A.I.M. Users Bulletin Board

[aptus]

I know this isn't quite what you were talking about (i.e. slowing down cash depletion), however at the end of the day it's all about how much profit you make (regardless of how your cash was depleted). So here's my view on update frequency.

If you backtest a wide variety of stocks over a 5+ year period you will come to the conclusion that daily updates beat weekly updates which beat monthly updates in the majority of cases.

More frequent updates tend to capture more buy and sell signals and therefore create more profit opportunities. And don't forget that each profit opportunity is a real profit.

Less frequent updates tend to buy at lower prices and sell at higher prices and therefore create more profit per trade, but less profit opportunities.

However the benefit of having more profit opportunities tends to be greater than the benefit of more profit per trade. Thus more frequent updates tend to be better in the long run.

Of course you can always come up with a specific case where this doesn't hold, however in the general case it is true.

BUT I think we can do even better. I feel that an appropriate mechanical filter is really the way to go. Then you can update daily and let the filter worry about when to let the price update through to the AIM engine.

As with everything, people post all sorts of opinions about why one method is better than another. And some people will argue their point with no facts to back it up.

That's why I strongly suggest that everyone read what people have to say and verify it based on facts, backtesting and logic BEFORE using the proposed method with real money.

Of course not everyone will do this, in which case the old maxim applies, "you make your choices and you live with your results."

Regards,
Mark

http://www.automaticinvestor.com