Clive, I have been giving this subject some thought.
The classic AIM program would have an investor increase their Portfolio Control by one-half of each purchase. To avoid the "Lichello Flaw" an investor would need to progressively increase consecutive purchase amounts to accomplish the goal of Mr. Lichello. In looking at The Book and the 10-8-5-4-5-8-10 exercise by Mr. Lichello, I see where his first exercise Market Order was $600 and his ending exercise Market Order was $260,601. Quite a bit of difference created by increasing the trade size progressively.
However, by keeping the same minimum trade amount each time then why bother with increasing the PC by one-half of the purchase? Why not just keep the PC the same throughout the entire program? Instead, why not just perform a "Constant Value" or "Constant Dollar" or "Core Position" program instead of an AIM program?
Rhetorical questions....just thinking out loud.
From what I can see, AIM is a sophisticated derivative of this Core Position type program. The major difference, to me at least, between AIM and a Constant Dollar (Core Position) type program is that AIM increases its Portfolio Control (Core Position) with each purchase, with the idea and thought of progressively increasing future trading size amounts; whereas the Constant Dollar/Core Position type program trades around a fixed dollar amount which never changes. By keeping the Core Position (Portfolio Control) at a Constant Dollar amount, then trading a fixed capital amount trade size makes sense (at least to me) if one wanted to keep their capital trading size amount the same each time they trade.
Just my thoughts on the subject.
Best regards,
Ray
