Hi Toofuzzy, I am trying to keep it simple but flexible, there are always trade offs.
You said
1)Use either the 52 week high and low or absolute historical high and low.
I feel this should be up to the investor. But I like the ideal of using the 52 week hi low prices, or price channel (not sure how many days would be best), or the NAIC's Stock Selection Guide work form.
2)Be 100% invested at low and 0% invested at high
I think this should be left up to the investor. The reason being a young investor, may want to use 0% and 100%, but a older investor may want to use less of a percentage range, like 40% and 60%.
3) formula: (High-Current Price)/ (High-Low Price) = % invested
This is very close to what I use but I keep the %invested between the high low ratio settings.
the next month the price drops so that the formula says to be 75% invested so: Add the current stock value to the $1,100 in cash plus the additional $200 cash added for the month. 75% of that is the amount of stock you want to own.
Doing the above would be so simple that a computer program wouldn't be needed. A minimum investment amount can be used to keep the trade sizes reasonable.
Put new cash where it is needed. But what happens when the formula tells you to own very little stock because stocks are near their highs? Maybe re-balance between the stock ACCOUNT (even though most of it will be cash) and the cash ACCOUNT (which will always be cash (or bonds).
This is what I plan on correcting next, right now my buy/sell triggers are getting in the way.
Come see me at Systematic Investing group #board-966 lets talk formula plans.
