A.I.M. Users Bulletin Board

[Conrad]

Clive, your proportional ladder for 10 steps does not have the slow start I have at the midpoint. I have adapted my ladder to 10 steps to match yours and have imposed a progressive trade function:

Step..% Del R..Reserve..Buy
0.........0.........40000
1.........1.........39600.....400
2.........2.........38808.....792
3.........4.........37256.....1552
4.........6.........35020.....2235
5.........9.........31868.....3152
6.........13........27726.....4143
7.........20........22180.....5545
8.........30........15526.....6654
9.........50........7763......7763
10........100.......0......... 7763
------------------------------
Sum Investment.........40000

(I cant manage to get a picture put in! How do I do that?
The
[picture] [/picture] . . .picture = img
does not seem to work. . .I spend hours and hours to try to get this done!)

I mean this one I made up for it
http://www.facebook.com/profile.php?id=100000376827032#!/photo.php?fbid=167675829921643&set=a.167675743254985.30517.100000376827032
hours ago

Anyway, I can easily modify the last of the ladder so that a bit of cash is left at step 10:

Step..% Del R..Reserve..Buy
0.........0.........40000
1.........1.........39600.....400
2.........2.........38808.....792
3.........4.........37256.....1552
4.........6.........35020.....2235
5.........9.........31868.....3152
6.........13........27726.....4143
7.........20........22180.....5545
8.........30........15526.....6654
9.........50........7763......7763
10........70.......2329......5434
------------------------------
Sum Investment.........37671
and there is 2329 cash left to invest, if then the price goes through the bottom limit.

On the top I can do the same thing and have a certain amount of equity left in case the price keeps rising.. .defining all sorts of trade functions is not the problem. How to use them is!

The first "problem" I recognised is that close to the Mid Point the trading action is very small and if the price keeps cycling there the volatility capture is minimal. I think you referred to this. . . In any case I would need to program the ladder that as soon as the price gets out of the Holding Zone the trade on Step 1 should be about the Minumum Buy, of course.

On the other hand if the price moves al the way to the limit then I have an efficient cash burn. The investor should be prepared to change tactics if the price behaviour deviates form what was expected to happen. So the "problem" is no problem in this case.

The bigger problem I encounter with this type of progressive ladder is what to do when the price trend reverses half way to the limit. Suppose the price is at step #7 and hand a buy 5545 is executed and the price reverses. Since I am still in the Buy Region the Sell Ladder does not apply, and if I get to any selling then I have no solid plan (as yet) as to how much to sell (other than arbitrarily using various options there obviously are).

1. Wait for price to get out of Holding Zone;
2. Then sell on the normal Vortex AIM algorithm until price gets to the Mid Point, reset the ladder and let is go as a new starting condition. This means that I would not use the ladder on the way up but would use slow or delayed selling. If the price cycles the volatility capture does its job. If the price cycles a long time below the Mid Point then the Mid Point will drop automatically down, and the average cycle price becomes the Mid Point.. . .this is a piece of cake!

3 The other choice is that after a large buy on step 7 I switch the Mid Point to the new lower position, but then it s not really a mid Point. It would however ease off on the trading either way. This would be fine if the trading range has dropped down but if the price runs up then "ladder selling" would exhaust the equity too fast. This does not appear to be a proper action.

4 So, the problem I have with this progressive ladder is that I have no standard way of responding to the price behaviour like happens in normal aiming. This makes the simple idea of the progressive ladder difficult to capture in an [I]automatic response algorithm[/I]. What I should really have is several trade algorithms ready at hand and then let the price behaviour decide which trading model is to be used. A tall order that requires a lot of programming

It appears to be A Bridge to Far.