Hi Neil, Re: Mattmod..........
I, too, remember when Don Carlson and Mark Hing did considerable work with this function. Generally, as you've noted, MattMod helps AIM's Purchasing Department the most. Because order size relates to total portfolio value of the stock plus the cash reserve, it tends to make slightly delayed and therefore "better" purchasing decisions upon the start of a decline. (obviously when the cash reserve is next to zero, the effect no longer applies, as it approaches pure AIM)
There's also an effect on the Sales Dept. with MattMod. As the cash reserve value increases, this is taken into account in calculating the minimum order size. Order size increases as a percent of the total value of the holding, stock plus cash, making successive orders larger and larger.
I do something slightly different. Years ago Steve "Grabber" said he was linking the Min. Order size to Portfolio Control. His reason was to keep both the buy and sell orders the same value, even if the number of shares would be different. After experimenting with this idea I found it to also be of benefit to the Purchasing Dept. Since Portfolio Control only goes "up", then so does the Minimum Order Size. So, sequential buys get bigger and bigger requiring greater discount to accomplish.
On the Sell side, there's no change from traditional AIM. Each sequential sales minimum order will be the same value as the previous sale. This is because there's no adjustment to Portfolio Control when selling.
I've never attempted to "test" MattMod vs % Portfolio Control min. order size. I've done enough testing of the %PC min. to feel comfortable with it and I like the uniformity of order value that it gives. I don't have any idea if it's "better" than MattMod, but it's easy!
Best regards, Tom
Port Washington, WI 53074
AI
