is retired now but still kicking like a horse!
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Hey daisy42,
This appears as the music notes for a song to me... it is 100% in line with my thinking and what I have been saying all along.
My SAFE settings are now determined algorithmically.
Firstly, the size of SAFE is determined by the relative volatility of the holding. I have assumed a setting of 7 for the broad market (S&P 500), and the setting for various funds is determined from their 1 year volatility as compared with that of the S&P 500, with more volatile funds having larger SAFE settings. Bond funds can have quite small settings. These figures are updated monthly.
I think many others will agree in principle with what you have conjured up. Interesting is that you have created an algorithm for it and I am curious as a little kitten as to what that algorithm would be and I will try to pull some teeth on it:
1) Does the Algorithm have any elements in it that are specifically related to the AIM Trading system or is it only related to the Equity Volatility? I suspect that the Standard AIM Structure has something to do with it. . .as the SAFE Concept is specifically an AIM variable.
2) If my hunch is correct then the Algorithm you have created would obviously not be useful for Vortex AIM. . .I do not use a SAFE;
3) If however the SAFE calculation has a relationship with the Hold Zone settings. . .which was the case for Standard AIM. . .the Hold Zones and SAFES being all 10% AND you calculation has more or less the same meaning as the Hold Zones then I would possibly be able to use these figures as Hold Zones for Vortex AIM.
I already almost always use Sell Hold Zone that is larger than the Buy Hold Zone. . .as usually this is also the result of an optimisation using a historical Data Set
For the SPY Fund on which I am running Demo Portfolio I have recently changed the hold zone setting to a rather low level:
Buy Hold Zone = 1%
Sell Hold Zone = 2%. . . Still there is very little trading action!!!
To compensate the low value of the (PC-V) at 1% and 2% I have increased the Trading Aggressively to
Fb= 0.9
Fs= 0.8
With V being ~ 6000 this gives
Buy ~~ 60*1/(1-0,9)= 600
Sell ~~ 120*1/(1-0,8)= 600
In this case the Trade Size happens to be of the same magnitude but that is not always the case. This approach is as yet simply intended to generally create trading action on low volatility equity and to increase the Trade size levels to above the Minimum Trade Size and still make a profit in typical up-down cycles. With a Trade size of 600 and a trading cost on 10,95 per trade the trading cost is 3.56 % for a down-up Round Robin Trading cycle, at these conditions for SPY.
In order to make a profit I need to see if I need to change my settings or not. . . click. . click. . . Aha. . .I see that on this -1% and + 2% Round Robin I will incur a loss of 4.46% on the Buy, so this is not acceptable. I will have to adjust my settings to make a profit. . .increase Trade sizes and use bit higher Hold Zone level: ...click. . .click. . .
For example by trial & error using this:
HZ Buy = 2%. . .Fb=Fs = 0,95 . . . (this increases the Sell significantly)
HZ Sell =3%
The Round Robin profit is now 45,48% ! That a lot better J
From this it is clear that with small changes for the parameters and a trial & error approach it will not be difficult to find the appropriate parameter setting for a particular equity situation.
The trick here is to do that with an appropriate algorithm like daist42 may have done!
Using these guidelines I could build an algorithm for my Hold Zones and Aggression Factors by which the above results would approximately be achieved for an acceptable trading activity. Until now I have not bothered to do this. . . It would be an challenging thing to work on. . . .Maybe I will
It would be interesting to see the full extend of daisy42's SAFE- Algorithm.
Ocroft
I demand that the market order column reads zero dollar action taken before I take action. No partial dollars.
OK, I understand it. This Zero Otder position is produced by the Price Reveral between previous lowest price and the price that gice a Zero Trade Advice in AIM. I take it that by No paritial dollarsyou mean that you ignore the fractions.
At that reversal Point you use Buy Advice that had accumulated up to the lowest price and buy shares for that amount.
I tried to mimic that exact procedure in Vortex but it does not work. It requires too many program alterations to do it correctly.
It is simply to complex to do al this and I have terminated these attemps.
Hallo Jack,
Although the Vortex TurboVest Model is based on calling upon more money than the Reserve would allow at any time, TurboVest it not a Margin Trading System.
As I understand Margin Trading this is for example borrowing $ 5000 from a broker and let him buy $ 10000 worth of equity for you, and you have a Debt of $ 5000. The Broker controls the equity and can sell it anytime he wants to.
If the price drops right away the Debt-load rises with the loss on the $ 10000 worth of equity. That is dangerous. It works fine for rising prices IF one sells in time. The danger here is that as prices rise the investor is lured to borrow more money to buy more equity. . .If then the prices drop suddenly he can looses a great amount and may end up with a Debt much greater that the original $ 5000 that was borrowed. . .It is a bit like Roulette Gambling.
With TurboVest this does not happen unless the investor starts to Gamble foolishly. With TurboVest he investor starts out AIMing normally with a healthy Portfolio. . . Like you did in your example. When process go up no borrowing is done!
As the prices drop and the investor needs to “borrow” money he must never allow his Debt to a money lender. . .a Bank or a friend. . . come close to the Break-Even Point so that the Portfolio Value remains always positive. In some cases the investor has extra assets of his own and he can decide to borrow against that . . .or he can simply add money to his Reserve.
Of course, if one does this with a Deep Diver it could go wrong id one is not smart, so one should NOT do this with a Deep Diver. . . only do it with a healthy fund. Moreover I advise the investor to use the TurboVest "borrowing" only if he has sufficient assets of his own that he couls draw on later . .I advice not to borrow money from a Margin Broker.
Normally if one borrows from a normal bank and use Equity Credit they use a Safety Margin of 30 or even 30% This assures that the investor hat he gets sufficient time to see his Debt approach the Safety Margin and take appropriate measures to present a disaster or he can decide to provide more money to his Reserve to reduce the Debt.
Ocroft, on the Vortex Test to compare it to the AIM Uptrend.
I have done a second optimization for the SPY Test Run.
Same prices of course
This time I found an Optimum set of parameters that executed the buys at close to the dip prices and the sells close to the peak prices. . .This is optimised from a trading point of view. . .trading close to the price limits. . . and I can state that these settings represent a Vortex Filter to prevent trading between the peaks and the dips.
Here are the results. I list the recent results in blue and the previous results in red:
Cash-Equity = 11002 - 8998 (55 - 45)%
Cash-Equity = 17122 - 2878 (85,61 - 14.39)%
Buy HZ=40%
Buy HZ=4.2%
Sell HZ=65%
Sell HZ=4.6%
Buy Aggression = 0.6678
Buy Aggression = 0.61200
Sell Aggression = 0.2980
Sell Aggression = 0.32369
PV= 42977
PV = 30434
Profit = 22977
Profit = 10434
Equity = 18577
Equity = 19326
Reserve = 24399
Reserve = 11108
ROI = 32.91 %
ROI = 14.95 %
Trading Costs = 55 <----- 5 trades, including inialization
Trading Costs = 624 <----- 57 trades, including inialization
Interest earned = 2226. . .Due to the average Cash on Deposit @ 2%
Interest earned = 3320. . .Due to the average Cash on Deposit @ 2%
Arithmetic Average Investment(Sum of Trades) = -11226
Buy 1 @ 81.79 = 11.551
Sell 1 @ 137.79 = -16.409
Buy 2 @ 73.93 = 17.156
Sell 2@ 125,75 = -23.524
Arithmetic Average Investment(Sum of Trades) = 8710
[color=blue]Time Average Investment[(Sum Ti*Ci)/Time) ] = -507 [/color]
[color=red]Time Average Investment[(Sum Ti*Ci)/Time) ] = -719[/color]
ROTAI Yield = -1298 %
ROTAI Yield = -416 %
The negative average investment and the negative ROTAI are explained in the previous Results Post on September 5.
As is noted this Vortex Filter forces the trades approximately to the towards the Trading Limits. The buys in this case are executed at the very dip but the Sells are executed a bit lower that the peeks.
With this optimised set of parameters it is of course not possible to expect that the prices actually behave this way, but this Test was done simply to compare thus Automatic procedure to Croft's Method. . .This is still a What IF Case for a specific Price Structure.
For he next Test I will use Ocroft's Method in Vortex and use the same aggression factor as in this Run. I will use a Reversal Price of 10% without knowing if this is a reasonable percentage.
In this Test Vortex remembers the trades not execured and I will buy the Trade Advice Amount for the Dip Price on the Uptrend Price.
This Test will deviate from the AIM-Uptrend only in the size of the Buy as Vortex used a different way to calculate the trade size.
Possibly Ocroft used a different Uptrend Percentage than 10% ????
Hallo Jack,
This surprices me!
I always had the impression that AIMers hated to borrow money to invest when the Reserve had ran dry.
In this back Test you are showing on 23 July the "Investor" has borrowed ~18300 and has a negative PV-value of ~870 (debt to the bank)
Thuis is not typical for an AIMer. . .right?
This method look very much like the Vortex TurboVest System
Regards,
Ocroft, Anyone,
Interested in Comparing Methods of with and without a Delay Filter?
On the same overall Starting conditions I made an Optimisation Run with $ 20000 Start Capital
I got a download for SPY but the prices are slightly different:
3-1-2000 = 139.56
31-08-2012= 141.16
Share gain in 12 years =1.13 %
Cash-Equity = 17122 - 2878 (85,61 - 14.39)%
Buy HZ=4.2%
Sell HZ=4.6%
Buy Aggression = 0.61200
Sell Aggression = 0.32369
PV = 30434
Profit = 10434
Equity = 19326
Reserve = 11108
ROI Simple, based on 20000 Fully Invested for 12 years: = 14,95 % . . . But this, of course, was not really the case ! See(1).
Trading Costs = 624 <----- That works out to 57 trades or 5 per year!
Interest earned = 3320. . .Due to the average Cash on Deposit @ 2%
This would give an Average Reserve of 13833, which indicates, especially in regards to the 10434 Profit, a relatively low average investment.
Arithmetic Average Investment(Sum of Traded) = 8710
Time Average Investment[(Sum Ti*Ci)/Time) ] = -719
ROTAY Yield = -416 %
This may seem rather strange but it is actually an effective indicator of a very good performance (based on not using a Filter to delay trades). The real meaning of this negative average invested cashis that for considerable periods of time the Sells were rather large, or there were many, so that no capital was at risk for various period of time.
This can be verified by examining the Trades Table. . .in a certain period towards the end of the 12 years 7 Sells were made consecutively, for a total withdrawal of $ 11275. . .which is more than the Arithmetic Average Investment for the 12 years. Although this ROTAI Method effectively shows the AIM-Method-Advantage over the Buy and Hold method it would certainly be rather confusing to a novice investor that is just getting his feet wet with AIMing
I will try another Optimisation Run at some other tome. Sometimes one finds a Yield Peak that is only a local maximum while with other settings a higher local maximum will be present.
Clearly, it is in ALL cases so that prices will not develop as in the historical series used for the optimisation. It is also obvious that without using a Filter to delay the Trades to the optimum points the yield will be much lower that the Up-Trend Method.
Thus Run surprised me though that I only got ~15% Annual Yield so far. With my previous Optimisation of SPY I used a Chart and I think I selected the points mostly on the Peaks and the Dips so I remember a much higher yield for that run.
It was interesting doing this again!
Especially effective here is the illustration of the ROTAY Yield showing that with a negative Time Averaged Investment for this run there was a lot of profit Taking when the prices got iut of the Big Dip. . .The Up-Trend Period. Obviously with a Filter one would have concentrated the buys in the First Dip @ ~82 and in the Second Dip @ ~74.
(1)Of course, I realise full well that the ROI Method considers the full amount of 20000 to be invested as a combinations of money in a bank account an money in equity. . .So in this sense the ROI is a legitimate performance indicator. . .Let it be known that I recognise that J but it is not an effective performance indicator if one injects new capital into a portfolio at arbitrary times and withdraws capital at arbitrary times. Then only the ROTAI Method is an good indicator of overall investment performance.
OK Ocroft, I should then get them from Yahoo Finance.
The problem I find with that is that they give about 4 tables, but now I know you used the closing prices.
Thanks,
Ocroft, RE: Your SPY Back Test Data
A SPY Backtest
Here is a 12 year (part one) backtest on SPY. I started from Jan 1, 2000 to 2012.
Would you be able to send me the SPY Price List you used for this Back test? I think it must be similar to the Price List I used for the 11 years 2000-2011 but I took the data from Chart.
I can not find the Optimization Run I did. I looked everywhere, so would like to redo that optimization with your data to see what I come up with for that 12 year run in Vortex and compare it with your Up-trend Test.
Just an Excel List with the prices and the dates. If you doe not have it in a Link the you can send it to my e-mail adres
eng@vortex(...)demon.nl <---- Remove the (brackets) and use 1 dot . . .otherwise some SPY Robots will send me SPAM
Regards,
Hi Ocroft, interesting you have gone back to the orinal SPY ~ 11 Year History to illustrate your uptrend method. I used that period at the start of 2011. It appears that you have used the same Portfolio details on cost and interest as I have been using on Spy. A good point for a comparison!againt the Unfiltered Vortex or AIM.
I understand your method and we agreed that if I would use Vortex with the same filters as you do we would obvioudly essentially get the same results.
What I did was to optimise Vortex with very roughtly the SPY data from that 11-year Run . . .I pickked the points from a piece of paper with the SPY Chart printed on it I have been looking for that Optimised Run but have not found it in my Dossie as yet. I may have thrown it away. I remember however that the yield was very high because it was a very volatile history but probably not 115 %. . .The optimization with all the highs and lows in it weakens the profit as compared to your method. . .certainly, because it also takes-in the less violent ups and downs.
The interesting thing was that for the 1-3/4 years since starting in January 2011 SPY was virtually dead and I had to drastically change the Holding Zones. . .I did not want to wait 10 years for a trade
Anyhow, for the 1 year - 8 months SPY did very little. . .Now I have a ROTAC=6,1 % and a ROTAT=14.4 %. . .That is bad!
I will look further for my SPY Optimized Run. . in the meantime I am very interested in what your method would have resulted in for the 1 yr-8 months sinds the start of 2011! There has been so little volatiliy that I wonder about that you might not seen any dips and uptrends large enough to trade anything at all . . . Vortex at least, due to having finally reduced the Holding Zones progressively lower had gained 6% based on Simple ROI, and 14,4 % on the time averaged Capital at Risk. . .This is only about % 6400!
Would you please run your Uptrend Run Test for us from January 2011 to 30 August 2012? . . .I am extremely interested in that. . .I bet the others are too. All this of course provided that SPY in 2011 would have satisfied your primary requierments for investing in it and using the settings you would have chosen in 2011 at the strat. . .You might even do as I did. . .after 3 month and no trades I started lowering the H-zones. believe it or not now thet stand at Buy = 1% asn Sell = 2% and I got a trade yesterday . . .I keep creaming the little profits( I hope) between the Trade Limits. . it is just a Game now
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.
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????
My Last Report on the Money Spinner
Up to today I have spend a great deal of time to dissect The Money Spinner and have provided this information to Heartland99 that wanted to find out the exact details of how it worked:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=79009865
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.
Anyone interested in discussions the Monet Spinner in detail with Heartland99 is welcome to do this on the Vortex AIMing Forum, or you can discuss it on this AIM Forum. . .or even start up an separate Money Spinner Forum
Regards,
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,
Hahahaha!
And did Shakespeare Aimsted right and profitted he from his steps to make Olivia's heart beat faster?
I was 50% right though with my paraphrase. . . It's flavour hailed from across the English Channel!
I should have known though. . .I read the tale in "A tale of Two Cities".
More Dope on the Money Spinner Dope
Any one that is not interested in my Money Spinner Analysis is strongly advised not to read any of my Dope on it . . . The Money Spinner is more like AIM than AIM ever wanted to be
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=78962497
If Shakespeare would have his way he would say:
It is the Best of AIMing.
It is the Worst of AIMing.
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.
More thought provoking features on the Money Spinner I had never realised where there when I read the Money Spinner Manual in 1980-1981.
Read and take notice
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=78935491
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.
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)
Here is something interesting for people that want to know the details of how the Money Spinner, that was published around 1980 by Chuck Chakrapani, actually works:
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=78924095
Regards,
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
Ocroft, just for Fun.
I have used your GE prices as provided. As I said with having knowledge of the prices I could have bought at price = 8.51 with a 1000 Reserve.
At that point the Buy Advice for Vortex at Zero Aggression was $ 7701.55 but I did not execute it. I executed it at 10,11 which is an 18.8% Recovery. I Bought 761.755 shares for the amount of $7701.55 10
For that date the Portfolio stood at:
Initial Buy @ 37,10 = 10000....270.1972 Shares Jan 2, 2012
End Condition 01-02-2013
Value @ price = 10.11 = 10433.24. . . .1031,9727 Shares
Reserve = 2298.45
Profit = -7268,30
PV = 12731,70
PC= 10433.24
Remarks
The accumulated buy @ 7701,55 at Zero Aggression could well have been have been 10000 if I had used a little higher aggression for the buying, so the result would be thee same as you would have done(as discussed). However, with 2298,45 Reserve now it would be possible to continue buying if the price dropped again significantly and IF I had still faith in that stock I just might do that, like you probably might. . .A good stock is good to buy at low prices!
On the other hand when the price recovery continues I would not sell all at 20% profit but I would sell a portion of it.
I suppose what I have done here is the essence of your method. . reight?
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,
Hey Ocroft, I know AIM Basic reasonably well from memory but have no longer the spread sheets. . .I get lost in the various versions of Vortex I keep here and there. . .and then when I look at them and say. . ."What the heck did I do here??? Good to be able to get spreads If I would need one. . .I do not want to get carried away to dive into that AIM Basic Thing again At the moment I am Running a Dry SPY Demo and normally I use that version if I start something new. It is "geared" not to go to negative Reserve.
If it used Clives, I would beat Vortex. If it used mine, we would be equal.
We both could probably beat Vortex if we observed its action with its own parameters used by its key operator. This is why I introduced the GE example.
You can decide on everything on your own then optimise the Run. . . that is ok with me.
The fat text is more or less what I was referring to earlier.
Just for Fun: How could Vortex beat Vortex?
Furthermore with the example you provided we have prior knowledge of future prices. . .In my statement I mentioned that for an assumed price behaviour, and IF that occurs, then all of us can optimise the yield to its absolute maximum. The Real Test would be on a Real Stock, and then do a run say for 6 months or a year.
On your example I have put in a Buy Hold Zone of 77% or so and then my first buy would be 20000 at the price of about ~8. Optimum perfotmasnce! Then with a Sell Hold Zone of 20% I would have made 20% profit selling the 20000 (or I could sell stepwise upwards). As it is the price rise is 18,8 % or so, it did not trigger a Sell yet.
Probably this is not what you meant, but I am not sure.
Question
Would you actually buy 10000 at Day 1 or would you use any other CER as I would? When I optimise for a specific price behaviour I might use a Reserve of 95% at Day 1.
I see two options here:
1. At Day 1 do Real Buy at some CER and then proceed AIMing virtually to the bottom and the recovery of X % to Buy the Accumulated AIM or Vortex Advice at the Bottom Price. . . .this is done at each Bottom. Does Ocroft Sell after that at a 20% rise or do you do some stepwise selling on the rising prises?
2. At Day 1 nothing is bought and one waits for the price to change. If it rises nothing can be sold. . .If they drop one has 20000 as reserve to play with.
Knowing the prices ahead of time and not laying down the rules makes the Challenge meaningless. . . .I then put in 100% at the Bottom. . .In reality I would not know that bottom, so I would have to wait till a recovery happens.. . The only thing is that I have not programmed Vortex . . .yet. . .to do this automatically. As a recovery occurs at the Sell hold zone I get a Sell Advice at a price of say 11 or 12. I know what the Buy Advice is at 8 and at 12 I can simply buy THAT amount of stock. . .that is what you appear to do too, but then we are doing the same thing.
This process using the Filter to detect the Recovery is not an Automatic one in Vortex. . .Vortex is not an Auto-Trading System. . .It is like AIM an Trade Advice System. . I as Manager can delay any trade I do not like and wait . . . in that mode I am The Filter and then I do what I think is the right thing to do. A test on unknown future prices would be interesting, but it would then depend on Stock Picking also. . .
The Ocroft Challenge
AIM Uptrend, applying an application that works, has a cash reserve of $10,000.
AIM Uptrend?. . . What system is that?
In regards to the system you described you had, I thought, 20000 in cash at the bottom of 41, the way it appeared to me . . .from memory. . .you would not buy anything at the start and would wait for a drop and then a recovery. That is the problem with verbal examples. . .the reader must make interpretations.
It was never clear to me if you actually bought 10000 worth of equity at the start(Day1)
Again, I didn't propose this scenario, but I have already out performed Vortex by knowing and then applying an application that works.
OK, who then Is the Fiend that started all this?
Anyway. . .This is getting to the bone that is to be chewed on. You are comparing specific AIM and Vortex examples on a case in which Clive gave his version, to your AIM with a Filter(What is the name of your System? Refresh my memory svp). . .Any one of us can apply a filter too. . . and if it is the same Filter we would have also Reserve =10000 at a price of 41 like AIM Uptrend. These discussions about filters are old ones.
AIM dofusdaddy link.
I do not recognize this. . .hold on. . I will open it. . .Huh? I see a zillion zeros. . .Never seen this site before. Too time consuming to get into it now.
37.01 -32.70 - 30.70 - 26.69 - 28.29 - 28.10 -25.50
19.51 -17.17 - 16.20 - 12.13 - 8.51 -10.11.
Please propose a scenario that would work best for Vortex, I am curious to see how I would fare.
I do not quite get it. Here we can look into the future and you suggest that with the 20000 to start with, and using use a Filter of my choosing, we will compare results?
I will give it a shot but not right now. . .it is past 4:25 AM and the hay is calling
I propose that on this run, knowing the future, I will optimise the system for these prices. Would you say that is OK? The point here is that Vortex does not have a Standard Version. All the parameters are variables.
In the Vortex case with the Reserve at 5746(as you said it was) at the Bottom that was special case with the purpose to Match the Standard AIM First Buy after having invested 10000 at Day 1. For example if St. AIM would have a Buy2 @ 80 of 1200 then I adjusted the Vortex Parameters so as to get a Buy at 80 of 1200. That was the only way to make a comparison with AIM so that we both had an identical start condition.
In this case you propose now this is not a condition. If you would tell me what the magnitude is of your Buy1 is at the start at Day 1 and then what your Buy 2 is thereafter, I could Match you that way and compare, and see what happens for these prices.
On the other hand if you let me decide on everything on my own then I optimise the Run. . .Is that OK with you?
Zzzzzzz....
What did you do????
You hit the kid with his own iPad?
Hallo Adam,
I agree with you 99,9%
It is 32 C in my home with all the doors open. . .there is no wind. . .Outside there is a Heat Wave hanging around, refusing to move. Everything outside that melts as 35 C is flowing down the street. I am sweating like a work horse. . . and I am almost naked while I write this. . .Good thing I am alone. . it would freak out somebody. . .I will go out, fight the heat, and find a place to have a cool drink.
I can no longer think of AIM, nor Vortex, nor Enron-ites, nor anything practical. . .after my post to Fuzzy today. . .I am at my last minutes of my life . . .so it feels!
The 0,1% has to wait. . .Maybe I made a mistake and 0,1% = 0%
Hi Fyzzy, it looks like you are beating a Life Horse that does not require a beating. . .it is running full speed already!
RE: 4) Regular AIM would run out of cash much sooner. You are not going all in at the first buy, just what AIM would have directed.
But that is already obvious and understood, and dealt with many times. I just added the "Unless, Of course . . . ." part as additional insight for what a smart investor would think about. No misunderstanding here, I am sure. . .I think. . .
I repeat your # 5 here. . .the one from the previous post I had a bone to pick aboutJ
5) You wait to sell anything till it goes down from a high instead of selling along the way.
You are factually stating here that one is to wait to sell anything till it goes down from a high. . as opposed to selling along the way. . .You are talking about the price going down and if that happens then you ought to BUY something at the appropriate price(either having delayed any buying or not). . . not SELL anything. I think it is obvious you missed the point that you used the word sell instead if the word buy. . .Otherwise what you said makes no sense at all.
Your extra explanation here in RE: 5) in your latest post may well be what you meant to say but this does not change the fact that what you said in 5) made no sense at all. That was my point I picked the bone about
Are we still friends?
Maybe you can be my Friend on Face Book too
We can discuss Any topic there and pick a lot of bones J
https://www.facebook.com/conrad.winkelman
Regards,
Ocroft,
In addition to what I mentioned previously on the. . . (What is new about your method???). . . method you describe is very similar as a method already known, and was discussed at length, when Don Carlson described it many years ago using his MACRO Filter . . . Buying only after a price reversal a Bottom had occurred and similarly Selling at the top after a price reversal had occurred there:
MACRO: Moving Average Cross-Over
The only difference is that Don applied it after he had committed himself to buying right-away at an acceptable Starting Point with a CER he considered appropriate. The advantage with that is that if the stock that is bought started rising right-away then Don could reap profits right-away on the way to the Top!!!
I know the MACRO-method quite well! Don discussed it with me and I tested it for him before he published it. I also coined the name MACRO for him
So, in that sense I see nothing essentially new in your method. The choice to start buying right away, or not, at Day 1, at an appropriate CER, is a practical one:
a) If the stock is to one's liking(Stock Picking) and moving down already then one better waits with buying till the Bottom(+Hick-up). . .(Read: Cross-Over). . .had occurred;
b) If the stock is obviously rising then jump in right away at the selected CER;
c) If the stock is moving sideways between a Trading Range(TR) then jump in very close to the Bottom of the TR.
I see no essential difference between that and your method. . .the differences are simply slight personal preferences based on market behaviour observations and understanding the “readings”.
Hi Fuzzy, I take your remarks one by one:
While I see some issues with Ocroft's method they are not as bad as you suggest.
I did not in any way suggest that Ocrofts Methods were bad! In fact with many methods that people understand and if they pick the stock well, they can do very well indeed! There is nothing wrong with the method. It simply has weak points just like AIMing has;
1) He identifies a stock he wants
Perfect!!!!
Many people in The Herd buy what they are told to buy by The Herd
2) He pretends he buys it and pretends he buys more on each AIM directed buy
Perfect! I understand! He is one of the few that knows what to do
3) When it moves up in to the hold zone (after a directed buy) or the actual first sell (I forget which) he then institutes an AIM directed buy
Perfect! I understand!!! He knows what he is doing! It does not matter that you forgot And my take on it is that it does not matter. . . At a big Drop he might as well put in the Full Amount he allocated to the Portfolio(20000) or he could decide to only put in the 10000 if he would have faith that at a price of 20 if he would still consider the stock worth buying. . .That is one of my Golden Rules: Only buy stoks that are worth buying. . .If that is the case a low price is a bonus!
If however the price reversal would have occurred at about 70 the I suspect Ocroft would execute approximately an Accumulated AIM Buy, or simply throw in 5000 as a reasonable amount. . .Between 1995 and 2000 I made a LOT of money with AIMing just like that: I did not use the AIM-formula and neither the Vortex-Formula. I Eye-balled all of it and made load of profit!
4) If a stock reverses and goes back down, you wait again to purchase more till it goes up.
Unless, of course, at the First Bottom (+ Hick-Up at the Buy Point) all the Reserve Money has been used up for buying. . .or that may have happened at the 2nd or 3rd Bottom(+Hick-Up). Eventually if the stock keeps dropping and recovering with a buy resulting at every hick-up then for every man there comes a point he can not or want not to buy more. . . and then comes the time to either Bail Out or to hope for a Recovery in the future. . .At such points Algorithms are of little use and a Judgement Call will have to be executed.
5) You wait to sell anything till it goes down from a high instead of selling along the way.
People on this Forum . . .would all have a bone or two to pick on this Wait to Sell at the Bottom ???? It’s much better to Buy at the Bottom . . .unless one is Bailing Out
Forum Manager,
I have made some needed corrections and because of that Post #'s 35724 and 35725 have become obsolete and have been replaced with post # 35726.
Please remove # 35724 and 35725!
This will prevent confusion!
Hi Ocroft:
"Move in for the kill at the bottom."
This issue has been on this Forum for as long as I can remember, although I can not remember now just how long that is
What you are suggesting is essentially a sort of fundamental technique that is used in combination with TA. . .and with any other investment concept:
Identify the Bottom and jump in. . .Identify the Top and jump out
This is nothing else than the foundation of investing that any kid can undestand:
Buy Low & Sell High
There is nothing new here!
Saying that you would Not buy at 41 but at 46 (+12,2%) could just as well be
Not buy at 41 but at 44 (+7,3%) or even Not buy at 41 but at 48 (+17%)
Any Recovery price could work out fine or it could work out wrong(you said as much yourself).
So, you Buy at 46 and invest a Lump Sum =10000(you may have been waiting a year for this), then the price drops to 42. . .What do you do then? Do you have an algorithm for what to do at 42 ???
As has been pointed out this method can result in a disaster of repeatedly missing the bottom and buying high and repeatedly missing the top and selling low. . .(extreme example of course).
In the year you have been waiting to identify the Bottom @ a 12,2% Recovery the stock price may have cycled +/- 11,8% 10 times while on the average the price has dropped from 100 to 41 and then you would have been waiting for a year doing nothing An Vortex AIMing(1) approach with a Hold zone of +/- 10% may have executed 10 profitable Sells and reaped a good profit while you have been waiting 1 year for a 12,2% Recover after a price of 41 and have done nothing yet. An AIMer may have dropped in value a bit on the first 10000 but may have invested more money at low process and his number of shares would be increased a great amount on the cycle profits(Volatility Creaming).
On a down trend one can even increase the Total PV and then when the Recovery starts the large number of share acquisitions will accrue profits rapidly, and if the up trend is just as volatile then there is more profit reaping even when one is in a selling spree.
The point being here is that any one of us can propose a scenario that would work best for a particular Investment Scheme. . . and if the price follows the proposed scenario then it would beat most other system(if not all of them) that were not “geared up” for that specific scenario
You method is well known already. . . .So I am curious what you are actually presenting in relation to AIMing??? We already know about all many techniques that can be used for delaying the investments to lower prices.
So, is that the only thing you are saying. . . that it is better . . .generally. . . to invests only at the Bottom. . . and I presume. . . that it is better to sell only at the Top?
(1)
In Regular AIM at a +/- 11.8% price cycling may not do this effectively due to the Residual Buy Effect. . .waiting extra long for the recovery price change to be large enough to trigger a reasonable Sell amount. . .The Vortex AIM does not have this feature. . .It advices a proportional Trade Size in proportion to the Price Change from the last trade. . .Vortex is a Ratio Trading System (Y= aX). . . .Standard AIM is more like an Offset Trading System (Y = AX - b).
The difference between the two systems is actually more complex that . . .AIM is also extra Asymmetric due to the PC-Update is not done for rising prices. . .this makes AIM and Vortex very difficult to compare on a one-to-one basis for any example.
All that can be done practically on this is to Compare the End Results for the Portfolio's in which the starting conditions are identical so that the First Buy and the First Sell would be identical under identical Hold Zones . . .From that point onwards the results will start to diverse. . .either Vortex or AIM would perform better after a long trading period. . . .this is solely determined by how the price changes develop.
I might add here that in Vortex AIM the Yield as a Fraction is now defined quite differently as in Standard AIM:
In AIM this is done as Yield-fraction = (Profit)/( Initial Cash +Initial Equity)
In Vortex this is:
a) Yield-fraction ROTAC = (Profit)/(Time Averaged Cash Investments)
b) Yield-fraction ROTAI = (Profit)/(Time Averaged Equity Acquisition Costs)
In these two formulas I have included cost factors for the equity acquisitions, interest earnings and dividend in an appropriate manner.
The Yield Figure is therefore a very realistic figure for the Capital @ Risk
Forgot to add the Note(1) in the above:
(1)
In Regular AIM at a +/- 11.8% price cycling may not do this effectively due to the Residual Buy Effect. . .waiting extra long for the recovery price change to be large enough to trigger a reasonable Sell amount. . .The Vortex AIM does not have this feature. . .It advices a proportional Trade Size in proportion to the Price Change from the last trade. . .Vortex is a Ratio Trading System (Y= aX). . . .Standard AIM is more like an Offset Trading System (Y = AX - b).
The difference between the two systems is actually more complex that . . .AIM is also extra Asymmetric due to the PC-Update is not done for rising prices. . .this makes AIM and Vortex very difficult to compare on a one-to-one basis for any example.
All that can be done practically on this is to Compare the End Results for the Portfolio's in which the starting conditions are identical so that the First Buy and the First Sell would be identical under identical Hold Zones . . .From that point onwards the results will start to diverse. . .either Vortex or AIM would perform better after a long trading period. . . .this is solely determined by how the price changes develop.
I might add here that in Vortrx AIM the Yeild as a Fraction is now defined quite differently as in Standard AIM:
In AIM this is done as Y-fraction = (Profit)/( Initial Cash +Initial Equity)
In Vortex this is:
a) Y-fraction ROTAC = (Profit)/(Time Averaged Cash Investments)
b) Y-fraction ROTAI = (Profit)/(Time Averaged Equity Aquition Costs)
In these two formulas I have included cost factors for the the equity aquisitions, interest earnings and dividend in an appropritae manner.
The Yield Figure is therefore a veru realistic figure for the Capital At Tisch
Hi Ocroft:
"Move in for the kill at the bottom."
This issue has been on this Forum for as long as I can remember, although I can not remember now just how long that is
What you are suggesting is essentially a sort of fundamental technique that is used in combination with TA. . .and with any other investment concept:
Identify the Bottom and jump in. . .Identify the Top and jump out
This is nothing else than the foundation of investing that any kid can undestand:
Buy Low & Sell High
There is nothing new here!
Saying that you would Not buy at 41 but at 46 (+12,2%) could just as well be
Not buy at 41 but at 44 (+7,3%) or even Not buy at 41 but at 48 (+17%)
Any Recovery price could work out fine or it could work out wrong(you said as much yourself).
So, you Buy at 46 and invest a Lump Sum =10000(you may have been waiting a year for this), then the price drops to 42. . .What do you do then? Do you have an algorithm for what to do at 42 ???
As has been pointed out this method can result in a disaster of repeatedly missing the bottom and buying high and repeatedly missing the top and selling low. . .(extreme example of course).
In the year you have been waiting to identify the Bottom @ a 12,2% Recovery the stock price may have cycled +/- 11,8% 10 times while on the average the price has dropped from 100 to 41 and then you would have been waiting for a year doing nothing An Vortex AIMing(1) approach with a Hold zone of +/- 10% may have executed 10 profitable Sells and reaped a good profit while you have been waiting 1 year for a 12,2% Recover after a price of 41 and have done nothing yet. An AIMer may have dropped in value a bit on the first 10000 but may have invested more money at low process and his number of shares would be increased a great amount on the cycle profits(Volatility Creaming).
On a down trend one can even increase the Total PV and then when the Recovery starts the large number of share acquisitions will accrue profits rapidly, and if the up trend is just as volatile then there is more profit reaping even when one is in a selling spree.
The point being here is that any one of us can propose a scenario that would work best for a particular Investment Scheme. . . and if the price follows the proposed scenario then it would beat most other system(if not all of them) that were not “geared up” for that specific scenario
You method is well known already. . . .So I am curious what you are actually presenting in relation to AIMing??? We already know about all many techniques that can be used for delaying the investments to lower prices.
So, is that the only thing you are saying. . . that it is better . . .generally. . . to invests only at the Bottom. . . and I presume. . . that it is better to sell only at the Top?