A.I.M. Users Bulletin Board

[lrp42]

Hi Allen and Adam,

One thing that might help you decide on what size triggers to use for transactions, in addition to ZigZag overlays on a chart, is to also add the Average True Range (ATR) technical indicator to the chart. It is a measure of the Volatility of the stock or ETF. Here is the StockChart definition and explanation:

http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:average_true_range_atr

The daily price ranges ATR can vary anywhere from about one-half of 1 percent for mutual funds up to several percent a day for a leveraged ETF or individual stock.

For the past several years I have only done LD-AIM programs because I like to have a lot of programs over a wide variety of different sectors, countries, etc. For the most part most of my LD-AIM programs are now with leveraged ETFs. My personal preference is not to use a leveraged ETF for a "By the Book" AIM program because of the "time decay" built into holding these leveraged products over a long period of time. However, with LD-AIM programs you can sell out and go to zero balance holdings depending on how many "Sells" with which you begin the program.....sometimes very quickly.

The default time period for the Average True Range (ATR) at StockCharts is 14 days. I personally like to use 21 to 50 days (depending) to get a smoothing of the volatility over a longer period. The more volatile the holding, the longer time period I use. It just gives me a better handle on what settings I should use for the LD-AIM program.

Best regards,

Ray