pay off when prices returned to their formal level!!! He ignored to explain however that when prices were high the investor would get less equity shares for his fixed monthly investment and that this would create a loss for these buys, relative to the average equity price.
Obviously Manno van den Berg had no idea he was describing a very old investment method that was already in vogue in the 1960-ties as a standard periodic investment technique , and no doubt it was even used even earlier than that. It would have been proper to at least for him give credit to people that had had developed such a periodic investment style years ago.
When I first read The Money Spinner (Chuck Chakrapani, Toronto, Canada) in 1980 about his unique investment system, that in the main was very much like Lichello’s AIM, Charkripani gave due credit to the developers of the Dollar Cost Average method(DCA in which periodic investing of fixed amount of money was the key feature. Chakrapani also mentioned that Robert Lichello had invented a system that was very similar to his Money Spinner but stated that the Money Spinner was not a derivative of Lichello’s AIM. . .I tend not to believe that. . . . From The Spinner and the DCA and Lichello’s AIM I eventually developed my Vortex AIMing method and then I wrote a paper on how AIMing in general was a clever derivative of the DCA method. The essence of this development was so simple any kid could understand AIMing, and in my humble opinion, it made the book of Robert Lichello virtually redundant. . . .too much dressing-up with irrelevant information to make his publication read like a Story Book, rather than an technical manual, like the Money Spinner is.
See Part 2 for the follow-up.
Finally a clear method for calculating Portfolio Performance for an AIMing Account!
At my introduction to AIMing via Money Spinner using the sequential buying and selling of equity and using a Reserve in Cash in a bank account I have been at odds with the Yield On Investment as a percentage for AIM Portfolio's.
In Engineering and in Business a yield % can be calculated on every part of a process and defining Efficiency was an ever re-occurring problem: “Efficiency based on what? “
Thermodynamics Professor at the University of BC in Vancouver, Canada, deserves the credit for defining yield as a ratio as follows for us:
-------->(What You Get)/(What You Pay For)<---------
Of course, WYG/WYPF can easily bet translated to OUTPUT/INPUT but that is misleading for processes for which one does not have to pay or have to do work for: All inputs do not have the same Input Quality
In AIMing Return On Investment------ROI------as a percentage is not sufficiently defining to mean anything at all, when dealing with a Portfolio in which Equity and Reserve are not seen as a single entity, input entity, unless one specifically considers the Reserve as a separate investment that makes it unavailable for other purposes. . .Money in a savings account, although technically one can consider it as an an investment, most people however do not.
Tom Veale has provided on this Forum years ago an interesting method to define a Return on capital at risk-------ROCAR.
The definition of ROCAR did not completely satisfy me. . . .it only considered the amounts paid for equity: 1) All cost factors that are incurred to set up an Investment Portfolio are not included and 2) the fact that in an AIM Portfolio one can, and people do, add money to the Reserve or they withdraw money from the Reserve(often not even changing the bank account they used for the portfolio reserve).
Essentially a simple ROI yield is never a proper yield because both the equity and the cash is fluctuating in time.
Our VORTEX AIMing program has been modified to account for the following two ways of Yield Percentage Repersentation:
1 Return on Time Averaged Capital----------> ROTAC
2 Return on Time Averaged Investment----------> ROTAI
ROTAC is very similar to the simple ROI except that when one “stacks” his portfolio with money at various different times, or withdraws money, for example as retirement income, the input in capital reduces over time and the real yield on capital becomes quite different, and the ROI no longer is an effective indicator of how well your Portfolio has performed.
ROTAI considers as inputs only the real cost factors for “Running and Maintaining” an Investment Portfolio. . . any cost factor the investor considers a investment factor. . . .any money you “paid” for purchasing equity en any money you “paid” for maintaining the investment are considered time depended inputs. . .these investments are risk. The Capital in the Reserve is not at risk. . .it is part of all the assets you own.
When the Reserve is used as a special investment that you specifically not considers as money in the bank then inputs like that are time related investments. . . .and are no longer considered as a reserve. Admittedly this a matter of choice! You are the Manager.
Incedentially, both our ROTAC and ROTAI use the same calculation routine to calculate the time-averaged-input. The method is formally referred to as the Internal Rate of Retutn(IRR).
In Vortex AIM the main Interface Screen of the Beta version shows the ROTAC and the ROTAI options for the individual Funds as well as the Portfolio in which multiple fund can be grouped. Each fund is separately shown together with the Portfolio Results. By clicking on ROTAC-button the relevant information invested capital is shown, for each fund as well as the Portfolio as a whole. Clicking on the ROTAI-button shows the relevant information for the equity costs, in a similar way.
Typically, for a portfolio in which “things” change over time the ROTAI is much larger than the ROTAC because the yields-base is usually much smaller.
Thanks Clive for your additional Remarks:
In Vortex I believe you set the Portfolio Control equal to the stock value after each trade. Under AIM if you buy 10% more stock value the PC is set to an amount half as much of that trade amount higher. When AIM sells PC isn't reduced but remains the same.
Indeed Clive, that is correct. Perhaps some background on this is expedient as many current AIMers here are new at AIMing and have not been exposed to my discussions on it:
1 Setting the PC = New Equity Value is a consequence of my aversion to the concept that if and Engineer designed a Machine for doing something specific and then after the Machine is ready to go he routinely ignores its primary function then I conclude that the specifications are wrong. A Trade Advice is normally meant to be followed up and if a Residual Buy results at the same stock price as the Advice is executed I consider it a Design Flaw. So my primary AIM was to get an Advice Function that would give Trade Advise=0 at the Execution Price.
That is the Operational Logic of Vortex AIM.
That I called the Residual Buy the Lichello Flaw was a Bone of Contention for some AIMers . . .Good discussions followed and the flesh on the bone was chewed off in time.
I have in the mean time become accustomed to call the flaw a Feature, although I remain to hold on to my opinion that Lichello had no prior consciousness whatsoever that this Feature would emerge in AIM. It was certainly not a specification. . .Lichello had few specifications at all. . only some hunches that he wanted to use the equity Price Changes to trigger his Trading on the bare bone wisdom of Buy Low + Sell High, and that the only market certainty is that equity prices would go up en down frequently. . . . .. . . .most of the time.
I have Read the 1977 Edition of Lichello’s book intensively. . .I was hell-bend on going to make at least 1 Million Canadian Dollars with AIMing . . . I had already read The Monet Spinner . . . and I remember well the "struggles" Lichello went trough in his effort to find what he was seeking. . .The Licence Plate with the 2X in it gave him the hint as to what to do, but before that he had settled(as starting-point for his “scheme”) on this Trade Advice Function:
PC2= PC1 + Buy
but he was very frustrated to discover cover that if prices dropped he saw his Reserve vanish like a Snowball in Hell, like in this Example:
Capitalization = 2000
PC1 = 1000. . .V= 1000
20%
Buy1 = (PC-V)
=(1000 – 800) = 200
Reserve =800
PC2 = 1000 + 200 = 1200
V2= 800+200 = 1000
20% drop
V3= 800
Buy2 = 1200 - 800 = 400
Reserve = 400
V4=800+400 = 1200
PC3=PC2 + 400 = 1600
20% drop
V5=960
Buy3 = 1600 - 960 = 640 <-----Short 240 already for the 3rd Buy !!!!
Effective Share Value Loss = 48,8 %
This bothered Lichello a lot. . .his idea had created a Cash Burn Rate that wiped out his 50% initial Reserve in a jiffy. . .and he lay awake over it (at least so he wrote something to that effect). . ."How do I get around that problem???" he asked himself, and for some time he had no answer, until one day he saw a licence plate on an old car in barn on a farm someplace, with 2X in the number, when he was travelling, and from that 2X he saw the solution, as if by Devine Inspiration, in a flash(so he wrote) that his Buy Update was 2X too large, so he decided to update the PC with 1/2 Buy and that would give him a smaller PC2 and a smaller Buy2 and would leave hum with more Reserve! . . .Bingo! . . .
He could still buy equity after an even deeper price drop would occur!!! Lichello had found his Cash Burn Brake!!!!
The real essence of this however that his Original Residual Buy. . .Original Sin ????. . . . was very large indeed and THAT was the Fly in his Ointment!. . . Lichello did not jump up and down at the discovery he had created a Huge Residual Buy right from the start of his tinkering (as he called it) . . .He did not at all discuss any Residual Buy at that time in his book, nor later, at least not under the name Residual Buy.
After he had created. . . I give credit where credit is due. . . his PC2 = PC1 + ½ Buy Lichello was a happy as a pig in a Barn Yard Mud Hole. . .He had found a neat way to keep MORE money in the Reserve and started to set up his AIM System and began various trial runs.
To Lichello’s dismay the Cash Burn Rate was still too high to his liking. He pondered about this a lot in order to find a solution for it. In all this he had become so happy about his 2X - Revelation that he declared it Holy. . . .ponder ponder ponder. . .”How to Temper the Reserve Erosion without killing that Holy Thing?” . . .It did NOT cross his mind that he could use a different PC-update factor than the 1/2 to get a lower Reserve Erosion Rate. He did not, for example, use this:
PC2 = PC1 + 1/4Buy . . .or perhaps
PC2 = PC1 + 1/3Buy
No, it did not occur to him, for as I remember nothing of the sort in the book.
Lichello decided to invent a Safety Factor on the Buying Rate: “If I reduce the buying by a bit more then the buying should work out just about right. . .too much tempering is no good for it, as then we miss the boat when prices rise again”. . .That is generally how Lichello told his story about it and how he came op with his 10% SAFE. . .still a very interesting development. . to say the least.
Behold, The Lichello Buy Algorithm
Buy = (PC-V) – 0,1 Buy
I maintain that The Residual Buy, as it eventually remained as a Feature, was not an intentional design specification that Lichello had in mind. His Original Residual Buy was also Feature, but a disastrous one at that. Lichello either looked at it and may have excepted it as a little flaw in his Holy Buy Function. . . .in the spirit of Nothing is Perfect . . .or he never saw it until someone told him about it . . .and at a later date, when he was confronted with it, he sort of explained it away in a manner that it looked like is was a good feature, because it produced the Brake on too rapid a Cash Burning for his original Buying Function.. . .I can live with that.
On the fact that after a Sell Lichello did not update the PC I understand it as a Brake on Equity Selling in the spirit of keeping the Investment Base constant ( never sell more that the constant Equity Value you started with, and retain the Equity value after you have reaped some profit. . .no bone of contention on that!
2 After I had eliminated the Residual Buy Feature of Standard AIM and got PC=V after every Buy, I had achieved the following
PC2=PC1 + f* Buy. . .and Buy = (PV-V)* 1/(1-f). . . .with f being the variable Buy Aggression Factor.
Interesting to note here is that the PC-updating PC2=PC1 + f*Buy is precisely the solution Lichello missed for finding effective braking on the Cash Burn Rate for the value of f=1 that he used originally. He settled on his Holy Update Number f= 1/2 as Brake#1 and when he found that the buying rate was still too aggressive he invented SAFE*V as Brake #2 to solve his problem!. . . .In Engineering we call that. . . . ehhhh. . . .Fudging
Why did Lichello use 10% as SAFE? Why not 11,4 or 9,345?. . .He could just as well have used a variable f instead of 0,5 for updating the PC, and then he could have dispensed with the SAFE altogether and he could have use the simple Function Buy = (PC-V). . .period !
In any case I have decided that for the Selling I would use the same Trade Algorithm
Sell = (PC-V)* 1/(1-v)
PC2=PC1 + v*Sell
And here too PC=V would always come out of it, IF the Sell Advice would be executed.
Remark
With a consequent execution of the Vortex Trade Advice PC=V is the formal result. If however one would decide that the Advice would not be appropriate. . .for what ever reason. . .then the investor could execute a smaller or a larger trade. . .No problem to do that! Vortex would respond with a Deficit Trade Advice. . .simply reminding the investor that in order to follow the Algorithm the trading was not completed. The investor gets the opportunity to alter the Trade Aggression or to wait for the next price change. If he does that then the Trade Advice would be larger by the amount of the Deficit Trade Advice. This is similar in character to the Lichello Feature, except that in Vortex it is a specific result of NOT executing the specially designed Trading Function that would purposely give PC=V.
As Vortex is constructed I have intentionally removed the Deficit Trade Advice from the program and programmed in the PC=V after a Trade. The rationale for this is that . . .If the investor had a good reason to judge the Trade Advice is not appropriate then a Forced PC=V is the solution. He now has the Choice as follows: 1) The Trade Advice is shown that normally would give P=C after execution. 2) Should the investor decide to execute a different trade size then Vortex responds with PC=V as a forced alternative PC=V in line with the judgement of the investor. If this happens often then the investor can temper or accelerate the trading so that the normal Trade Advice is more or less in tune with what the inestor decides it should be. . .a conscious intervention becomes the basis for readjusting the Vortex Operational Parameters.
This gives me a very flexible Trade Algorithms that I can set separately and I could set the Aggression Factors f and v exactly as I wanted them to be.
Aggressive buying + Aggressive selling. . . .Profit Reaping on a Trading Range. . .for Tigers!
Aggressive buying + Conservative selling. . .Equity Growth.
Conservative buying + Conservative selling. . . For the Scared that like Buy & Hold
Conservative buying + Aggressive Selling. . . .For letting the Portfolio serve as an Retirement Income Plan
Also the f and the v factors can be used to adjust the behaviour such as Trading Frequency and Trading Magnitude in response to Equity Volatility changes. . .for a low volatility equity like SPY is now one can use a small Holding Zone and still trade quite frequently with good size Trades.
The one thing that with Vortex AIM does not occur automatically as yet is to achieve progressive Trade Size increases for trades moving towards the Outer Limits of a Trading Range. . in order to do that I would have to superimpose a Progressive Ladder Structure. . on the trading function, and THAT has been discussed exhaustively on the AIM Forum. I have not come to any easy automatic solution for that. I have struggled with that like Lichello struggled to invent his Standard AIM Algorithm. . .as yet I have not found the solution for it.. .. .
That is. . .I just got a Inspirational Flash on this . . .I have to let it sink in. . .I do NOT want to create a Vortex Flaw!
Vortex AIMers, this may be of interest to you:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=77296806
This is the start of an interesting series of discussions on:
1) Portfolio Review vs Trading Frequencies;
2) The fundamental differenced between Vortex AIM and Standard Lichello AIM...(AIMST;
3.1) For a parameter-setting that is identical for Vortex and AOMST at the start of the buying AIMST is a much more aggressive machine overall with a much larger Cash Burn Rate which may nee tempering;
3.2 In 3.1 the Buys with AIMST become larger as the equity price drops. This is Progressive Buying. . .running the Reserve to 0 fast;
3.3) In 3.1 the Buys with Vortex become smaller as the equity price drops. This is Contra-progressive Buying. . . allowing the Reserve to have money left for buying at even lower prices. . . This Vortex feature is like a Brake on the buying.
4) As may be obvious to any investor, when prices drop, delayed trading. . .concentrating the buying at the low equity price gives a much greater yield when the prices recover.
As usual such features can be a blessing. . .if understood and regarded properly. Also they can cause peril for the investor. One does well to consider these features of Vortex for what they are worth in order to let them work to your advantage.
Also read the AIM Post with numbers > 35618 to 35525 that pertain to these features on
http://www.aim-users.com
Regards,
The Vortex ROTAI Definition is to be changed
In Vortex AIM initially the Annual Yield for any fund has been calculated on the basis of the Time Average Investment (TAI) for the time variable inputs and withdrawals. In this the Initial Capitalization was not seen as an Investment in the equity. . .only the initial purchase of equity was considered an investment Also the cost of buying the equity is considered an investment . The basic principle of the ROTAI . . . .Return On Time Averaged Investment. . . .is very similar to the ROCAR as defined by Tom Veale and is used by AIMers to get a better feel of the real yield of their investment. . .The ROTAI specifically presents the yield on Capital at Risk. The Reserve is not considered an investment as it simply part of the investor's Back-up Assets. A Reserve only becomes an effective investment in case it is provided as security to Broker that has been given to the authority to spend the money as he sees fit or to cover for losses like they can occur in FOREX trading via a Broker.
In private investing such as AIMing the AIMer has full control over his Investment and can decide at any time NOT to Buy an equity. . .or to sell some of it. . .his Reserve is not Risk Capital until he buys equity for it. This is the fundamental basis for me using the ROTAI Yield in Vortex AIM. It has always been my principle guideline for having the investor call the shots and not let a machine take over. The Reserve in a Portfolio is not locked-into an investment.
For this reason I have decided to redifine the current ROTAI Yield Equation so that only the time averaged investments are calculated as the effective investments. The Reserve is regarded simply as a Private Buffer to buy equity up to the point that the investor is prepared to do so. Also in the past and in my book The Vortex Method I have advised Vortex AIM investors to regard the Reserve as flexible back-up money in the sense that one might add to it, or take away from it, as he sees fit, without in any way altering the equity holdings.
Recently I discovered that some time ago the ROTAI Equation had been altered to include 100% of the capitalization of the Portfolio. This means in effect that now the ROTAI works only from the point of view of the small scale inputs and withdrawals that are the time average component of the investment. . .whiping out the principle feature of ROTAI! In effect the ROTAI is now only marginally different from the simple ROI and I discovered this with managing the current Demo Run on SPY. The ROTAI yield in the Excel version I am using for Testing is ~ 18% while the Vortex Windows ROTAI shows only 6,5 %. . .which is about the same as the ROI using the $ 20000 capitalization as Investment while in effect the Time Averaged Investment is only about $ 6400!
The ROTAI Yield Equation will soon be resorted to its former glory . . .In this only equity investments, withdrawals and directly related equity components relevant to the acquisition and selling of the shares will be part of it, so that only the Capital at Risk is considered as the basis for the yield calculation.
In this it is interesting to note that for example in this scheme a dividend is considered as a negative investment. . .in effect it is a time-based withdrawal from the equity . . .it only affects the investment at the time it is received . . .In the ROTAI Equation the dividend makes the investment base smaller so that in this way the dividend as a time-based negative investment infuences the yield of the investment more realistically. Only in proportion of the time the dividend has entered the portfolio does it participate in the yield calculation
If one would simply add the dividend to the Reserve it manifests itself as simple Profit, and then the dividend amount is effectively assumed to have been paid out at the without regaqrds to when it was paid out. This inflates the ROI unfairly. In the ROTAI calculation the dividend accrues its effect only in proportion of the time it has been part of the portfolio.. . .It is more honest yield. See the example:
Profit 100 + 10 Div = 110 total profit.
The 100 profit is simply profit, assumed to have been there on Day 1 already!
Investment on Day 1 = 200
Dividend was added on Day 300 of the year with 365 days in it
ROI Method . . . . . Yield = 110/200 for 1 year = 0,55 or 55%
ROTAI method. . .. Yield = 100/{[(200*1 - 10*(65/365)]/365} = 0,5045 or 50,45 %
Because the dividend is a profit component that has been in the portfolio only for 65 days its effect is that the yield is much smaller than with the unfair ROI Method.
If you do not see this then think of the case in which de dividend would be paid out on Day 366. . . .a day after the Year End Run is evaluated. At that time there is no dividend and the ROI = 50^% just like the ROTAI would be!!!! This is the reason for using the Time Averaged Investment Method. . . .It gives an honest Yield Percentage
Information on upcoming updates on Vortex AIM
Cash Limiter Vortex Version
Recently I discovered with a Test Portfolio that in some cases the Negative Reserve Preventor (NRP) does not always prevent buying shares when the Reserve for a fund is too small to execute the Advised Buy. This brings the fund unintentionally into a position of having used “borrowed money. Although in practice such a trade would not be executed it is the specific purpose of the Standard Vortex Program to prevent making trades with “borrowed money”.
The cause of this error is as follows:
In any Portfolio one can enter as may different type of equities as desired. For this up to 5 bank accounts can be used per Portfolio for keeping the Reserve and for Fund Cost Accounting so that Equities Management can be grouped in desired categories. . .For example Precious Metals and another types like Oils, etc. in a Natural Resources Portfolio. This way one can have 5 different type of natural resources grouped in one Portfolio. Each Fund is singularly fully represented as a separate investment, in regards to all relevant investment aspects such as among others, Yield, and these are summed-up to form the Portfolio Total Representation, as if the Portfolio is a single investment.
This worked fine except that till now the testing for sufficient cash to buy(or not to buy) has been done on the Reserve Total per account, rather than on each fund. This has allowed the possibility that some funds can go to a negative Reserve if the Account Balance is large enough not to go negative. This is not as intended. It would work fine only if a Portfolio has two funds that have negative correlation. . .one fund sells while the other buys.
Vortex Aim will be modified so that the NRP Test will be carried out on the Reserve per Equity. This would prevent the allocated Reserve for a fund to become negative: The Buy will be blocked until enough money is available for buying.
Yes Marc,
The amount is € 100
My PayPal name is Vortex Engineering
Email = eng@vortex.[***]demon.nl
Remove the [***] from the e-mail address. . . I am told that this[***] will fool Robot Scanners
Regards,
Hi Conrad
what is your paypal payment address account?
The amount is 100 euros?
Marc
Hi Marc,
Referring to your Enhanced AIM using a leverage factor:
Perhaps it wasn't meant to work with such an aggressive sequence as lichelos 10-8 etc.
That is correct!
Just to remind other readers on this Forum of the Vortex idea, I re-iterated it here:
As I showed the 2X-Leverage to creates a too great a Cash Burn Rate and a too rapid Share Sell Out.
My Vortex Method to eliminate the Lichello Residual Buy was not primarily directed to create great Trading Aggression but to find the correct value of the f-Factor in the AIM Function
Trade = (PC-V)*M to get the Residual Buy Advice to disappear
This specifically was used in the AIM PC-Update Formula
PC2=PC1 + f*Buy . . .the f in Standard AIM = 0,5
What resulted from this is that M= 1/(1-f) and that allowed me to Introduce the Aggression Factors for Buying fb and for Selling fs.
This resulted in an opportunity for very effective Method to make the Buys and the Sells as small or as large as one would want them! One can trade very conservatively this way eith a variable f-factor and even actively trade on funds with very low volatility and still get desired frequent trading action!
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On your Vortex Registration Order : If you used the Order Form then The Code will automatically change your Vortex Demo to a registered version after we get payment confirmation.
What you have to do yourself is to activate the PayPal Payment at PayPal. . .This does not yet occur automatically. I might need to update the Vortex PayPal Account to have this happen automatically.
We will wait for the Payment. Remember. . .the payment is for the Registration Code. . .The Vortex Demo Version becomes then a Registered version.
Regards,
Hi conrad
thanks for the analysis.
Perhaps it wasn't meant to work with such an aggressive sequence as lichelos 10-8 etc.
Please look out for my email address as I registered on your web site to use paypal to purchase your program.
I believe it is about 126 us dollars .
My PC computer is probably loaded with spy ware .
that is why I'm doing it in a round about way.
Thank you
Hi Marc123
I just spend a long time writing up my reply and the result of some testing and then I pressed the wrong button. . .Everything gone
I just want to mention this:
1) I have assumed for the AIM Adaptation that you suggested:
Buy = 2*{(PC-V)-0.1*V}
Sell= 2*{(V-PC)-0,1*V)
PC Update after a Buy:
PC2=PC1+ 1/2*Buy
PC not updated after a Sell
2) I have made up the AIM Algorithm like that but the results make no sense. The Buying and selling are so aggressive that first all the Reserve is depleted long before the price of $4 is reached, missing buys at the Dip prices $ 5 and $ 4
3) Then the Selling starts aggressively so as to sell all the shares as the price hits $ 10 again
I spend lot of time modelling this but I gave up as it makes no sense.
All I need to know is
A) That the model you referred to does not go into negative Reserve values
B) The First Buy at $ 8
C) The First Sell at $ 5 after the price hits $ 4
Until then I can not compare anything.
Regards
Hi Conrad
Im not the original author of the enhanced method. It was the IT guy at work . He got me interested in aim and such. He left a while ago when we down sized . To give credit due his first name was Paul.
If i remember correctly it was 50/50 cash stocks . A 10% safe. No minimum trade size. classic aim.
His enhanced method was to divide the resulting buy or sell amount by .5 to enhance it. He said it was like having virtual shares and diminished lichellos flaw. Again it is from memory . i.e if amount was originally 100 in aim . The resulting new action amount is 100/.5=200 dollars.
I never saved the results of various runs . I will report back when I do.
Thank you
Marc
Marc, just for a reference here are the Results of the Trades in VORTEX Run 1 that gives me a PV-value of $ 16941 just as you got for Standard AIM:
Step--------PV-------PV Growth Relative to Staring Capital
0 ----- $10.000,00 ---------0
1 ----- $9.000,00 ---- -1000,00
2 ----- $6.989,30 ---- -3010,70
3 ----- $5.771,41 ---- -4228,59
4 ----- $7.403,95 ---- -2596,05
5 ----- $12.301,58 ---- 2301,58
6------ $15.566,67 ---- 5566,67
7 ----- $14.969,54 ---- 4969,54
8 ----- $13.768,90 ---- 3768,90
9 ----- $13.041,67 ---- 3041,67
10 ---- $14.016,50 ---- 4016,50
11 ---- $16.941,00 ---- 6941,00
Rendement ROI = 69,4 %
Time Averaged Investment SUM Ci*Ti/Time = TAI = $ 5755 (Capital at Risk)
Rendement on TAI = 121 %
In this case the 3x negative Cash positions reflect Borrowed money. These negative amounts have been calculated into the ROTAI Formula as investments(Capital at Risk).
It does not mean much as only Step 0 and Step 11 are identical. It does show however that the trading follows a different Path. Possibly one can extract some information from each position relative to Standard AIM that is different, if one takes the time to analyse it.
Marc,
On you Test Case "Lichello Series: I am assuming you start with something like this:
Total Cash + Equity = 10000
Cash = 5000
Equity = 5000
Holding Zone Buy & Sell = 10%
Minimum Trade = ??????
No interest on Reserve
No trading costs
Reserve is let go negative ??????(1)
One Year Run Time
-January 01- 01-2011: Price= $ 10
-December 31-12-2011: Price= $ 8
Run Time in Days = 365
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(1) For my First Run I used The TurboVest Model so as rgar Negative Cash was to be allowed and I simulated the Standard AIM Portfolio Value just For Fun for the PV = $ 16941 like you got for the Standard AIM Run. In order to do this I tweaked the Buy & Sell Aggression Factor to be exactly equal at 0,26571, as I have no other way of setting the variable parameters in VORTEX ANM. So 1st Run is my initial Reference Point ehich is identical to your Reference Point.
In order to compare VORTEX AIM with what you have done with your adaptation I must know your operational details for matching:
* Did you use a Minimum Trade Size? If yes, what is it?
* Do you allow Reserve to go negative? . . .Yes or No? I had 3x a negative Reserve @ $ 759. I do not understand this for now as the price jumped from 4 to 5 to 8 and that is more than 10% so I have to check this out yet
If you used no negative cash then I can use the No Buy Condition if there is not enough Reserve to Buy
In order to compare your Run that ended up at $ 21781 I must know the following:
1. The Size of your First Buy at $8
2 The Size of your Forts Sell at $ ?????
For matching my Starting Condition to your Run.
This I need to know if we sell at the same price. . .If we do I can match it for the Selling. If that happens then we have an identical starting condition and we can compare the result.
If you get a First Sell at a different price then it is not possible to get an honest match. All I can do then is to approximate use your First Sell information so that my First Sell has an identical impact on the PV-change. at that same date. Such a Sell is a fudged one for me.
It would not be a 100% fair comparison but that can not be helped. . . you can not always have an identical start if the Buy-Sell Function is Different.
I will wait for your response.
Regards,
Hi Marc,
I have an appointment in 1/2 an hour. . I will get back to it later.
One point to make is that with a somewhat different Buy - Sell Formula there is no way to compare exactly for how to start my parameters other than to set
1 Set Holding Zone the same as you do. What did you set it a?
2 The Min Trade amount the same. What was yours>
3 Then I can scale the aggression factors so that my First Buy and the First Sell are identical as yours.
Other that that there are no comparative settings.
50/50 Cash/Equity
Regards
Hi conrad
I want to make sure what I do matches classic aim and what I do to enhance it matches what yuou get.
IIn a series of 1 year twelve inputs of classic lichello 50% cash reserve at the start with the funds split 50% between stocks and cash reserve. 10 % safe
10,8,5,4,5,8,10,8,5,4,5,8 10000 dollars becomes 16941 dollars
when enhanced it becomes 21781 dollars in what i do to eliminate what I think is the lichello flaw. What do you get?
marc
Marc,
If you eliminate "The Lichello Flaw" in the Regular Lichello AIM then how did you modify the Buy Function? Did you keep the SAFE settings the same?
How did you integrate this into the standard AIM Buy Function?
Regular AIM Buy = (PV-V) -s*V<--------------s is the Safe Fraction
If now you use (1/(1-f))*(PV-V)-s*V, <------For f= 0
it is the Regular AIM Buy Function. So, for any value of f>0 you will get a larger Buy . ..BUT then the Regular AIM will still give you a Residual Buy because of the “ –s*V” factor .
I do not understand how the Buy Formula was changed in your tests.
It stands to reason that for a fund that cycles on a horizontal line the results are higher, but have you tried it on a series of real stock prices that are NOT selected to have a particular trend?
What did you actually Test?
Hi conrad
Thank you for the information.
I ve tried running sample runs of the Lichello anomaly . If you eliminate it, the outcome of a sample run seems to be higher. I have in the past purchased chapter your english edition of chapter 6 .
Thank you
Marc
Hi Marc123
Just an update in the registration procedure. This is now much simpler!
In the Vortex Window Demo there is a Registration Form under the Help Menu that you can fill in and submit.
You then get an e-mail with the Registration Number after payment is received. That number you enter on the Registration Window and then the registration is complete!!!!!!!
http://www.vortexcw.nl/vortex/index.html
VORTEX AIMing is a discussion and promotion platform for the VORTEX Automatic Investment Method and for the sale of the Vortex programs and booklets and services. I created the VORTEX Method after reading about anAIM-like investment technique known as theMoney Spinner, a name coined by Canadian investment expert Chuck Chakrapani in 1980. Thereafter I read How to make a million dollars. . .Automatically by Robert Lichello-1977. The Chakrapani method is in virtually identical to the Lichello AIM.
For a useful start on the Lichello Standard AIM there are spread-sheet available that shows you the basics of AIM(you do not have to read any difficult books if you want to invest with this basic method right away!):
http://www.dofusdaddy.com/aim_internet.htm
The Money Spinner presents an investment technique that has similar features as the Standard Lichello-AIM. These investment techniques are specifically created for investors that are not yet very experienced and want to be conservative with investing as they venture into the investment world. The VORTEX program belongs in the AIM-family of Automatic Investment Management systems, a name coined by Lichello but now-a-days it is used by various people that use AIM-like investment techniques. The Vortex Method is a neat derivative of the Lichello AIM in that it 1) provides for conservative(safe) trading as well as for aggressive trading and 2) eliminates what I call "The Lichello Flaw " in regards to Lichello's Residual Buy Advice that is given even if the share price is identical to the share price at the previous trade. For more information on standard AIM contact the AIM-website of Tom Veale:
http://investorshub.advfn.com/AIM-Users-Bulletin-Board-(AIMUSERS)-AIMUSERS-949/
with many interesting links on the topic.
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New for Dutch Readers
It is a detailed presentation prepared for my attendance at the Dutch HCC Computer Club Investment Symposium in Geldermalsen:
http://www.beleggersonline.nl/index.php?option=com_content&task=view&id=220&Itemid=9
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In this text: VORTEX means either any one the VORTEX investment technique or any of the the VORTEX computer programs - for Excel or for Windows.
The unique features of VORTEX are:
1 The trade Multiplication factor (M) sets the trade size relative to a Portfolio Reference point (PR) based on equity price changes after an initial trade. For an initial trade you simply select the amount of money you want to start your Investment with and the amount of money you want to keep as a Reserve for buying opportunities. In VORTEX the Trade Size = M*(PR-EV). . . .EV is Equity Value (value of shares or any type of tradeable equity). . .The value of M (multiplier) is calculated by a buying factor Fb for and a selling factor Fs. These non-linear factors simply indicate how aggressive or how conservative the trading is carries out. Experienced investors could use very aggressive factors like > 0.8 but less than 1.0, while inexperienced investors should start out with with conservative factors between 0 and 0.3 or so. In case negative values are used the trade recommendations can be set lower than the minimum recommended trade so that effectively the investor carries out a Buy and Hold investment techniekque which is recommended if one suspects a long rising price trend.
With any setting of the Fb <1 the value of M can be varied from 0 (Buy & Hold) to infinity for Fb=1. For the recommended Trade Size =M*(PR-EV) the PR is a Portfolio Reference, (a sort Set Point as is used in control theories), or as it is usually called in America, the Portfolio Control point = PC, is the new Equity Value after any trade is completed and is calculated by the Vortex program. The meaning of this name is interesting: In control theory a System is controlled by use of a controller Set Point. . . it is the reference point at which the controller takes corrective action to maintain the system on its desirable operating value. In the an AIM investment system the PR (or PC) does essentially the very same thing: it provided a reference point from which corrective action is executed to maintain the investment strategy on its growth-path. In investing it is usual to have a target for the future. . .if you do not have "target" be careful when investing any money! Read the section below on FOREX Trading on the dangers of losing money easily.. ..Forex trading uses a very aggressive investment technique by means of a high leverage factor (buying a lot of equity with little money).
For technical people the PR is a very important concept and this is also the reason that AIM-like programs are referred to as machines or engines. . .they work like car engines that are controlled by the drivers: the Fb and the Fs in Vortex are simply activity factors that makes the Vortex Engine work like a Fiat Panda with a 300 cc engine (the Conservative Mode), or like a Ferrari with a 6000 cc monster-engine (the Tiger Mode). Essentially a high activity factor allows you to trade equity that shows very low volatility as if it was a volatile stock. . .Vortex thrives on volatility.
2 After any trade the Trade Size Advice is automatically set to zero because then PR=EV. . . .after you just have executed a trade it would be obvious that you would not want to trade again, at the same price! By setting the Fb for buying and the Fs for selling separately you can control your trade activity for Portfolio Growth (saving mode) or for Portfolio Wind-down (retirement mode) exactly as YOU decide it. . these are two of the targets of the four investments modes you should have in mind when you start investing, in order to choose between them! The other two investment modes are a mix of aggressive & conservative buying or aggressive & conservative selling. In the technical Pamphlet The Vortex Method these four investment methods are explained in detail.
A least one more obvious target is the "maximized yield mode" . . . this target achieves the greatest Time Averaged Return on Investment (ROTAI) . . .but it this is only to be recommended for equity that is rather safe as well as stable.
3 An auxiliary Vortex trading module TurboVest is available as an "add-on" feature for effective "cutting edge" investing using equity credit. This a safe technique of investing with borrowed money. This technique is applied only in a Bear Market. TurboVest is not to be confused with "margin investing" which is normally only used for Bull Market conditions. Margin investing can wipe you out is a flash if the trend suddenly reverses! Margin investing is only an option if you can be VERY sure the equity prices are not going to reverse before a certain Profit Point is reached. If you can not ber certain of that such a point exists stay away from marging investing! The Turbovest Method is based on the requirement that 1) you invest only in funds or in a currency that can not go to zero value en 2) that your portfolio has already acquired a considerable positive value. The method is based on a\using an internally created leverage that is based on equity credit. The Turbovest Leverage at most 10 that arises out of the intrinsic value of your portfolio is very moderate compared to the aggressive FOREX trade leverage factors of 50 or 100 that are typically used. The Vortex Turbovest Module with special instructions is avalailable at moderate extra cost and we recommend this method only for people that alreaday are used to AIM-like investing
4 An auxiliary Vortex installment plan module PremiVest is available for periodic Lay-Away-Investing . . . small investments. . .at regular or irregular intervals without necessarily starting with a larger initial investment. The tLay-A-Way entry-amount can be any amount that a fund lets you buy at very low trading costs. Very interesting for applying to Mutual Funds for which the trading costs are say 0.1 to 0.3 % per trade and minimum starting amounts of say € 20. These low cost funds are ideal for frequent AIM-like dynamic trading and especially for trading with small amounts. Obvious this is an investment mode created for people with little extra extra money but can "lay-away" small amounts periodically. The Vortex PremiVest is meant for people that might want to invest small amounts irregulary. . .thus when they get the extra money.
For Dutch Readers see how to orderThe Vortex Method book (Dutch only), and it's short English Edition(only the bare bones Details of the Vortex Method) and the Vortex Windows Program; the Vortex Excel sheets (for Back-testing and for getting Vortex AIMing experience), on my website's Order Form:
http://www.vortexcw.nl/vortex/index.html
Back-testing is particularly effective for finding the optimum values for the activity factors and the trading thresholds(minimum buys and price intervals). . . The limits within which no trading should occur- this is also called the Dead Band.If you do not understand any of this do not panic! . . .just ask me a question on this forum or on my e-mail and I will answer you immediately.
Power Point Presentations
Additional information on the Vortex Methode with examples are presented.
The Power Point presentations are available in Dutch as well as in English. Direct downmoading information(to come). Englisch version viae-mail : eng@vortex.de[remove red text &brackets]mon.nl.
Right now you can request the Dutch Power Point document via the DOWNLOAD link in : http://www.vortexcw.nl/vortex/index.html
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The Vortex FOREX Method (Excel as well as for Windows ) has been adapted. The program manages the Portfolio Value in terms of currency in which the foreign currency pairs are bought. . . .In Excel this can be any currency and in the Windows program this is Euro or US Dollar. The "pip" definition for triggering trades can be used but also one can retain the percentage rate change as a trade trigger. The programs provides an input for the desirable FOREX margin leverage and an extra variable parameters, and offers the same unique features for variable trade multipliers for buying as well as for selling as in the standard Vortex Method program. . .a total of 6 variables apart from the standard Vortex features this gives:
-trading cost fixed fee...enter as applicable. . . often this not applicable for online FOREX trading but is relevant for other equity trading: set to 0 for Forex trading;
-trading cost: fee as a percentage of the trade amount . . .enter as applicable;
- setting the Reserve fraction that is to remain as a Reserve Buffer preventing the Reserve to go all the way to zero (Portfolio Value Factor);
-setting the buy/sell holding zones for the trading below which no trade is advised; - the Cash Equity Ratio to start a portfolio;
-interest received on Reserve Capital...enter as a simple interest for Credit Balance and for Debit Balance for the TurboVest Option. The program compounds the interest automatically on each trading event and adds it to the Portfolio Value;
-Setting the margin percentage for margin investing
The leverage or margin percentage determines the amount of foreign currency that you can buy with 1 unit of your account currency. This ratio is the Leverage or Margin Ratio.
In effect this parameter defines the percentage of the pre-financing the the Forex Agent provides. For example if you buy fan amount of equity for € 100 and the leverage is 100 the investor pays € 1 and the Forex Agent lends you € 99, frequently even at zero lending cost!!!!!
With the Vortex FOREX trading the Reserve(or Deposit to the Agent) is calculated on the inverse leveraged amount: For example id you buy € 100 equity your Vortex Reserve is reduced bu only €1 because € 99 is provided by the Agent. When a margin position is liquidated the net proceeds of the position are added to the Reserve just like in ant other Vortex Sell. The net value of a margin position is called the Net Asset Value of your position. As the currency value rises or drops the profit is added to the Reserve so that the Reserve is an actual indication of the Deposit of your account. As you are trading you can see directly the margin you have on you account for buying foreign currency as well as the point at which you will get and automatic Position Closure so that you can prevent getting a Margin Call from your broker. . .this is your broker warning you that unless you deposit extra money into your account ALL your positions might be closed very soon if the equity value drops further.
For a more instructive explanation on FOREX trading see for example this Link:
http://fxtrade.oanda.com/tools/fxcalculators/units_available_calculator.shtml
The Vortex FOREX Method version is available as a Trade Limiter Investment Machine(TurboVest) as well as the Standard Option which prevents a negative Reserve. . .If the Reserve approaches 0 the Trade Advise is zero in the Standard Vortex method. With the Turbovest Method you can set the Portfolio Value Factor in such a way that a certain amount of Portfolio Vaue is protected so that you will not get a Trade Advice to get you in Negative Portfolio Value. The Portfolio Value Factor can be set to trade all the way down to zero or to leave a residual amount of value available at all times.
The Vortex FOREX TurboVest Method is actually an Equity Credit Trading Manager. . . It allows trading up to a specified Equity Credit Level ( ECL). This limiting amount can be set to zero ( No equity credit buying) or as high as you can afford it). The Turbovest Method is NOT a margin trading method. The equity credit arises from your own equity in your portfolio. If you have no equity to start with you can not invoke the TurboVest Method. The net value of your portfolio must be greater than zero in order to use the TurboVest Method. If you use the TurboVest method in combination with the Margin Trading method then your equity credit can be used to increase the margin deposit so that you can keep buying at a deeper equity price dip.
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Price information for Vortex programs and booklets is available on the Order Form Page on http://www.vortexcw.nl/vortex/index.html
All prices are listed in Euro but you can also pay in Dollars, or even in other currencies, but you have to provide your own exchange rate conversion and transfer cost figures. Paying via PayPal is the preferred method from foreign countries as the currency conversion fees are low. Paying with Euro currency to my bank account in The Netherlands is also possible but you would have to ad € 16 extra per payment. for the bank charges.
My PayPal account name is C.L.H. Winkelman and/or Vortex Engineering. The e-mail address is eng@vort{remove red text & brackets}ex.demon.nl
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Conrad L H Winkelman
Vortex Technologies
Prinsessenweg 31-A
3433 AB Nieuwegein
The Netherlands
E-mail: See above and also Home page on http://www.vortexcw.nl if you are interested in other things I do or did.
Vortex Windows Program Website:
http://www.ckweb.nl/vortex_us/index.php Free Download Standard Vortex Method for 30 days. . . full capabilities. For the Forex Version request via e-mail.
Remark: VORTEX is a bilingual program: English & Dutch for all the user text . Simply select the language of your choice during installation or in the pull-down menu ----> Options/Settings and from there selecting the language of the interface and the Reports is explained. For free downloading the latest 30-day complete version of Vortex Version 1.26 click on:
http://www.ckweb.nl/vortex_us/index.php
In VORTEX it is possible to download various equity prices from the USA and/or European providers. You can inspect charts of the Portfolio Value and Share Values. You can use the full program for 30 days at no cost to you.
The VORTEX Help-File is formatted in Windows Style. Changes are being implemented as the development continues and you get a message as a new version is available.
Excel basic-versions of Standard VORTEX are available. They show the principal features without all the portfolio features of the the Windows version . The cost of these Excel sheets are €25 including Order Processing costs but not exchanging foreign currency payments to Euro. These programs an be used for testing strategies of Portfolio Management so that the Activity Factors, Trade Dead Band, and the Cash Equity Ratio (CER) can be optimized on the basis of anticipated share price swings or price histories. Also the actual Return On Time Averaged Investment (ROTAI) is calculated on these Vortex Excel sheets(See Note below):
a) The Turbovest Version (can use cash positions for money borrowed on Equity Value). The Leverage is typically 5.
b) Cash Limiter Version(Cash can be limited all the way to 0). This reduces the value of the trade executing when the Reserve gets close to zero..
FOREX trading programs cost € 60
Order Form on:
http://www.vortexcw.nl/vortex/index.html
Updated: March 31 , 2015
NB: The ROTAI method for return on investment calculation is used instead of the simple ROI-method (which is based on the assumption that at intermediate moments capital is added or withdrawn from the Portfolio, and is really only representative for a Buy & Hold investments for which the investeg capital does not change in value, and for which there are no trading costs involved). The ROTAI-method accommodates intermediate Buy & Sells to calculate the real ROI of the average invested capital over time. Investment additions or withdrawals are calculated on the actual dates the trades are executed and interest gained is added or subtracted if paid (for borrowed money, if applicable) as this is entered into the VORTEX registry. Likewise all costs and investment earnings are included in the ROTAI-calculation so that it gives a true representation of the yield on an annual basis.
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