is retired now but still kicking like a horse!
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Hi LC, I have read the link a bit:
The funds mirror daily returns, not long-term performance, which can make them even more difficult to fathom.
Quite true, but at least if one understand the underlying equity there is a fair chance of making dough on them. It comes down to studying the equity one is investing in and then investing will be effective, on the average.
"If you want to gamble, go to Vegas — you'll have a better time," says Dan Calabria, author of Mutual Funds Today … Who's watching your money?
This guy Dan Calabria is a ding-dong! He probably doesn't dare to invest himself, so he just writes books and spouts out nonsense ( I hope I am not going to have to eat my words on this!).
If you go to Vegas everybody is watching your money. . .to take it away from you! . . .and they usually do! There is little to fathom there. . . unless you want to spend a lot of time understanding the games that are played there and having to pay the piper as you learn.
My cousin told me 50 years ago "Its easy to learn how to play the billiard game well. . .it just will cost you a pocket full of dimes and a lot of time while you drink a lot of beer". . . to play a game in the local Cafe then cost 1 dime, but I was too young to play, so I bought an ice cream instead, with the only dime I had.
Nothing has changed since then(except the price per game and now we can choose pool or snooker as well )and more so it is true for investing. . .hundreds of instruments to choose from.
I have now started to invest again. . . small time though. . .to learn the game a bit better (swimming the river). . .a few days ago I knew nothing about turbo's and now I am getting the hang of it. . .a bit. . . and possibly having to spending a pocket full of Euro's instead of dimes. Going to Vegas is boring I think. . a lot of noisy drunks to content with and girls that look for a free ride. . .is THAT fun? For me it cost me a bundle to go there before I even get a chance to loose the rest of the money I have.
My turbo EUR/USD Short, 1.448 ran up from -100% ROTAI* (annualized) on the day I bought it(€ 10 cost to buy)to 5335 % 1 day later! One day after that it dropped to about 1000% but rebounded to 1780 % at closing time.
My other investments are Flat Liners. . .creeping up in value, but no faster than a snail in a deep sleep .
The only thing I have to do now is to fathom how the gears of the EUR/USD turn so I will have some clue when to get out before the Stop-Loss does it for me. . .for now I am ahead in this game, and as I fathom it the EUR/USD will creep down a bit more for a while yet. . . I do not yet fathom it a lot. Maybe not at all as yet.
I will sleep as a baby tonight. . . .as an old baby that is
_________________________
* Of course I realize that the ROTAI figure means nothing much for running only one day, but the 22,3 % ROI for one day was exciting nonetheless.
Update on my FX investments and Funds
1 Euro-USD Turbo Short Stop-Loss 1.448
NL006342438/85246
Amsterdam Euronex Market
http://www.abnamromarkets.nl/NL/Showpage.aspx?pageID=35&ISIN=NL0006342438
120 units bought in two stages(Aiming Method). The price dropped from 3.28 to 3.08 and has risen to 3.97 at 17:22. Profit at the end of the day = + 22.3 %(8140% annualized).
I still miss some understanding of the "mechanics". I have to reason this out.
Reference Rate = 1.431
Financing Level= 1.477
Originally I figured that the the Turbo Short was related to the value of the USD an I could not figure out that the Stop-Loss(SL) was at 1.448. Now it appears, from some logical thinking, that the this turbo is (obviously) referenced to the Ratio EUR/USD. When this ratio drops I make money. When it rises I lose my shirt. It makes sense now. . . a little thinking helps!
The fact that the turbo price is rising means possibly that the Dollar is increasing value and that the Euro is increasing in value as well, but at a lower rate than the Dollar! . . .both currencies are then moving up in price relative to other currencies!
It could also mean that the the Dollar is dropping in value and that the Euro is dropping in value at a greater rate. Either way I make money.
Then it is possible that the Dollar remains at constant value and the Euro loses value, or that the Euro remains at constant value and that the Dollar gains value.
In the end it means that as the EUR/USD Ratio rises to 1.448 my position will be terminated at that point or close to it. Should the termination be executed at exactly 1.448 the rest value of the turbo is 0. . .if the termination occurs at say 1,445 I have a rest value. If the termination occurs at say 1,45 I will have a little debt to pay.
All in all with this turbo I have to hope for a development in the world for which the ratio EUR/USD will deteriorate so that the SL will not be invoked. . hoping for a recovery in the USA and a collapsing economy in Europe. . .Maybe I should wish for something more uplifting: . . . maybe that in every country economics will improve. I think I shall wish for that!
When I listen to the various pundits in the US en in Europe I can interpret the "facts". . .whatever they are. . . both ways.
I see gold linings on the dark clouds. . .other than that I am almost blind . . .I do not understand the market at all but usually I have good gut feeling based on common sense in relation to what happens and the tone market chatter. I hate charts.
I recently read about 10 Old Rules from Bob Farrel of Merrill-Lynch for considering when one is investing. A few of them these he has stolen from Tom Veale as well as from my son Damian when he was 5 years old: Buy Low Sell High: it means that most smart investors get out of the market and into cash or something equivalent when prices are relatively high and at most keep a part of their equity active near a top. It appears then that most investors are not very smart and rush to buy equity when the experts think the prices are going to drop soon.
Then Bob Farrel gives another gem of wisdom away: when the experts think that the top is almost reached and are going to drop soon then the prices keep rising far more than experts ever expected and that is exactly what the "dumb" public had hoped for. As a consequence of this continuing rise increses the longing for higher prices yet, and the public keeps buying more and more while a few are "slim" enough not to be too greedy so they get out in time and are considered smart while in fact they were just lucky.
Then something peculiar happens: At the point all the experts become speechless en have nothing more to say at all an eerie silence falls over the market place. . . no one dares to predict anything. . .the chatter disappears except for a few whispers. That is the point prices are at the top and will start dropping at a fast pace to a deep dip.
I guess all I have to do is keep listening to the market chatter and when it begins to die down then sell of all my Long investments and dump the cash in Short investments.
At the moment with my jump into the river I have had some luck: I am not dead and actually I am swimming a bit. I thought the Dollar was going to fall but instead it may be on the rise for now!
I guess I an just lucky at the moment.
2 JPM Latin American Equity Fund. From 16.52 to 16.71 = +1.15 % per 2 days.(210 %/yr)
3 Fidelity Japan FA. From 0.96 to 0.97 = +1.04 %(380%/yr)
I am on my way to riches and rubbing elbows with Warren Buffet, but I have to hurry. . . he might soon be dead!
On account of my dive into USD Trading in the previous message I have fired-up the Turbo Boiler and the pressure is rising! I have provided some extra information on my TurboVest Method and some history to get my Forum Fired up a bit more. For anyone that knows something about FOREX I invite you to make suggestions for improving my limited know-how on the subject. . .or to shoot me down if you think what I say it just verbiage:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=40886677
Anybody may jump into the fray.
The Vortex Forex Excel software. . .FORTEX maybe????. . .is still being developed to better match the needs of the FX trading. Right now some corrections are made to more correctly represent the Reserve so that it is clear how much money is available for buying extra currency when the exchange rate drops. Also the Vortex Virtual Reserve. . the actual leveraged amount that currency is bought (or reserved) for is a redundant column. . the FX trader does not have to concern himself with that. . .he simply wants to know how much currency his actual reserve can buy: that is X*Reserve minus account costs and minus trading costs, if applicable.
Also at this time I use a mid point Exchange Rate rather than separate buy & sell rates. Also I need yet to incorporate the lock-in of profits mechanism. If a currency rate rises that at a certain "pip value" the profit is locked-in (ClickPoint) but the currency on account is not sold. I want to include the ClicPoint in the software. At this time the Vortex Sell-Advice is simply ignored and the profit keeps rising with the rising rate. When the investor finally liquidates his position a Sell is activated in Vortex on account of the information from the real FX Account.
This means that after the currency drops in value through the ClickPoint I need to somehow program this into the software. I suppose I can do this by simply carrying out a Full Sell. . but I do not yet know if FX Brokers actually liquidate the position at that point. . .I would argue that I should not liquidate the position but let the account run its course. . .Vortex can not create a loss IF the FX Broker locks in the profit at the ClickPoint. So, letting Vortex run with dropping value allows for extra buying at new lows, even one could use the TurboVest Method to buy extra currency if the price dives deeper. This then creates the opportunity to invest the locked in profit at a new low in currency value and one can activate Vortex "on the run" without having to start up a new AIM-Machine.
Does anyone have any comments on this, from the point of view of actually needing an AIM-Machine running parallel with a real FX account. . in other words, would anybody be daring enough to use a FX account for a "contrary investing" method like AIM and specially the TurboVest Method?
I would say this is quite OK if the leverage is not very large and/or if one already has a good profit locked in, then the TurboVest method well be ideal to buy on a dropping currency rate. . .the rate will of course come back again in cycles!
At the moment I am experimenting with
1 EUR/USD Turbo Short AAB 1,448 for riding the Dollar Diving
2 USD direct currency trading using TurboVest via a USD Account at my bank.
Also I have bought the following:
3. 100 x Fidelity Latin American Equity Fund at € 16,52. . .it is in a rising trend.
4. 2000x A Japan Mutual Fund at € 0,96. . great for trading as a Penny Stock. . is also in a bit of a rising trend but the low price makes it ideal for pseudo high volatility trading
I will keep you informed on the developments on all fronts.
Please note: I have coined the term TurboVest Method many years ago as a means for investing with a good filled portfolio during dropping prices. . .for as far as an Vortex AIMer would not have sold all his equity at a top position. So, TurboVest kicks in only after the initially allocated Reserve is used up: buying extra equity with borrowed money.
A the time I started writing my book The Vortex Method I knew very little about the real financial derivative markets “out there”. The name I coined came from the very root of the meaning of the name “vortex”. . . a rapidly spinning fluid or gas that under certain conditions would "suck up" any fluid or gas and particles into the core of the vortex where a relatively low pressure region is exists. . .identical as happens in a hurricane and in industrial cyclones. . . and not to forget, in tornados. . .in which a "particle" could well be a house, or a 60 Ton locomotive!
The Vortex Methiod means that it "sucks" money from the pockets of the public (The stampeding Herd) when prices drop and dumps it into my bank account. . . like a hurricane sucks up water from the ocean and dumps it onto land when it hits a coastline, or like the locomotive that is "sucked up" from the rails by a tornado and dumped hundreds of feet away from the pick-up point.
As mechanical engineer I am quite familiar with turbo compressors and various turbo-machinery. . .I had an exhaust-driven turbo-compressor for fuel/air mixture boosting on my 1962 Corvair that I used to have between 1968 and 1975. That thing was a lovely small monster. I cried when it died in 1975! I saved the turbo compressor for many years but it got lost at some point
Rapidly spinning turbo-gas made me think of the name TurboVest Investment Method. . .for my Vortex AIM-investing with equity credit, for buying diving stocks and currencies: it is an accelerated way of making money with the Vortex Method.
Can you imagine my surprise and pride when later I read that the banks had created derivatives with the name Turbo? The creation of that name may well have preceded the birth of the TurboVest Method but still, that does noting to make me less proud of that name.
So, that was a bit of Vortex-AIMing & Turbo-AIMing history and some waxing sentiment on account of it all.
It's time to get myself some coffee now.
I have a. . .surprise^2 for you all. I have taken the plunge and actually dived into currency trading. . .the good old US dollar for now.
After reading here there and over the rainbow about turbo's I still had only a vague grasp on this derivative beast. . .one drowns in derivatives these days. . .maybe WE are the cause of this Financial Crisis
But anyhow, I thought about the Spartans that supposedly threw their kids in the river to learn how to swim. Those that learned did it well all their lives, unless their arms and legs were cut off in wars hey fought. I just jumped into the river:
1. 100 Turbo AAB Euro/Dollar Short 1,448 @ 3,28;
2. 20 of the same when the price dived @ € 3,08;
20 minutes ago the price was € 3,55. . . Profit in one day 9,342915811 %;
3 Bought US$ 1000 on my Dollar account @ € 0,7024445(ER=1,423600014)
On account of a slight drop in Dollar ER, which I supposed was going to happen, I made money on the Turbo and lost a little on the Dollar account. . . who cares anyway?
But on the Dollar account I will use my own TurboVest Method as it goes down (slow method) and on the AAB Turbo I will earn if the Dollar goes down (fast method). If the dollar keeps dumping value for a long time then the Turbo will wipe out the currency loss and I will make a good profit when I sell the Turbo at close to the bottom. . .if I can get that right. . . . In the meantime I will have bought more cheap Dollars on the downside and when the greenback comes back up. . as it will now and then. . . I sell off the Dollars. I still am a bit "Fuzzy Too" on the cost structure and on the stop-loss. . I believe the funny number 1.448 is the Dollar rate at which. . .Oh shit, I have no idea yet what this means. . .If the exchange rate hits 1,448 then this means the value of the dollar has gone down and then there is no stop-loss to be activated. . .If the exchange rate goes down then the dollar is rising and at some point the stop-loss will kick in. . .Ohh well, one day it will all come together and I will sing the song: "I can see clearly now and the sun will rise . . ." or whatever.
Then I also will take a Turbo Long (when the dollar is rising again).
I am learning to swim. . . I am not that good at it yet, but I think it will go better when I reach Grand Rapids in the River. . or else I will drown.
This stuff beats swimming in a dry creek any day. . .I have not looked at my Turbo's for 20 minutes now. . Maybe have already lost the gains I had when I started to writing about this adventure.
Isn't this FOREX stuff fun?
My Vortex programmer suggested I should call my FOREX software FORTEX instead. . . Hahaha, what a joker that guy is. . .Nobody knows what the hell a fortex is. Why should anyone sit up and notice?
I see on CNN just now that The Dow Jones is down by 36 points. . no, 37 points. .no 39 point. .no 37 point. . no, 38 point. . .shit, I can get it right. . the damn thing keeps jumping like jack rabbit.
Is that good for my Turbo Short? It must be. . stocks getting dumped ---> US$ goes down . . .right ?
Aimster, I thought tulip bulbs were still a hot thing in Holland right now. Millions of people from all over the world come here, pay big money to "tip-toe through the tulips" like Tiny Tim used to do.
I rather get into something nobody ever did before but I can't think of any. . .everything has already been done!
So I did the next best thing: I started a small investment in JPM Latin American Equity Fund. The ABN fund with the same name is no longer active. The JPM is on a rising trend and some volatility. The Fund only has 1,3% Reserve on hand right now and 98,7% shares. . .they operate just like AIM.
I am just getting my feet wet. I also might get into buying a few cheap US dollars. . it's got to renounce when the economy recovers.
Jack, I missed the target once again!
We have a saying in Dutch:
"Niet geschoten, altijd mis". . . (If you don't shoot you miss every time)
It's a bit of a contradiction. I would say: "If you don't shoot you can't miss". It's the safe way out for people that do not want to risk anything. Like: "People that don't work don't make mistakes", but also they do not learn anything new. My offer was of course half way "tongue in cheek" but half way serious. I would take up the role of a "broker" for a single experiment!
On this FOREX strategy I am also learning more as I go.
Today we are likely witnessing the beginning of the sell-off season.
I rather doubt it. I heard today that the mini rally was over and stock prices dropped today in Europe generally about 3 %. Maybe you heard this news as well and think that one should sell now before the prices drop 10%
Likely we are near a good time to buy again . . .I think they might even drop up to 10 % and then they will rise again by 20% and so we will cycle to a new high in 5 years, or so, so that every person except AIMers, the very poor and the professionals are elbowing themselves to the stock market doors to buy over-prized stocks.
Read my lips!
In 5 years nobody will remember I said this so nobody will take me to task for being wrong, if my prediction does not come out.
I am extremely angry! I typed a long response with answers and suggestions and pushed a wrong button and everything disappeared
(I know how to prevent it but I got caught again with my pants down)
I will try again but this time everything I say now will be quite different.
. . it suggests that there is money to be made using a disciplined, AIM-like approach with Fx.
Indeed. Vortex can make money on any Data Set that contains value variations over some cycles. . that is no secret. To make money on a real case without knowing what the prices will do is a different issue.
Something about the data doesn't seem right, though. Have a look at the following Chart at Google finance. It indicates that 1 USD was not anywhere close to 0.9331 Euro in Dec. 2004.
http://www.google.com/finance?q=CURRENCY:USD
It might be interesting to see what happens if you run the analysis using more recent data.
You may well be correct. I received that DataSet from Narin Anderson to use on my Vortex FX Model. . . I had no idea what it represented. . I assumed it was the US$ but it could well have been the Exchange Rate Can$/US$ or the price of Pecan Nuts per pound in Zwaziland in Zwali currency. . I did not care and it makes no difference as it is a model of something that has value variations. . . .(after checking my files I noticed that Narin Anderson is Canadian).
About testing anything more recent. . .just send me a DataSet of you liking in Excel format, with between 60 and 100 DataPoints and I will do the Demo Run. To do it correct then also give me this:
· Trading costs
· Interest on positive and negative Reserve
· Leverage
· Cash Limiting Vortex Model or TurboVest Vortex Model
If you send me raw data from the Money Marker you need to as the trading cost. If the Reserve is in you own account the use interest on that. At this time a special rate for negative Reserve I still have to build-in. This feature is important if you want to invest with borrowed money. I will send you back the results for some arbitrary set of vortex parameters as used in the previous results I send.
I have a much better idea: Send me € 1000 (or a smaller amount)via PayPal and I will be the Broker for a Real Forex Case. What is needed is. . .In this case you are buying in Euro’s as I am executing it from an Euro Account.
· Agreement on the trading costs that I charge per trade;
· The leverage will not be larger that 5;
· I do not pay interest on the € 1000 and I consider the transfer cost PayPal charges as a cost for the Demo Run,
· You decide on which “pip” value you profit has to be locked in. . .a sort of ClixFund system;
· I will not allow you to run up a negative Reserve. I will send you the Cash Limiter Excel Model so you can decide when a currency will have to be traded. I will mimic everything you do. . . You are the CEO but I can advice you on the questions you have. This means if you trade in such a way that the Reserve becomes negative. you have to bail out to prevent running up to Reserve = 0. If you do not do than I will do it as I do not want you to runt into debt position;
· We will have to agree on which €/$ index we will execute the trading
It will work as follows:
· The cost of the program € 60 will be deducted from the € 1000 and thereafter you can use it for any other forex activity. You can even copy the program and run other forex activities at the same time;
· The trading will start at any time you give me a “Buy” or “Sell” Order;
· Say you start with a Buy of € 100 to buy a Dollar or any other currency. If L=5 then you and I simply enter that in the Excel Model and the cost per trade is displayed and the Reserve becomes R2=1000-60 –PayPal Cost –Trad1 cost. The 500 units of currency is the value of the leveraged Buy. That is al. My Vortex Euro Account with the € 5000 + 1000 Deposit does not change. In this case I do not have to buy any foreign currency at al as we are not really trading currency but playing the Currency Index. . I could actually buy the 500 units currency buy that is more expensive as I have to do more work;
· After this the rate rises or drops. If the rate rises the profit on the 500 units is added tot the Reserve. If the rate drops the loss is added to the Reserve. It is as simple as that;
· As the rate rises then at a certain pip value I will lock in the profit but you still have access to the 500 Unit (In Vortex this means actually, as yet, that a Sell is not executed). Locking in the profit means noting more than if the rate drops to the lock-in level the 500 units will be terminated on that price and you have a guaranteed profit. If the rate keeps rising then the 500 units will keep increasing in value and the profit can be locked in again. The locking in simply means that you have greater Reserve but also guaranteed levers of profit;
· If you want to buy more currency units then you give an Buy Order up to the point that you have an spend able Reserve. If you want to Sell then you issue a sell Order or you eliminate the position;
· A tally of the bail-out position will give the value of the Reserve and that amount will be returned to you with trading costs subtracted. If you have traded and the price drops back to the Lock-in level then the position will be canceled and the Profit will be waiting for you to request it. My Trading costs have been already deducted.
An obvious thing to settle on is the trading costs as a fixed amount + a percentage of the trade. In that way I will profit along with you if the price rises but also if the price drops. . . Remember. . I am the Broker. . .J
A better way of learning of how forex trading with VORTEX works does not exist.
The thing about this “trading” scheme is nothing more than a betting game and I provide the betting table as some cost. The “problem” with this proposal is that it is not a formalized system in which one can have guarantees that Broker Vortex is a recognized bona-fide Agent. . of course, I am bona-fide but no one can get this confirmed. . . for us this is just like a friendly poker game. The same type of trust in me you need when you order a Vortex Product and to gave to pay up front. The Deposit simply serves as a money pool to make sure I get my services paid for.
With a L=1 I could even set up a Dollar account at my bank. In that case I could even deliver the dollars you would have purchased, but this would be a futile exercise as it would be much more costly.
You might ask: “Suppose I make a lot of money on the exchange rate increase. . . .How can Vortex pay that profit to me if he does not actually trade the currency?
Good question. I simply have the option to open a US Dollar account at a moments notice and actually I would have a Dollar Buffer. I would not mimic all the little trades you order. In that way if the dollar rises the actual value increase is realized on that Buffer and I earn also on that. If the value drops I should make sure that my Buffer is about of the same magnitude as you have bought with the leverage rate. Then my loss on the buffer is bout the same as your's, and is deducted from your Reserve. If my Buffer is too large I simply lose on the drop in value on my own part of the Buffer.
My suggestion is an interesting means to run an FOREX Experiment. . .on how the Vortex Model works. The experiment does not need to follow exactly the rules of formal Forex Trading. I lost and won money on previous ventures before. . . .It would not be different here.
OK Jack.
The question is more complex but the answer is easy. I need mathematics for it. I let Excel do the work:
With a real dataset from 2004 that someone provided me, from the FOREX DEMO with buying dollars.
Start Reserve = Deposit to Broker or in your own account if you buy direct on the money market.
Leverage = 100
Exchange Rate 1USD=0,93310 € to start
Trading Trigger 1% up and 1% down
fb=0,8 (Aggression factors)
fs=0,5
Interest on Reserve =0
Trading Cost = 0
Date. . . .Exchange Rate
07-12-04 . . . € 0,93310 . . .Reserve = € 20,000 Deposit. Profit=0
08-12-04 . . . € 0,93750
09-12-04 . . . € 0,93760
10-12-04 . . . € 0,92730
13-12-04 . . . € 0,92410
14-12-04 . . . € 0,93340
15-12-04 . . . € 0,94160
16-12-04 . . . € 0,93850
17-12-04 . . . € 0,94030
20-12-04 . . . € 0,94170
21-12-04 . . . € 0,94020
22-12-04 . . . € 0,94290
23-12-04 . . . € 0,95170
24-12-04 . . . € 0,95130
27-12-04 . . . € 0,95510
28-12-04 . . . € 0,94980
29-12-04 . . . € 0,95100
30-12-04 . . . € 0,95030
31-12-04 . . . € 0,94120. .Cash Position = € 80,393 in 23 days,
so the profit is € 60,393 !!!
The day before the exchange rate was higher and the cash stood at € 30,000 . . . only a 50% profit . . .but a buy was not triggered until the rate dropped to 0,9412 the next day. Due to the previous trading the number of $ Reserve had increased and with the next large buy the profit jumped. . .even though the exchange rate was higher than at the start.
The exchange rate cycles but is in an upward trend. Making profit is easier then.
This was with an arbitrary parameter setting on the TurboVest Demo, but the Turbo condition was not invoked(This happens only on the negative trend OR on big Exchange Rate drops in a rising trend)
If I set the parameters at a more aggressive level:
Trading trigger 0,1 % up and 0,1% down
fb=0,9
fs=0
the Reserve value explodes to € 196,256 in 3 days! Not bad!
This sounds, of course terrific. . .but it is terrific. One needs to consider, of course, the risk of trading at a leverage of 100. . if the exchange rate drops sharply then the large buys it triggers in the TurboVest Model get you to negative cash quickly at these extreme aggressive setting. If you would be trading without the actual equity credit the buys would not be executed, so that is a safety valve but you would lose the deposit of € 20,000 in a blink of an eye IF the drop in the exchange rate starts the day after you begin. . your FOREX broker would simply end your account and you might even end up with a debt. . The party is then over.
At a leverage =1 Vortex would be far less aggressive and the Reserve would last much longer.
I set L=1 . . same parameters:
03-02-05 . . .€ 32,404. . .Profit = € 12,404 on the € 20,000 in 58 days and there were 36 +/- trades. At L=1 you are essentially trading Dollars just like you trade shares. The leverage at L=100 cause the trade triggers at exactly the same rate change but the trade amounts are 100 x higher.
Jack, the questions you asked are 100% depended on how you trade the currency. As you change the aggression of you trading then you are going to need more (or less) knowledge of how the exchange rate is change in response to the dynamics of the country in relation to what happens in the world.
An investor that is completely ignorant of the "happenings” in the world can safely trade currencies. I will change the parameters to
L=1
fb=0
fs=0. . trade amount = (PV-V)*1
Trade triggers again 0,1% as before. This allows you to trade when you take a vacation during which you only want to relax. . . .Zzz. .apnu. .zzzZz. .zz..
Trading was very frequent: 36 trades, but no one noticed;
The highest Reserve value is € 20,018 - - - - Profit= € 18
The lowest Reserve value is € 19,983 - - - - - Loss= € 17
The end Reserve value is € 20,000
. . . .not counting the pennies.
Who said trading dollars is dangerous? With these conservative Vortex settings one can not lose the dough and keep having the fun of investing until the day they die.
At 4% interest on Reserve the profit is € 127. . .but who cares?
PS: For the currency trading the exchange rates already contain the provision for the Broker. . .usually. So the Trading cost can be set to zero in most cases.
Hey Toofuzzy, you have not read it correctly or heard it wrong.
It was this:
"This land belongs to Anderson Land"
Anderson is the brother of the guy that invented the Polaroid Camera.
That land is worth a billions!
Toofuzzy, if you are a gardener you can make a bundle here in Holland growing wiet. . . NO!!NO. . Not weed!
I do not have a garden, so I wouldn't know what Ruth Stout is saying. . .does it help anyone? . . .I know Christie Lou Stout, but she is not into gardening.
Still, with the utter simplicity of AIMing, HOW COME so few people are doing it and cause a traffic Jam at the stock market doors to buy shares when these are about to dive and all the professionals are selling?
(I know the answer)
My point is the simplicity of the truth is not accepted so easily by most people. Some things defy understanding.
E=mc^2 is a simple formula but no one understands it. . . Millions of books are written on it by people that do not understand it, and after reading these books, billions of people still do not understand it.
At least Buy Low Sell High is easy to understand. One does needs not even a 1-page explanation for it.
In 1987. . .approximately the time I already had developed the idea for Vortex AIM. . . sold a German Mark to my 5-year old son Damian, for 1 Florin. . .he was asking me what I was doing but to tell him what I was AIMing was all about I had to come down to his level. . my book was a bit out of his league. I told him the Mark was worth Fl. 1,22 but because he only had Fl. 1 he could buy the shiny coin from me for Fl,00. He did.
A little while later I told him that I really wanted to buy that Mark back from him. . .He frowned a bit but then he grinned at me and said: "OK, but I want One-Fifty for it! At first I was glad that he was so smart but then I frowned. . .I was useless. . .this kid simply knew already the basics of buy Low Sell High. . what is a father for if not to teach his kid something?
Not even a 5-years old needs to be told that buying low and selling high makes sense!
So, writing a book about Buy Low-Sell High is meant to take money away from dummies. My son Damian never read my book.
I now do Damian’s bookkeeping! He rents houses for € 1000 but pays only €750 for that house himself. I send him a bill for the work of balancing his shabby administration(Shoe Box Method) but he has perfected the trick with the German Mark:
He doesn’t pay me at all.
Jack, I am going to hire Toofuzzy to explain all my ideas! Most of then he already knows. . .About AIMing I mean. . .I have loads of ideas that nobody understands yet!
How many round trips AIming the Dollar??? Do you mean AIMing or Vortex AIMing or Turbovest Aiming? There is no answer. .as far as I know.
First there is the typical # absolute price changes that occur. . Maybe 50 times a day. . or more?
With an aggressive approach Vortex can be set at a trade trigger in the same order as the lowest Delta P($) that is used in the money market. . . 6 decimals? If so then the trade trigger in Vortex can be set at
0,000001/1*100 = 0,0001 %
If you are trading in millions of dollars then that Delta P might be big enough to trigger a trade at that low price change. So, if any starting investor wants to trade millions of dollars at a time and doesn’t know how he should buy Vortex. .or may be two as that would be cheaper J
Now the question is what you consider a Round Trip(RT):
1) To me it means that when a buy changes to a sell and back to a buy: that is a RT. So the number of RT's per Vortex AIMing Year will depend on the trading aggressively that would be used and this depends on the settings of the Trading thresholds (holding zones). . the trader would determine that.
2) Once can also count the actual price changes that occur for that year from Up to Down an back(not back to the same price but like this +++------+ <---- this I call a RT on the price itself. . .that would be a much larger number than the RT in an AIMing Run.
3) Next you can define a RT the be the up/down trend switching on a defined Average(whichever way you define it).
The number of RT's in (1) is dependent on the trader but also on (2) while (2)is a market figure and (3) is again determined by the definition of the average price.
Maybe TooFuzzy has an answer to your question.
I don’t.
Why is it important to you?
Cio!
Well, some of us speak a bit of Dutch but it depend on who we meet and then we switch to their language.
Of course this is a little lie: we have one formal national language but many dialects. In the province of Friesland. . .I never understood why a province id called a land. . . it is like saying Ohioland or Arkansasland. . .anyway, in Friesland they have their own language: Friesian. We, the only legitimate Nederlanders, do not understand it.
Well, Einstein created a little formula but that is the end-result of a lot of work that few people if any, understood in 1905, OK, maybe 3 people. If now anyone wants to explain the General Relativity Theory. . . anyone of only 6 people that understand it. . .then they have to be long-winded as well.
The AIM Theory is also simple:
Buy Low
Sell High
How come so few people do that?
It takes a lot of effort to explain how it works and much verbiage to make people believe it.
Regards,
Ahaha! I see wat my problem is. . .If I used as few words as Toofuzzy uses to explain something then people would understand me. . .maybe.
Grin
Jack, consider the price of a commodity as a saw tooth profile that slowly drops its average price in time. . . so instead of a trading range that is horizontal it has an average slope towards the future.
If we idealize that for the illustration you buy at the bottom dips and sell at the top peaks. . the same as one does with the Lichello Test Serie
10,8,5/4/5/8/10. . .
but now it is
10/8/5/4/5/7/9/7/5/3/4/6/8/6/4/3/5/7/5. . . .
something like that. This way every cycle creates a profit with the AIM-trading
In a real case the same thing happens but then the trades are not always at the dips or the peaks. If you make a profit or not depends on the steepness of the drop in time and the buy-sell parameters. Within this general approach. . with is a normal AIMing approach as I see it. . .your PV value grows. If one uses variable parameters this is easy to optimize for a particular general price drop that you assume, but when the trend changes you need to changes the parameter settings.
When I did this years ago just eyeballed the whole activity and it worked both ways. I did not even use a computer . . .just a book with many columns, a pencil and a piece of gum. When I started investing with other people had say 10 commodities(shares, warrants, options, currencies) and even though I had already developed the Vortex Method I still eyeballed all the trades but this time I had my finger on the pulse of the markets a lot more than I have now. . . I had a reasonably good feel for it. . besides that the market trend was generally upward in these days so losing became more difficult to do. In those days Aircraft manufacturer Fokker was a bit in trouble but I believed it was OK as the government took a share and after that Daimler Benz took over completely. . Jurgen Thremp's Baby it was! I started buying at 10, it cycled for a while between 8 and 13 or so, and after a year or so it began to cycle slowly downwards. The prospects began to deteriorate and Jurgen's Baby began to turn blue in the face and got cancer. I bailed out at 6 and I still made profit. . .I could have bailed out at 7 or 8 but then the signs were still OK. I could have bailed out at 13 but why get out of a good thing as long as it is good?
Cio,
Hoi Jack, This is keeping me out of bed
What people say about what the dollar may do is something that has nothing to do with the AIM Machine. This would be the same for stock ABC. . .with a prognosis the it is going to dive deep most people would not bet on that it was going to rise. On the other end AIMing is also about buying extra shares at dips and if one expects the dip and it happens then he jumps in (or he would have gone short the moment he knew the dip was coming). In this if one has already a lot of equity and sits is a dip he can buy more shares with equity as security. . .presuming one is not doing this on ENRON type stock. . . .The US$ may on the average drop in value but one would expect it to become worthless, like happened in Zimbabwe. So, investing in cheap dollars on the way down or on the bottom of the dip, or close to it, is that way to go.
When I made money on both sides of the on the dollars trend I simply used the AIM strategy: on the average the cycling continued and I creamed the profits from it on the way down. Total profit was say 10% or so but the dollar lost about 10% or 15% of its value. . the exact numbers are in my book.
Then the trend changed and I kept creaming the profits of the cycling on the way up. This time the profit was less than the rise in value of the dollar. It was about 6%. . buy and hold would have been better, as is typical for AIMing. At that time I did not yet invent the ROTAI-way of calculating profits. I expect the ROTAI might have been 15 % or so.
This experience was my start with AIMing. I was not surprised it worked. I was pleased to make the money. Thereafter I made the bigger gains with AIMing with borrowed money(TurboVest Method) on a portfolio of various stocks + also US dollars. . which allowed me to set up much larger portfolio's than otherwise would have been possible.
Regards,
Whow! You've got me cornered
I haven't experimented with currency plays but they certainly seem to be advertising them all over the 'net these days. So in general, applying AIM to FOREX would be, for example say you've got a Euro/Dollar pairing; would you shift from one to the other, rebalancing every so often internally or would you add external funds into the losing side, keeping a constant ratio between the pairs?
Well. . .mmmmm. . .uhhh. . . lets's see. . .
OK, lets first talk about my ignorance before we talk about your's.
What's a Currency Play?
What's Euro/Dollar Pairing?
What's. . .Oh shit, I have no idea where this is going
When I developed the Vortex AIM Method and wrote my little book I compared a "share" to anything one could name that had a variable worth and anything that satisfied that criteria could be traded with the AIM-method. So, why not dollars? I simply started to buying and selling dollars(10 years ago) and no one was using funny names.
I have not dived into the formal FOREX market via brokers that priovide leverage. A few years ago someone that was active with Forex suggested to me that Vortex could used for Forex and I said: “Of course it can. . a dollar is simply a dollar, just like any equity. I picked the brain a bit and I added the leverage to Vortex . . as an engineer I could fathom what that meant from the brain picking. . .then I had to struggle a bit with the amount of dough to buy the dollars with and the amount of dough called a deposit. . .then I heard somebody yell "pip". . I never heard of that in engineering, so I had to read up a bit on that but I have no idea as yet why it is should be relevant for my program. . .one simply sets the "triggers" for buying and selling as a percentage change of the equity and the aggression factors are set as you like them. . . Vortex doesn't care about names. . so if one likes to use “pips”, so be it. . its not relevant to me because Vortex is only an auxiliary tool for someone using a broker(or a trading machine) to provides the mechanism to let him trade at leveraged rates. . that they use pips in that. . fine. . Vortex is not a Trading Robot . . . If pips are used in the actual trading mechanism then fine. . .Vortex only advices how much to buy or to sell. . . and from a "pip" that is thrown at me I make a percentage to plug into Vortex. . .so $$$ are traded with the same "leveraged machine" . . .simply a few more gears.
Then I got more interest from others and now I am thinking about improving Vortex FOREX with the help of a FORERX trader to include some "pips" and possibly some of the current "bells" and "buttons that are "meaningful for FOREX Traders. . .on these specifics I am as yet relatively ignorant. . I am not trader. . .just the guy that puts the levers and the gears on the machine to make everything turn and rattle to make it do what forex trader want it to do. . maybe I will put a few flashing lights on it so it does a few things that I like as well
I suppose you questions relate to portfolio management for forex trading rather than the trading mechanism. . . I have no strategy for Forex Management, so I can not answer you specifically. . you talk about paring and shifting and keeping a ratio constant, and rebalancing. . .I do not feel that these aspects are relevant for a machine like Vortex. . .and even if I understood these terms I am certain it is not important for the Vortex Advice Generator. I see this is a similar issue for regular AIM and the question how one and when one can "put on the brakes" if prices start jumping out of a comfortable trading range: How does one manage issue that are NOT part of the machine? I do not know. Every car need a driver and I just make the car perform as you want it. . . by adding buttons and gears and if you want it I “make it so” to keeps your coffee warm.
So, the secret is out. I am the ignorant one. I am the Dummy!
I think you might be able to drive the FOREX CAR better than I can already. When you buy my FOREX CAR you can drive it any which way you want and tell me later what you want to have added to it.
What the hell. . . where can you get anything useful, for € 60 these days?
Your question on taxes I can answer. . I don not feel that I am the dummy on that one: You report only the profits just like any other profit. Lets look at what is happening with a Forex Trade.
1 You place $ 100 in Deposit(Reserve) and decide a leverage ratio. . .say 100 . . .to keep it simple. . .(for dummies).
2 You have invested nothing. . .The investment is its worth 0. The broker owes you $ 100 minus a holding fee if you chicken-out en ask your money back.
3 You think it is good day to buy $10 worth of Euro's: Issue a Buy Order, somehow via the system of your broker and set the Buy/Sell Trigger as you please. . it's irrelevant how you do that;
4 Your broker puts € 700 in an old sock. Your Reserve is now worth $ 90 and you have invested $ 10. There is no profit s the IRA man doesn't care.
5 The € 700 goes to € 90 in value the next day so the profit is € 200 and you sell all of it. The profit for the broker is € 250. . .to keep it simple for dummies I use big profits.
6 You liquidate this position (or only a part of it) and you get $ (200(9/7)/(0,7)=$ 367,35 added to you Reserve.
7 R2=R1-10+P = $90+367,35 = 457,35. . .P(%)= 4573% Profit
Not bad for a $ 10 investment
Even a dummy can calculate that. If the price goes down by € 200 then your loss is that much. In practice making the profits works a bit different as I understand it. . as prices rise one can automatically lock in the profit without actually selling any of the Euro's in the sock. . this money simply belongs to the broker and the locking-in is an agreement that if the position is dropping in value then you do get the profit at the point it was locked in if the prices drop below the lock-in value. . .If the currency value drops more then the remaining $ 90 Reserve is eroded rapidly. . .it erodes at 100 times the € value in the sock.
You report the profit for the year to the IR-man. If you had not sold at the end of the year at this position your Portfolio is worth $ 457,35 for you but for the IR-man it is worth only $ 367,45 as the initial Deposit of $ 100 is not an investment. Also the € 900 in the old sock does not belong to you. . only the € 200 profit does. . the worth of the money in the sock is €950 and the broker has to Report € 50 profit to the IR-man.
This would be the case for the Dutch investor. Only the profit is taxable. . .but if the $ 100 Deposit is part of your million dollar capital then you pay income tax on the $ 365,35 profit plus capital tax on the $ 100.
Jack, Ref. Seed capital ???
The idea of investing small amounts in funds like The Latin American Equity Fund or others like it(House Funds of the ABN AMRO)Like I used to do years ago still appeals to me and I might get into that just to "be" in the market for fun and to feel its vibes. I might put in a € 1000 and trade as little as € 50 and I can put in € 50 a month extra with my PremiVest method to slowly fatten the pig.
But, it does not really count as "investing". Its like playing with a miniature tea set.
My first action with my AIM-method was the FOREX business. I considered the Dollar an excellent equity:
It us worth owning
It will not likely disappear in my life time
It fluctuates every day
Trading cost are extremely low
I made money when the value dropped on the average
I made money when the price rose on the average
Vortex AIM was invented for it.
Unfortunately my bank stopped my trading because the trade volume was too low
Why do you no longer like AIMing currencies?
. . .?? Shit. . I forgot to go to bed.
Its past 8:40 AM
I never learn!
I certainly get it!. . .Your Point I mean.
How do I get the darn genes?
On our software. . .I have no idea. . .nobody ever told me that it was not worth the money they paid for it. . .this leaves open the possibility that it is incredibly good stuff but that nobody dares to tell me that.
Or the name 'vortex' may be the wrong name. . .A vortex? . . .Is that not the thing that blows houses to smithereens and kills people in Texas?
Hi Jack,
I read your message twice! I get the drift now! You are advising me to use my own Rich Uncle Method(RUM). I have no rich uncle! I am 65 and most of my uncles are dead already. . as a matter of fact, I think of any one of them being still alive. None of then were rich anyway.
When things are going the right way for me I borrow from the bank using equity credit to buy extra equity IF I would have any equity that I had started with.
One of my other investment rules is: Never borrow money if you have no collateral. . except if you have an idea that can not fail. . having created a cure for cancer for example. . . or a plan that has a 85% chance of succeeding.
My other Rule is: Do not invest money you can not afford to lose. I am following all my rules . . .and get nowhere.
Selling software gives me some pocket money. . .I have no genes that good marketeers appear to have.
Is possible to get an injection with the genes from an Super Marketeer?
If yes, then I will invest my € 5000 savings I have in that little known secret.
Do not tell anyone, after you have told me, of course.
Now I an going to have a few drinks.
Regards,
Like the other respondents that already have said their piece I advise that adding cash when prices drop is the “right thing” to do provided you have determined that the equity "is worth owning". .IF that is so then it is the right thing to buy more of it. . .any time, but particularly when the price will drop more(then you wait a while) . . .this is the fundamental methodology used by Warren Buffet and others like him. It is Rule #1a for investing. This simple wisdom goes as far that it means, without exception, that this type of equity is worth buying when prices are increasing. . then you ARE still buying when price is low and THAT is also a basic rule for investing.
For a equity that is not worth buying you should not own any of it. That is Rule #1b.
Of course, my advice implicitly means that when you invest you should preferably know at least something about the market dynamics, and human behavior (copy the rich guy J). . .most of all you should have a reasonable knowledge about yourself: will you have sleepless nights 1) if prices drop because you worry about the potential loss you might suffer OR 2) are you being kept awake from excitement about the beautiful opportunities for making a profit that are developing?
If 1) then invest very cautiously and conservatively and leave the market when prices have dropped 10% or more. If 2) then invest aggressively and never leave the market. . .unless you discover that the equity you bought under Rule # 1a is no longer worth having. Then you apply Rule #1b en step out.
Within these guidelines that I advice one should become skilled in interpreting the market heartbeats. . .anything that happens. Which Investment Management Machine you use is far less important than being the CEO of you investment activities. You are the Manager. AIM or Vortex-AIm or Wallstreet are simply tools one can learn to use.
Anyone that that knows nothing about investing will not be able to MAKE money with Wallstreet, or any other management machine. . . except by pure luck once in a blue moon, but that is also possible in a Cassino.
My advise is to keep buying as prices drop(use a braking system like MACRO if they drop fast) IF the equity remains worth owning. Borrow money if you run out of cash and use the TurboVest Method, or the PremiVest Method or the rich Uncle Method, IF the equity remains worth owning. . .If it is worth owning then the more equity you have the more profit you will MAKE. . . Its not a question of Lady Luck but a question of skill and knowledge.
Jack!, nice to hear from you!
It seems that we are in the middle of a summer rally right now. We'll see how long it will last. Hopefully, it will run for another few weeks.
This rally might be part of the "Go away in May & come back in September" phenomena. Sometimes September comes a bit early!
I expect all AIMers will have invested heavily in May when others went away. . .I wonder if that actually happened.
I feel a little said that I have not been investing since 2000 . . .it was such a Beautiful Dip the last couple of years. . . for good reasons though. . .I mean good reasons for not being in the market. . .not enough dough!
The Big Dip due to the recession has been an excellently opportunity to acquire lots of good shares at basement prices. . .I bet Donald Trump and Warren Buffet and many investors with lots of money have invested extra during this recession and after the prices have returned to triple their Dip Level the professionals will start unloading more and more stock at the prices rise more so that the public at large can start snapping up the high priced equities that are dumped. Then the stock market will be ready to dive again. . .the only uncertainty is the amplitude and the frequency of the Up/Down Moves. Good to hear that lots of AIMers keep earning money like water like you did. I wonder if there are any AIMers like me that have lost it all. . . their savings, their house, and more!
Due to having received some money in December from the motorcycle accident in 2007 I have now just more than € 5000 to spare, above starvation level but I have always advised people that one should have about €10000 so that he could afford to lose, in order to invest effectively. I would be a bad advisor to risk the little money I have now. Besides that, I have for about 8 years lived in the Valley of Poverty . . .unlike Martin Luther King I have not been on the top of the mountain, neither have I seen any glory. . . and the little extra now feels like as if I am rich. . .that’s worth something, I am not sure how much. . .but I want to keep feeling rich for a while longer. The meager pension I get. . .at welfare level . . .allows me to cover the basics comfortably, so this let me stretch out my Reserve for the opportunities that every now and then come along. . .it’s just like AIMing.
The sales of the Vortex software and booklet are at pocket money level. .every time I get an sale of say € 15 from the book it feels like finding a little gold nugget of about 1/2 a millimeter diameter. . it takes an hour to extract it from the creek and I spend € 3 for gasoline to drive it laughing all the way to the bank. . .where the "nugget" is duly weighted and tested, I then collect € 1,33 for the find and then the bank-people to start laughing me all the way out of the bank. . . Once in blue moon, a week ago it happened, a few "vortex nuggets" could actually be seen from 4 feet distance, but only if the sun shined on it, and I collect € 35. . and my 50% partner also collects € 35 and PayPal gets € 6. Then I got all exited and felt that "Rush Feeling" coming up and I went to load up my wagon with shovels and wood and a water pump and wanted to head for the hills out there, but then I realize that my wagon has no wheels. . . .darn!
Maybe I will go into AIMing Dollars using my Forex Turbovest Plan... the greenback must some day become worth something again. . .right?
Thanks Mark,
In the meantime I did get hold of Jeff and we are "talking" again like old times. No doubt he is going to chance the e-mail address on his site that did not work.
Regards,
Does anybody know where I can contact Jeff Wever of JJJ Investing?
From a current JJJ website I get an old e-mail address message:
The following addresses had permanent fatal errors -----
<jeffee@t-online.de>
Anybody ???
Hi AIMers, greetings to all.
I have updated my Vortex Forex Excel program and added a TurboVest Model.
The model I had before was for cash limiting to zero. The TurboVest model allows for general investing with equity credit.
With the Update it is now possible to enter trading costs and earn interest on cash. Also some errors in calculating the real Reserve.
See for more information:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=40330613
I keep peeking at the AIM discussions but I feel that the subject matter usually goes over my head .
The Vortex TurboVest Method was discussed on this Forum between 3 and 5 years ago. One could check up on what it amounts to via de Search Machine.
Regards,
Updated versions Vortex FOREX spreadsheets are now available.
I have recently modified my Excel FOREX spread sheets considerably. The earlier version did not calculate the real Cash Deposit properly and trading costs and interest on cash could not be used. Also I only had a version with the Cash Limiter Function.
I now have also a version in which negative cash is possible. This is the TurboVest Model. One does not need to apply the TurboVest Technique but this method of investing with equity credit needs the negative cash feature in the program.
The FOREX models now calculate the actual Cash Reserve on the basis of currency trades at a chosen Leverage Rate. If currency prices rise the profit of the Sell is added to the Real Cash position. If prices drop the Deposit Residue drops and this limits how much currency can be bought as prices drop more. At a certain point the Reserve is exhausted and then either the forex position must be closed or extra cash need to be entered.
If the investor wants to use the special TurboVest Method using equity credit then the Turbovest Technique may be used to advantage. An Instruction Manual for this is also available
The TurboVest method can be studied in the previous discussion on this Forum.
Soon the FOREX program redesigned Cash Limiter and the new Version TurboVest Model will be listed on my website.
http://www.vortexcw.nl/vortex/index.html -----> Vortex Method----->Order Form
These spreads can already be ordered by ordering FOREX from the website and adding in the Remarks Space the exact description of the model that is desired.
Due to various reasons I have updated my heretofore ridiculous low prices to include the processing time and costs.
The Vortex FOREX Excel Programs are € 60 and this can be paid via Pay Pal on the website PayPal Button or via the e-mail method via e-mail eng@vortex.demon.nl.
Tom,
Once again thanks for you comments on ROCAR and its definition link. I have digested you comments and now I understand it more fully. Your explanation mirrors approximately the reason for my ROTAI. . .(Which I developed on the basis of your idea!). . .being based on the time-averaged investment TAI for the dynamic trading.
The fundamental difference between the two is that you calculate the average Investment Ratio E/TV to correct the IC. . .which is assumed to be the initial investment that is split between Reserve and Equity. The ROCAR only becomes negative when there is a loss. . .(CV-IC)<0. . .the ratio E/TV is always positive. The essence of the ROCAR is then that the Reserve is an intrinsic part of the original investment as IC= (Reserve + Equity) at the start and is assumed a constant.
The way I look at the yield is quite different. With the variable input of cash(buys) and withdrawals of cash(sells). . .plus corrections for trading costs etc. . . I get an Arithmetic Sum=I for the investments over the investment period. . . there is no single "original" investment Io and the Profit=(Equity-I). The ROI would be Profit/I. I make two corrections to this:
1) I correct the ROI with the time averaged investment. . .the investment at the beginning of the investment period is weighted more than the investment at the end op the period. This gives a lower fictitious average investment for the period and the correction factor is similar to your E/TV: TAI= Ita/I but both Ita and I can be negative at different moments and this creates a bothersome complexity for the yield that I must eliminate. . .(working on it): ROTAI = Profit/TAI
2) I correct the ROTAI Profit. . .a feature added with the development my Windows Program. . .with the compounded growth formula
r = ( 1 + ROTAI)^(1/n) –1
Compounded Tine Average Growth
*****************************
How do you calculate the AIM Profit and Yield and ROCAR if you have added/subtracted cash to/from your initial investment IC, during the investment period, so that I= I1 + I2 + I3 . . .etc. and Profit is actually (Equity – I)?
Clive & Tom, I looked up what you mean by CAGR. It is simply the Compound Annual Growth Rate
(CAGR) = {(Co+Gain)/Co }^(1/n). . .n in years.
After reading Tom's response about compound growth I suspected as much as this, but I also thought it might have been a formula for time-averaged investment gains.
I have used this form of growth in my booklet on The Vortex Method in the form
C=Co*(1+ R/n)^n. . . R = annual growth rate for the number op period n in the year
and showed that if one compounds ever second (hahaha) then the growth formula reduces approximately to
C=Co*Exp(rt). . . with r=instantaneous growth rate n--->infinity
The meaning of the exercise was to show how an AIM system realizes a sort exponential share quantity growth pattern due to the repetitive Buy/Sell strategy, with the share quantity increasing in a compounded manner due to the strong gain in shares at buying at low prices and selling only a few shares at high prices.
Share quantity growth rate formula is then approximately this:
N=No*(1+ R/n)^n
This would be the growth rate for only the number of shares and the compound capital gain would occur at average constant share price. If on top of that, over the period n years, the average price would steadily rise one ends up with a sort of accelerated compound capital gain. This is the essence of an accelerated AIM such as Vortex (with the associated extra dangers due the aggressive trading, of course). At the same time it can be shown that capital gain is possible even during a steadily decreasing share price as long as volatility remains.
It now intrigues me even more to combine my ROTAI and the CAGR but as applied to a collection of investments with different standard deviations goes beyond my interest. . . I have a fundamental aversion to statistical analysis. . .and never understood much of it.
I have solved the problem I had with the negative values for the time-averaged investment. . .(when a portfolio is liquidated by use of sells that are structurally larger than the buys and over time and the cash withdrawal-total become larger than the cash injection-total).
Thanks for the input both of you provided.
Holy Smokes. . I have opened Pandora's Box. . please put the stuff that escaped back and screw the lid on tight, before any serious ill comes from it!
It's going to take me a full day to understand it all! That's serious damage!
From my response to Clive it was clear that I do not grasp the essence of the CAGR. . .if it is some sort of "time averaged" investment for a dynamic investment (like day-trading of like AIM)then maybe that is the formula I was looking for. The formula for %-gain I use, based on the time averaged investment is in my opinion sufficiently useful. . .it calculates the simple ROI for a period using a time-weighted method for the buys and the sells to calculate the average investment. I can simply compensate this time-averaged ROI on the basis of compound rate of return if the buy sell periods are identical during the year but in an dynamic trading system the periods are arbitrarily determined by the share price change so to use the compound growth model would be rather more difficult. . . I am not even sure how I could do that.
Why has the GAGR a more valid accounting value? Is is important to realize that the earning power of an investment is actually based on additive increment dC of the capital C that is invested for a time period:
Incremental rate = dC/dt= C(t)*r*dt
with "r" the proper rate of growth for the time interval dt.
For an investment one can only calculate backwards because "r" is unknown and the "C(t)" and the "dt" are determined by the sort of buy and sell method one uses as wel as the price changes that occurring. I decided that this method for de Vortex ROTAI is too complex, so I use the stepwise method so that the buys and sells produce the time-averaged investment TAI and I use the simple rate of return for that average. The dates and the buys and the sells are known from the Vortex data base, so the computations are not difficult. To make the calculations more complex appears not useful to me, for now. . .other than possibly to calculate the rate of return on the basis of the compound growth model, using say monthly compounding.
So my question remains: What are the calculation details of CAGR method in terms of the buys and sells and trade-moment in time, for an AIM-investment?
From Clive's example I could not figure it out yet.
In the end to correct the ROTAI for the negative results if the time averaged investment is negative will be a "piece of cake" for the programmer. So, if my ROTAI is comparable to the CAGR then I do not have to look any further. . . . Somehow I suspect that CAGR is something quite different than ROTAI and applies to lumping different portfolios into a single investment. Does it maybe mean Compound Average Growth?
Is7550, thanks for responding on ROCAR,
[Offtopic discussion actually]
Possibly you might have misunderstood my intention for retrieving the ROCAR formula. In your example I could use an approximation with(11+8,4)/2= 9,7 % yield. . .I presume CAGR means “Capital Growth” as a percentage. Normally one should not add up percentages in this way as I did here, unless the base quantities have the same characteristics. What appealed to me in the ROCAR is that the average investment over time after a series of buys and sells is usually quite different than the initial investment, and quite different that an arithmetic average.
The "real" return on a time variable investment is what interest me but as a percentage this is difficult to t give a meaningful answer. . . even if this answer is mathematically quite correct(the answer depends on the definition of the yield as a percentage).
For a dynamic investment technique. . . especially for Vortex, which it is intended for aggressive investing. . . the invested amount of money varies wildly. Moreover, if for a high yield investment a significant portion of the equity is sold the average investment over time can be negative and that gives me a negative profit percentage even though the profit in terms of money value is positive. This is a consequence of my choice to use a ROI based on a time averaged investment(ROTAI). The formula I use for ROTAI is similar to the Internal Rate of Return, but possibly not the same. However for as far as I understand with the IRR the yield should also become negative if the investment is sold in a stepwise fashion.
This causes confusion for an investor that does not understand the basis of the percentage yield definition I Use. For the ROCAR the yield was somehow kept positive and I was trying to find out how Tom did that.
Your little program for CAGRL. . . I can not find any NOTEPAD on my computer. . .maybe it is in MS Office but I gave the CD to my son and now it is gone! From the text it is not quite clear to me what it calculates. . .what happens if the investment is sold in stepwise fashion all the way to Equity=0
What I seek is a formula that gives a good representation of the actual percentage yield of the time varying investment when the investment is reduced in steps all the way to zero. ROTAI does that but it end up with a negative yield percentage. I can correct for the negative answer in ROTAI, but I look for other means of solving this problem that maybe are simpler, or more meaningful. Is CAGR the answer? Is this the same or comparable to the IRR?
In my ROTAI formula I could add a simple control element to make the Time Averaged Investment positive: IF TAI<0 THEN TAI=>0. . .This solves the problem I have. And IF TAI=0 then I give an explanation as to why. . . . the original investment has been fully recuperated! . . .(in this case ROTAI = PROFIT/0).
Tom, on your ROCAR we had some interesting discussion in the past and you showed me the way you calculated it. I can not remember what you did to if the Sells were larger than the Buys. . .with a good profit situation you can sell more value than the original investment and the net investment at risc can become negative even though the profit is still positive.
If you sell more value than you deposited how do you keep ROCAR from becoming negative?
Maybe you could give me the post # in which you explained the ROCAR in detail?
That beginners would be better off to first try to understand the basics is logical. . .one does not start out with driving by going full throttle in a F1 race car. I ran on the kiddy circuit for years to understand what AIM was all about.
What I pointed out is that what I hear quite often on this Forum (just my opinion, of course) is that AIM-drivers are advised to "keep it simple" as if AIM is supposed to be kept "simple" rather than to advice "to learn the ropes” and then attempt to turn the simple AIM into a F1 AIM. . . . That's more or less how I created Vortex AIM.
If one sticks with a Simple AIM then the returns remain poor. I would rather advice newcomers that trying to create an AIM Monster that is foaming at the mouth when the start shot is given will be a very rewarding exercise. Then when one turns old and shaky there will be enough time to revert to a Simple AIM. . .zzzz. . zzzz. . .
Nowadays I am. . .Ohh, forget it. . . it would bore you to no end to know!
As usually I can agree with you to some point: Each one of us will decide where "the line in the sand" will be drawn beyond which more tinkering with the AIM-system will be of no use. Essentially you state more or less that AIMers already did and still are doing to improve their ROI:
One may spend a lifetime improving AIM, if that's what one chooses to do, but my point is do you get so caught up in improving it that you don't really use it? Collectively I think this board has derived substantial improvements to the core system already: Vealies, split SAFE values, using the Iwave or Vwave to match a starting AIM account to the current level of risk in the market, as well as others.
Especially the resent discussions on possibly using 3 different types of PC-updating mechanisms. . even to the extend of lowering the PC-value when shares are sold. . .like I do with the Vortex AIM (contrary to standard AIM procedures!!!). Then the recent suggestion here to somehow predict the market behavior 6 months in advance by using some sort of extra smart software for market analysis is encouraging to notice. . .not that this is a new thought . . it is not. . .but the fact that it is suggested anew proves that people do not want “do the simple thing”. . . even if it is clearly an attractive option for some AIMers.
Besides that, there used to be quite a few discussion on the MACRO of Don Carlson. . .something I thought was quite effective. . .to delay buys and delay sells. The MACO-way or other way to delay trading when the market makes large moves are common sense and to want to capture it with an algorithm is natural: it stems from the believe that market moves are not random but are connected to other events.
All this is evidence that most people seek the secret of beating the market. . .I do not see that AIMers are not thinking about these things but rather that they actively are seeking such features to capture the market dynamics. . . this pleases me instead of wanting to advice AIMers to "to do the simple thing" that Lichello had in mind.
I see plenty of complex attempts to squeeze more blood from AIM. . some of which go over my head but the fact that such techniques are suggested is a good thing.
To do the simple thing. . .
Somehow you answer to the question about squeezing more out of an AIM than the standard performance that were suggested by Lichello appears to be inconsistent with what most investors want. The fundamental essence of human activity is to optimize everything we do. . .it is the foundation of survival too: increase the output and minimize the input!
Hoe many years has THIS FORUM been "in business" with the essential objective to get more out of AIMing? Was it not for THAT aim then this forum would hardly survive. Even if you only consider that teaching a newcomer to AIMing is a means of teaching him "doing better" than he/she might do without the advice that is given here freely. Many (if not all) AIMers that contribute on this forum have "doing better" in mind. Lets not pretend that that is not so!
When does one set a line in the sand to decide: "To here and no more. . or no further?"
I have had people object to investing in my AIM-system. They said: "I might lose some money . . .what then?” I usually retorted: "When you go on your annual "holiday" you spend $ 10.000 pp and when you come back you mostly complain about the 10 of the 18 days total you spend in airline terminals, in train station, bus stops and in traffic jams or about the rental car that broke down. How much money did you earn with THAT? Is it not money you lost? Will you ever see that money back?"
Sometimes people do not get the drift of what I mean to point out and more often than not they justify the "loss" of money on account of the holidays as "worth it". The line in the sand is so far away that the idea of "money lost" does not enter into their equations.
Something like that is HAPPENING here on this forum but strangely enough "few ones" see it. Uncountable hours are spend on talking about AIM and about making it better but if one suggest that spending a lot of time on trying to optimize AIM's performance and/or make AIM derivatives then all of a sudden the line in the sand appears to appear and the law of Diminishing Returns is cited and it is advised that it is better to keep it simple so that one does not have to spend so much time on actual AIMing.
Why is talking about AIM worthwhile but spending a lot of time developing better AIM systems not?
Some how I can not explain this duality. . .contradiction?. . . that I sense on this forum. . . should it not be normal to spend a lot of time on improving AIM if that give a sense of doing a worthwhile thing? Rather, should it not be encouraged to squeeze more out of AIM or to make more AIM derivatives?
Lets get rid of that line in the sand.
Lets do the complex thing instead.
The Free Lunch.
In many problems, GAs may have a tendency to converge towards local optima or even arbitrary points rather than the global optimum of the problem. This means that it does not "know how" to sacrifice short-term fitness to gain longer-term fitness. The likelihood of this occurring depends on the shape of the fitness landscape: certain problems may provide an easy ascent towards a global optimum, others may make it easier for the function to find the local optima. This problem may be alleviated by using a different fitness function, increasing the rate of mutation, or by using selection techniques that maintain a diverse population of solutions, although the No Free Lunch theorem proves that there is no general solution to this problem
Although I get free lunches regularly, it has nothing to do with investing
The explanations are quite volumous and without much programming skills it does not help much to find out how to apply this in a DIYS manner(amateur method). However, I do recognize various similarities with manual optimization using an Excel spread with Vortex and 5 parameters, especially the difficulty finding of a Global Optimum compared to the ease of finding Local Optimum (between the limits of the parameters that would be practical) is immediately evident if you do a lot of optimizing. I usually did various runs, each time with widely different starting values. . .sometimes I got 5 or 6 different Local Optimums after 6 hours or more hours of tweaking.
Also the NO Free Lunch Effect is something you run into right away: It is extremely time consuming work and once you start you forget to have lunch in time. . .Double Jeopardy!
Then when you are done you discover that the stock prices no longer behave as they did for the optimization!
AIMster, on optimization!
By default the AI optimizer starts from 1 year ago to the present date, lets you plug in a stock or fund symbol, starting amount, then, under the genetic version, optimize for greatest portfolio value, greatest number of shares, greatest portfolio control value. (Choice of one, not all of the above!)
I gather you refer to the AI program of Mark Hing? Way back when Mark was developing his optimizer I discussed with him various means and methods to develop a subroutine for the Vortex Program. He gave me a lot of advice on how to optimize the investment using historical data. I believe strongly in the effect of this sort of optimization but it is only effective for stocks that exhibit, to some extend, a repetition of its +/- pattern and a program(or the investor) needs to identify that repetition (otherwise to keep optimizing is useless). In the end to create a optimization package for Vortex proved far to difficult for us and I abandoned the idea. Instead I stuck with manual optimization using an Excel version of Vortex and that work great but it is a lot of work.
I had the further thought of what if one started the optimizer from the date one initiates a program and always uses that as the same starting date? This would in effect allow you to tune your settings to optimized values as the program continues, rather than using the past to project into the future. Perhaps not the Grail, but it will be interesting to see if this adds value.
This would only be effective if the stock prices retain their pattern from the starting date. That almost never happens. Usually the pattern (if it exist at all) exhibits it self over relatively short periods. Keeping the starting date for the optimization fixed could create very wrong parameter settings that will last for a relatively long time, unless one uses an exponential decay method that reduces the effect of the past. If one does that then automatically one have an optimization technique that only considers the data of the recent past. . say for 1 year or less(selectable), if you recognize that then it is pointless to keep considering data from 5 years ago. Using a short data set makes the optimization faster anyway.
The scheme I wanted to use is an automatic package that would start with certain period of historical data and then use the optimized parameters to start the investment. Then as you go the optimization package would accept the stock price data as you enter the new data as you go, buying and selling as usual, but of course also entering data periodically for which you make no trades. For every set of data for a new period that is entered in the databank the optimization tool only used the latest data period. In a way you always use say a one year’s worth of trailing data for the optimization. You could do an optimization say every month or every week. With this type of optimization one could still use the exponential decay method for the data (weighing the present data more than the data from the past. . .this way you pick up on changing patterns more effectively.
It appears that AI does the optimization with the trailing data as I had in mind . . . possibly even suggested to me by Mark Hing
Do you know if he uses the exponential decay method for weighing the price data?. . .I never understood fully what his "genetic" method really meant.
SDR # 800 :)
I knew it was a long time ago. I got one. . it appears. . .for Post # 800 but there where no rings is stock and I got it sometimes later. Maybe Tom still knows.
Anyhow, after receiving the SDR I tried to unlock the secrets of the stock market. I discovered this
1 Buy Low
2 Sell High
3 Go To 1
It Works!!!!
I made a lot of dough with it but lost it all and more on an engineering venture
Several years ago I lost the ring. . .no wonder I no longer know any secrets these days!
Hi Grabber,
The List must have a defect. . .I did get such a ring from Tom way back when. . .I forgot "when" but I could look it up.
Maybe Tom didn't want a Dutchman on the SDR List
So, the Secret is no longer a Secret!
Now you need a new Secret Code