Don Carlson,
I am not sure if I reacted to your private message on your Trading Range
Multiplier, so I repeat my reaction here(more or less).
As I remember it you had some kind of algorithm that measured the Upper/Lower bands and the Mid Point of the Trading range and then accelerated the Buys/Sells when the stock price moved towards these bands. I do not remember(maybe I never analyzed it) what your Multiplier would do if the stock price moved through these bands.
In my system the exponential Multiplier simply continues to be calculated and the Buys/Sells are therefore determined simply by the exponential function, and for the Buy this means that the Market Order grows strongly as the price drops below the trading band. This however is no problem as the purpose of the Exponential Multiplier is to exhaust the cash at the lower trading band. When the price drops below that band there is no more cash to invest anyway!
With this technique a Deep Diver must be tolerated or one has to bail out if the writing is on the wall.
On the Sell side I have two options:
1) An accelerated Sell Policy that is more or less symmetric with the Buy Policy but with its own exponential coefficients. This way one can select to exhaust most shares at a certain profit level:
2) An exponential function with negative coefficients. This will result in a decelerated Sell policy so that as the price keeps rising the selling of shares is slowed down, but enough shares are sold to make a good profit(Risk minimization). This option is in line with the general AIM focus.
With Option 2 the investor can sell a big chunk at top price when he thinks he is ready for it(overriding the very small Market Sell Orders).
I have combined several general options that all AIMers appear to look for:
A) Continued trade activity within the Trading Range;
B) A delayed cash disbursement mechanism to spend the cash predominantly close the statistical bottom trading band;
C1) A Sell Policy that creams off the profits within the Trading Range and lets the profits run above the Trading Range;
C2) A Sell Policy that creams off the profits within the Trading Range and Sells off the shares rapidly above the Trading Range.
This description is maybe not so much different than what you have developed previously. I suppose that with the choice of the coefficients in you system you can also control the trading exactly as you want it.
Regards,
AI
