AI
Monday, May 27, 2002 2:37:01 AM
Hi Robert,
It's hard to predict the effect of the update period. In your example, the shorter period is more effective, but turn the numbers around, and it is less effective. With a price of $15 after two weeks, AIM will sell, and with $20 after a month, AIM will sell again. But now the monthly updated AIM will have the advantage. What to do?
There are two schools of thought on update periods: fixed update periods, and 'grab the first buy/sell point'.
With the fixed updates, shorter update periods might capture more action, but they also might start the action too soon. When you use weekly or biweekly updates, it would seem a good idea to lengthen the period to at least a month in a string of transactions in the same direction. This might be very important for buys, as cash is a limited resource in AIM. AIM will never sell you out of a position completely, but it is possible to exhaust your cash.
Of course buy-sell sequences can't come fast enough, and that's were the GTC folks come in. They place Good Till Cancelled orders at the buy and sell point, and lay back. Repeat when one of the orders triggers. For the same reason as above, some people prefer to enter a new buy order after a buy (and a sell after a sell) after some time has expired, say a month. (The order in the opposite direction is of course entered immediately!) Again, spacing out is especially important for buys, because of the limited cash. And a very small minority does enter a buy order directly after a buy order (or a sell after a sell), but, say, 30% lower than the calculated buy point. Every day they raise the target by 1%, and after a month they keep it at the normal buy point. Fun when it works, but it is a lot of work, and it is not guaranteed to give superior results either.
And the bottom line remains: it is hard to predict the effect of all this tinkering. Standard AIM is probably good enough for a lot of cases. When you notice that you are missing opportunities, shorten the period, ans when you notice that you are reacting too fast on the action, slow down.
DISCLOSURE: I am a GTC guy.
I hope this helps, but I'll settle for a spinning head
Have fun (and profits!) AIMing!
Regards,
Karel
It's hard to predict the effect of the update period. In your example, the shorter period is more effective, but turn the numbers around, and it is less effective. With a price of $15 after two weeks, AIM will sell, and with $20 after a month, AIM will sell again. But now the monthly updated AIM will have the advantage. What to do?
There are two schools of thought on update periods: fixed update periods, and 'grab the first buy/sell point'.
With the fixed updates, shorter update periods might capture more action, but they also might start the action too soon. When you use weekly or biweekly updates, it would seem a good idea to lengthen the period to at least a month in a string of transactions in the same direction. This might be very important for buys, as cash is a limited resource in AIM. AIM will never sell you out of a position completely, but it is possible to exhaust your cash.
Of course buy-sell sequences can't come fast enough, and that's were the GTC folks come in. They place Good Till Cancelled orders at the buy and sell point, and lay back. Repeat when one of the orders triggers. For the same reason as above, some people prefer to enter a new buy order after a buy (and a sell after a sell) after some time has expired, say a month. (The order in the opposite direction is of course entered immediately!) Again, spacing out is especially important for buys, because of the limited cash. And a very small minority does enter a buy order directly after a buy order (or a sell after a sell), but, say, 30% lower than the calculated buy point. Every day they raise the target by 1%, and after a month they keep it at the normal buy point. Fun when it works, but it is a lot of work, and it is not guaranteed to give superior results either.
And the bottom line remains: it is hard to predict the effect of all this tinkering. Standard AIM is probably good enough for a lot of cases. When you notice that you are missing opportunities, shorten the period, ans when you notice that you are reacting too fast on the action, slow down.
DISCLOSURE: I am a GTC guy.
I hope this helps, but I'll settle for a spinning head
Have fun (and profits!) AIMing!
Regards,
Karel
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