A.I.M. Users Bulletin Board

[Conrad]

Hi Toofuzzy, just a short response

A lot of virtual Deja-vu hits me when I read your text but I did not remember the details you no doubt have presented to me before. . .I will make an effort to understand it. . .maybe it is useful in Vortex

Normally you would start with V=10000 + C=10000 but because of poverty you could start V=10000 + C=5000

I can see that V=10000 would create rather large Buys so that the Cash Burn is high for dropping prices. You do not like that option as the Cash.Equity Rato is too low. OK.

Then you switch to V=5000 + C=10000 but you set up the AIM account as V=5000(R)+ 5000(Im) + C=10000 as far as the AIM algorithm is concerned it uses

B=(10000-V)- s(V) and Value is the devalued 5000 stock you started with. . .Hold Zone = 10% and Safe = say 0,05(5%). This then becomes:

B=(10000- 4500) - 225 = 5275

The Buy you finance from the Reserve of 10000 so the Reserve becomes R= 4725. If you would have started out with V=10000 and C= 5000 you would have had this:

B= (10000- 9000) - 450 = 550 . . . .Reserve = 4450

The Buy would be sharply reduced but your Reserve would still be significant. So the result of the Imaginary Shares in the PC is that that you can buy more stock and have a larger Cash Stack and you get the inflated Buy Advice from the Imaginary Shares in the PC.

In effect this to create something like this using the real numbers:

Buy =(PC- V)*M . . .M is a Multiplier, and M being almost a factor of 10 larger than if you had used V=10000 . . .right????

This is virtually(hahaha) identical to the way Vortex works with using a large Aggression Factor so that M= 9 or 10 or so. . .right?

If so, then in Vortex I would do this for example:

V=5000/C=10000/R=1000
fb = 0,9 Price drop = 10% on Hold Zone.

Your Virtual AIM Advisor looks like this in Vortex AIM

Buy= ( 5000-4500)* 1/(1-0,9) = 550*10 = 5500

Which is very similar to the Buy = 5275 in the Virtual AIM example for what you would have done

OK, I understand it now, and I will remember it.
My question in regards to using your idea in Vortex is also answered:
It is not necessary as Vortex already has that option to start with a Buy Inflation Factor. . .No virtual shares required!

Next question

What do you do is the share price goes up? Do you still use the Virtual 5000 in the PC ????

Test

Sell = (10000- 5500)- 0,05*5500 = 4225
V=1275 and R =6275

It would appear that with a 10 % price rise you get an Inflated Sell Advice and you virtually(hahaha) destroying your equity. . .Certainly that is not your intention!!!!

I conclude from this that if the price starts rising you quickly change the pc=10000 to V = 5000 and R=10000 and then Sell a small amount(other things being equal):

Sell = (5500 - 5000)- 275= 225. . .new R= 10225

This is more or less Standard AIM.

In Vortex I would use the normal Sell Aggression factor I would judge to be appropriate.

I seem to remember that for the example used here you would not keep the 5000 virtual shares in the PC. . .How do you update the PC after the first buy and how long would you keep it there? Hi Toofuzzy,

A lot of virtual Deja-vu hits me when I read your text but I do not remember any of the details you no doubt have presented to me before. . .I will make an effort to understand it now. . .maybe it is useful in Vortex AIM

Normally you would start with V=10000 + C=10000 but because of poverty you could start V=10000 + C=5000

I can see that V=10000 would create rather large Buys so that the Cash Burn is high for dropping prices. You do not like that option as the Cash.Equity Rato is too low. OK.

Then you switch to V=5000 + C=10000 but you set up the AIM account as V=5000(R)+ 5000(Im) + C=10000 as far as the AIM algorithm is concerned it uses

B=(10000-V)- s(V) and Value is the devalued 5000 stock you started with. . .Hold Zone = 10% and Safe = say 0,05(5%). This then becomes:

B=(10000- 4500) - 225 = 5275

The Buy you finance from the Reserve of 10000 so the Reserve becomes R= 4725. If you would have started out with V=10000 and C= 5000 you would have had this:

B= (10000- 9000) - 450 = 550 . . . .Reserve = 4450

The Buy would be sharply reduced but your Reserve would still be significant. So the result of the Imaginary Shares in the PC is that that you can buy much more stock on the first Buy and have a larger Cash Stack and you get the inflated Buy Advice from the Imaginary Shares in the PC.

In effect this to create something like this using the real numbers:

Buy =(PC- V)*M . . .M is a Multiplier, and M being almost a factor of 10 larger than if you had used V=10000 . . .right????

This is virtually(hahaha) identical to the way Vortex works with using a large Aggression Factor so that M= 9 or 10 or so. . . right?

If so, then in Vortex I would do this, for example:

V=5000/C=10000/R=1000
fb = 0,9 Price drop = 10% on Hold Zone.

Your Virtual AIM Advisor looks like this in Vortex AIM

Buy= (5000-4500)* 1/(1-0,9) = 550*10 = 5500

Which is very similar to the Buy = 5275 in the Virtual AIM example for what you would have done.

OK, I understand it now, and I will remember it.
My question in regards to using your idea in Vortex is also answered:
It is not necessary as Vortex already has that option to start with a Buy Inflation Factor. . .No virtual shares required!

Next question

What do you do if the share price goes up? Do you still use the Virtual 5000 in the PC ????

Test

Sell = (10000- 5500)- 0,05*5500 = 4225
V=1275 and R =6275

It would appear that with a 10 % price rise you get a highly Inflated Sell Advice and you virtually(hahaha) destroy your equity. . .Certainly that is not your intention!!!!

I conclude from this that if the price starts rising you quickly change the pc=10000 to V= 5000. . . R remains at 10000 and then Sell a rather small amount(other things being equal):

Sell = (5500 - 5000)- 275= 225. . .new R= 10225

This is more or less Standard AIM.

In Vortex I would use the normal Sell Aggression Factor I would judge to be appropriate for the case at hand.

I seem to remember that for the example used here you would not keep the 5000 virtual shares in the PC. . .How do you update the PC after the first buy and how long would you keep it there?

I noticed that with the virtual shares method after the first buy your share value is 9775. . .virtually to the level you wanted it to be at the start! From this I can conclude that your method simply amounts to stacking the Reserve and waiting till the stock drops to make that strong Opportunity Buy at low price.

Question
How do you update the PC after that first Buy?