AIM enhancement
I'm a long time AIM fan, recent user and new board lurker. Many of you seem to be interested in tweaking the AIM algorithm with an eye to squeeze more juice from the machine. I would like to submit an idea that you that may or may not have merit, but someone may find a use for.
It seems to me that the BTB AIM is a great mechanical trading system, and the new techniques and enhancements (split safe, Vealie, AIM-Hi) have added to the utility of the algorithm. In keeping with the mechanical nature of AIM, I would like to submit the idea of a self-adjusting safe.
The idea is simple. When you get consecutive buy or sell signals, a small percentage of the safe value is subtracted away from the safe value to accelerate the amount of stock purchased or sold so as to buy or sell more shares at the peaks. Let's examine a case where you have four consecutive buy signals (there may be no signals in between, as long as there are no sell signals). On the first signal normal transaction, but to calculate safe on the second buy signal, multiply the current stock value times .08 (instead of .1) so that your signal has twenty percent more strength when it is filtered through the adjusted safe function. On the third signal, multiply times .06, and on the fourth, multiply times .04 where we would stop and reset to .1 for the next sell signal. Each consecutive buy signal is filtered through a smaller safe value, increasing the amount of stock purchased at a lower price.
The concept is the same for selling signals. Decrease the safe value on consecutive sales to sell more shares while the stock is peaking. In a buy-sell-buy-sell situation, the default configuration holds and no adjustments are made. I seem to remember testing this with favorable results, but I can't find the spreadsheet (three computers ago). If anyone has the gumption and expertise, I would be curious of any testing outcomes. Note that the .02 deduction amount of safe is just for example, it could be a 25% deduction of the safe amount, or 10% (hence never becoming negative...hmmm there's an idea), if you had many consecutive transactions of the buy or sell variety. The beauty of this idea reflects the beauty of AIM: set it and forget it. The self-adjusting safe tailors itself to your AIM needs.
Anyways, I’d be interested in hearing thoughts on this new enhancement for AIM. Thanks, and cheers to all.
banjanxed
AI
