A.I.M. Users Bulletin Board

[ls7550]

Say your stock drops below the hold zone. You don't follow advice of AIM but hold off and wait for your buy filter to kick in. The stock makes some recovery. Say it goes back into the hold zone (not an unlikely prospect) -- so with this advice you're making your buy of 10 shares at a price within the hold zone. Am I correct.

That's my understanding - other than 'wait for your buy filter to kick in'.

Review in January, AIM indicates a buy, you actually buy at the February review date - unless another buy is being indicated at that time (in which case you wait another 30 days ...etc and then buy all of the additional stock in a single larger trade).

In effect seeing the potential start of a longer term downward trend and deferring actual buying for 30 days after that trend has faltered/stopped/reversed. Sometimes that trend will have reversed (back into the hold zone) and you relatively lost out by having waited 30 days (paid a higher price for the stock). In other cases the trend might continue and you relatively won by having waited (bought the stock at a relatively lower price).

I use my own Ladder style of AIM (based on a log stochastic where I set a top at which I'm happy to be all-out and a bottom at which I'm happy to be all-in) - which has proportional price change steps between each rung (trade points). If I trade at each and every step (rung) generally that's (considerably) less rewarding than trading multiple steps at a time (single larger trades less frequently). PnF type trading, where you trade at box-reversals (shortly after the general trend has changed to the opposite direction). The ideal is to have traded a single buy trade relatively close to the bottom and a single sell trade relatively close to the top, rather than cost averaging in (out) across the entire trend range.



Generally there are more frequent instances of relatively losing-out by a little (trend reversed so you bought at a slightly higher price/sold at a slightly lower price), interspaced with relatively winning by having traded larger amounts at the more extremes (trend continued and you cost averaged in (out) closer to the trough (peak).