VORTEX AIMing

[Conrad]

I do not agree with your assessment TF:

By the time you realize the market is more volatile, you are out of money to buy more because you were too aggressive too soon.

To start off with when I developed Vortex AIM as a derivative of Lichello's AIM I have always promoted a few important guidelines for Dynamic Trading. . .AIM is not unique using that principle. . .most professional savvy investors do exactly what AIM-type investors do except they do it with more skill than the average AIMer: They are always ahead of The Herd and they thrive on that, taking the money from the Late Ones, which later become the Scared Ones that dump their equity a basement prices. . .I bet the Old AIM Guy will put his hand in the fire next to mineJ

Some principal guidelines for Vortex AIMing I have discussed repeatedly here and on the AIM Users Board and emphasised in my book The Vortex Method are:

1 Do not invest money you can not afford to lose unless you are comfortable with accepting the risk of doing so;

2 Never give a machine the primary responsibility of your investment philosophy. . .Remain in charge and carry out your trades that you decide are the right ones even if your Auxiliary Investment Manager, like for example AIM, or a hired hand, gives a different Trade Advice. With that in mind one could have done very well in 2002 and in 2007, for with good investment management and some skills for it one can do well in any market, although of course, not everyone can do well in the stock market, even in a great year. . .it is a zero Sum Game. . .and if one realies that the professionals are generally better investors than the Averge Joe then he is already ahead of the Herd;

3 If one is emotional in regards to investing in then he should get out if the market as soon as he discovers he is emotional about it! Especially if he ventured into the Stock Market without knowing anything about it. . . better for him to invest his money in a savings account. . .Vortex AIMing is not for him;

4 In regards to your question as to what would make me adjust the settings. .. that would appear obvious if one is a watchful investor: When you see the trading range of your equity become narrow then it is time. . . in case one uses Vortex AIMing. . .

4.1 to a) Reduce the Trading Thresholds(holding zones) and b) Increase the Trade Aggression Factors accordingly if they are not already rather high. This will shift the trading to smaller price differences but the trade sizes will shift back to the Min. Trade amounts or higher, so that the trading frequency remains about the same---> creaming off the dynamic profits each mini-cycle;

4.2 In Vortex AIMing one can see what the Trade Advice is at any time, even if the threshold for executing a trade has not been reached yet([red script[/red]). As soon as the price goes through the threshold the Trade Advice become executable([blue]]blue script[/bleu]) the investor has the choice to execute the trade immediately or to decide to let it ride. . .he uses his judgement for that. . .not emotion! For this methodology he also must use his judgement notto use the GTC-method at times he has no time to look at the market, but if he is rather active with investing he will make time for keeping an eye on it and then he can trade on his judgement and skill, using the Vortex Trade Advisor as baseline Manager if things roll along fine. Dynamic Trading requires at least a minimal active involvement in regards to what the equity is doing most every few days. For someone that is satisfied to sit back and look at the prices only one per month Vortex AIMing can be used too effectively but then the Default Settings are advised to be as they are. . .It works then almost identically to AIM B the Book. Additionally, the various Vortex Adjustments can easily be set so that the investment becomes a Buy * Hold Portfolio. . .for any investor there is a perfect set of Operation Parameters;

5. In regards to the SPY Demo I have generally used an aggressive management with suitable trading thresholds, starting out with thresholds based on the previous optimisation of the settings for the rather volatile SPY history, something like Buy=15% and Sell=20%(of the top of my head) but after several months of near "flat lining" I reduced them but still a bit above the noted volatility 7%. . .(The trade aggression was already high at the optimised values: Buy= 0.8 & Sell=0.6, to foster Share Growth). . .so I left that untouched. Then later on still getting too few trades I shifted to these values: Buy = 5%, Sell = 7%. On June 26 a few days says ago I decided that the trading activity was still too low and shifted to Buy= 3% & Sell =4% and that will stand until a change is in order.

6 Considering the above the SPY Demo has generated only 7 trades total !!!! but the significant result is a Share Base growth of 44% from 44 shares to 64 shares in 1,5 years.
I started out with 20000 and after 1,5 years the Reserve and 7 trades the Reserve stand at $ 13081. . .I consider that in spite of using rather high aggression factors my management has been on the conservative side at least. Using this approach and if the equity is rather safe one that can not go bust I would advise to use the Vortex Turbo Method(TurboVest). . .That work even better for investors that know what they are doing, as it would allow, after having started with a healthy Reserve, to make moderate use of equity credit, providing extra financial “space” and use a Negative Reserve. Vortex Turbo might be exactly what some people need.

In conclusion, if any one cares to call what I did is emotional management then I would advise not to risk any money in the Stock Market