A.I.M. Users Bulletin Board

[Conrad]

Hi Grabber,

On this Board we all hail from Babylon and constantly misinterpret each other, or at least a lot of the times.
My reference to how other systems calculate trade amounts and what sort of Reference Number they use(In Vortex AIM it is called "Reference". . .I really do not like the "Portfolio Control" name as it does not "control" the Portfolio. . .the investor does by his executions. . .and that are often "interferences". .as it should. . . with the investment algorithm) is simply my question to ponder what might be common to all systems. . .THAT would be informative.

Now back to what you mean. . .you might have given an example. . . that would have saved me 1000 words. . and you too.

. . .increase/reduce the PC by the cost of the shares bought/sold (on a LIFO basis)

I do not understand you if I misinterpreted you: The cost of the shares bought/sold is the Trade Amount. . .I can not interpret this any other way.

AIM Advice = Trade Amount

Trade= No Shares * Share Price.
So what you said is that you would want to increase or reduce the PC by the Trade Amount. . .as I stated it!

May be you meant

PC2=PC1 (+/-) Share Price

For example PC1= $ 10000. . . .to save 1000 more words J

but that makes no sense at all. If you trade for $ 2000 and the share prive = $0,75 or even $ 10 then

PC2= 10000 (+/-) 0,75. . . . .or 10000 (+/-) 10

and the PC would hardly change at all, so that you will get a new Trade Advice immediately as a Residual Trade at the same share price.

Example

PC= 10000
V= 12000-----> Advice = /10000-12000/ -1200 = 800
V2=12000-800 = 11200
PC2=10000-1 = 9999 (for a Share Price = $1)

Next Trade = /9999-11200/ - 1120 = 91. . . .to Sell as V2 > PC2

Well. . that is not so bad. . .it is a small Residual Sell which you would ignore. This could work but Standard AIM works also. . maybe even better.

If you had done the standard thing:

PC2 = 10000 + 400 = 10400
V2=11200 as before

Trade Advive = /10400-11200/-1120 = -320

which means to Buy shares for $ 320 in Standard AIM. . .So Really AIM would tell you to buy back $ 320 worth of shares from the $ 800 you just sold. But you would ignore that in Standard AIM(Which is also Lichello FLAW) as it makes no sense. . .BUT it does mean that the Standard AIM put on a stronger Brake to the Trading. . the prive has to rise substantially to get a Sell Advice.

Which is what I said. . .adjusting the PC with the Share Price makes no sense.

So I still do not know what you had in mind that would make sense. . OR if you did have this in mind I will say it again: "It makes no sense". It would accelerate trading to a very aggressive trading mode.



At this point I am not even trying out what it will do on Buying side. . . .with a constant PC the Trade Amount = (PC-V)-0,1V would be reduced relative to Standard AIM so it would reduce the Cash Burning . . .so maybe for Buying it maybe be a good thing to spend the cash a bit more efficiently for deep divers. . .but if Cash Burn Reduction is the objective you might as well Reduce the PC more aggressively like Vortex Aim does:

PC2=V2

so that at any point on a deep diver after a trade the Trade Advice = 0, while for your idea the Trade Advice gets bigger and bigger as the price drops more with each Buy. . .this is a well known problem with standard AIM. . .due to the rising PC value and the Residual Buy that makes the buying very aggressive.

So, as an idea for you is to shift to the Vortex AIM Method. This may give you exactly what you might want. . . .you can:

1 Put an automatic Brake of your liking on the Selling for preserving Equity at rising prices(conservative investing. . .any fraction of B&H in it you like);
2 You can put an automatic Brake on the Buying for preserving the Reserve at dropping prices(conservative investing. . .any fraction of B&H in it you like);;
3 Aggressive selling + Aggressive Buying . . .Trading Range Investing
4 Aggressive Selling + a Brake on the Buying. . .Retirement Income Mode
5 Brake on the Selling + Aggressive Buying. . .TurboVest for strong Portfolio Growth Mode.