A.I.M. Users Bulletin Board

[Conrad]

Clive,

Just an added comment on the Vortex "ladders" that are created with the Aggression Factors(AF). . . The Vortex Ladders are typicallynonlinear(apart from the fact that the limits are not determined ahead of time):

With The Trade Function = M*(V2-V1) . . . .M=1/(1-AF)

1) The trade amount gets smaller as the stock is sold off on the holding zone steps. The step size tends to 0 if M is small and if M is large one would run out of shares real fast. This is however opposite to my previous idea of the progressive ladder I had that would increase the trade size at the price reached the limits of the Trading Zone(selling off all shares at the top of the trading zone);

2) The trade amount for buying could increase when buying but also it could decrease. . this depends solely on the Buy Aggression:

* When M is small the stock value gets smaller as at some point at which the drop in stock value exceeds the added value from the Buy. This is a natural brake on the Cash Burn and it extends buying into lower prices( a frequently discussed topic);
* When M is large then the added stock value of the buy exceeds the drop in value due share price dropping but the Cash Burn is large. . .this would be great when the Trading zone is well defined.

So in a sense the variable aggression factors. . .in combination with the variable holding zones contain a range of possibilities to manage the Vortex Portfolio in a number of different ways in response to share price behaviors and the investor’s ability to “read” the market signals correctly

Admittedly with 5 variables to play with it is certainly a challenge to get the right settings for a chosen equity and to change them correctly as the price behavior develops, but the work required to get the "hang of the ropes" can be more than worth the "trouble".