Hi Adam, I think it should be clear by now that, after everything I have written about it, is that my "beef" about the Residual Buy Signal is not a matter of aesthetics but a matter of the function of the Advice Generator: An Advice(Trade Signal) should be followed up. . . especially in a system that is called Automatic Investment Management. My argument has nothing to do with the effect on yield: If you are going to ignore the Residual Buy Signal anyway then setting the Advice=0 after a trade is executed will have zero effect on yield. When you are going to execute the Residual Buys then it definitely will have an effect on yield. . .especially if the stock price had dropped a lot. If the stock price keeps dropping then you should be advised to use external information to decide to keep buying or not, or to bail out. . .thus overriding the AIM Signals! . . .I repeat that the normal AIM operating mode appears to be to ignore the Residual Buy Signals. Then it is logical to set the Advice Generator to give Buy Advice=0 after each trade. If then you decide to buy more shares at the low price because of sensible external information(inside information for example) then it is perfectly sensible to buy more shares, but THEN you might as well ignore the Residual Buy also and put ALL the money you have(and more) on that stock. . .such overruling AIM has nothing to do with the AIM algorithm that is supposed to give an optimum Buy Advice.
In regards to the "problem" of deep divers this is nothing unique to AIM if you have an effective overruling management technique. If you do not feel comfortable with it. . .bail out right away. . only keep stock that is worth keeping. . .plus: only buy stock that is worth buying. This is the type of advice that should not even be necessary for any one that is investing. . .!!!
Would you buy a car that is not worth owning?
Now an issue in regards to Residual Buys and Deep Divers: If one is already "scared" to execute Residual Buys in normal volatility trading then it is simply a very logical thing to set the Trade Signal=0 after every trade. If prices drop faster than you expected then the feature of having the Buy Advice=0 would be even more logical. . .it would act as a filter to STOP executing the AIM buying frenzy that is implicit in the Residual Buy Signal!
So, again, my opinion on the AIM Advice Generator is that after each trade it should give a zero-Trade Advice. How much stock you want to buy at a given price change had nothing to do with it and you can decide that question by setting the AIM parameters as you like them to be. . you can set SAFE= 0 or even SAFE=-0,2 if you want to. you can set the Holding Zone high or low and the Min. Trade as you see fit. All these things are done, or at least have been discussed as real options for AIM in order to get the Trade Signal that are wanted. . .
Why then not set the Trade Signal=0 after each Trade IF you want to ignore the Residual Buys anyway?
