Hi Steve,
"...What is "Magic" about the 26 week moving average?"
I'm not sure about the origin of the "26 week ema", but I am aware of several "important" ema's that are generally accepted by most software vendors or charting applications. Probably the most common are the 13 period and 50 period ema's. For example, if you ever visit Clearstation.com, their charts have the 13 and 50 period ema's as default settings. Many of the better charting websites.......ie., BigCharts.com, StockCharts.com, etc., give you the option to use whatever ema's or sma's you like.
"...Could some method be used to measure percentage movement up and down from that level? And then the relative difference between these 2 be used to 'shift' the 'Sum of Settings' from center more towards the Buy or Sell sides?"
When I originally attempted to tweak AIM I tried to do something similar. I found that the nature of AIM's algorithm didn't really allow for......additional mathematical component's. At least not if you wanted to preserve the AIM model as it was intended. I'm not saying this is a bad thing, for Lichello developed a very simple, stable piece of work. Perhaps an analogy would be, he created a very fine wine that can't be altered unless one desires to produce a different flavor entirely, but still be classified as wine. (Probably not the best analogy, but I think you get the point).
Anyway, in order to use what you suggest, (a method to measure up and down from some level and then the relative difference between these 2 be used to 'shift' the 'Sum of Settings' from center more towards the Buy or Sell sides), I created X_DEV by using a 12 day sma and then structuring the algorithm so that the X_DEV bands could be spaced at different distances from the stocks 12 day sma to find it's "optimal buy-sell range".
As you know, AIM's buy-sell range and trade sizing are determined by your PC (portfolio control) and SAFE settings. With AIM, the price of the stock is all important. The price determines your SV (stock value) which is then measured against the PC and SAFE to determine if an action (buy or sell) can be made and how large or small that action should be.
Because you can't alter price, AIM's algorithm prevents much.......manipulation......to determine if that action will produce optimal results (or returns). AIM just assumes it will (produce optimal returns) based on the current size of your stock value as determined by the current price of the stock. AIM can't know (doesn't even care to know) what the current trend of price may be. This is a very important aspect of AIM and a crucial philospohical and therefore debatable topic for those that think AIM is fine the way it is and should not be altered, and those that develop all the AIM variants. It's the "black box" non-subjective vs. semi-subjective argument. Which approach is better can only be determined on an individual basis, and dependent on the individuals experience and skill level......in my opinion.
The AIM variants and X_DEV (whether X_DEV is an AIM variant is also debatable I suppose) can show optimal returns in comparison to AIM BTB because they are not limited by price alone. Most of them, certainly X_DEV, take into account the quality of price action (it's current "bias" or trend) along with it's absolute price to determine action (buy or sell).
Some AIM variants will be structured so that the "trend" can be determined as mechanically as possible. More flexible AIM variants will allow the trend or "bias" of price action to be determined both mechanically and semi-subjectively, which I feel can lead to exceptional results for those with some degree of trading experience.
The methods used to determine the quality of price action is what will separate the superior AIM variants from the less superior. I believe this is the underlying question of your post. The "magic" is not in any particular static setting, but in how the particular setting is found.
I hope that gives you something to think about as you "slather the sauce" today. g
Happy Memorial Day everyone!
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