A.I.M. Users Bulletin Board

[OldAIMGuy]

Good morning Toof, Re: Formulae for calculating AIM's next trade targets.......

My formulae were created to give the trade price for a minimum share order size. This was done originally back when commissions were based upon a 100 share minimum order size. Back then you paid a high base commission on any trade of 100 shares or less. In the '90s as the discount brokers became reality this inhibition for small orders was dramatically reduced.

In my case, the ratio of the minimum share order size and total shares owned becomes your controlling factor for order size regardless of dollars. Later I believe I made a change to these to calculate these minimum prices based upon minimum dollars, but would have to look in the archives. In Newport we had both "Share" and "Dollar" formulae with a "whichever is the larger dollar value" statement. In that way minimum shares could rule on selling while minimum dollars could rule on buying. So, you could have a minimum of 100 shares and/or $1000 which would work on a stock of $10/share or more (satisfied both Min Share and Min Dollar)but would give different share counts on an $8 share price (satisfied Min Dollar but needed to buy more than 100 shares).

0.9 and 1.1 were the SAFE constants in these. In your case, you combined SAFE and Min Order into one value. Yours should approximate the next target trade prices just fine.

NSP - Next Sell Price
NBP - Next Buy Price
SO - # of shares owned
MSO - Min. # Trade Shares/Order
PC - Portfolio Control

               PC  
 NSP = ----------------------  
        SO (0.9 - (MSO/SO))  
  
                PC  
 NBP = ----------------------  
        SO (1.1 + (MSO/SO)) 

These two will give you the price/share for minimum order sizes and standard Lichello SAFE of 10%. You can vary the SAFE values for buying and selling and you could stage the orders for different minimum order sizes for buying and selling if you wanted.