A.I.M. Users Bulletin Board

[Conrad]

Bob,
Thanks for this additional "take" on what Ocroft appears to be doing.

The interesting part of this is that I had constructed Vortex AIM to function exactly like that:

After the first Equity Buy to start the AIM going at the recommended CER, Vortex would create a Buy Advice X1. If executed the Advice would go to zero and upon a further price drop it would create Buy Advice X1. . .etc. . . .then after a recovery it would start giving a Sell Advice.

Should one not execute Buy X1 the at the price Buy X2 comes around the Buy Advice becomes X1+X2. . .etc., all the way to as low as one dares to go! . . . .(I actually realise now that I have to test if this assertion. . . I will test this later).

Vortex "remembers" the Deficit Amount if the trade is not entered so there would be no reason to actually run the Dummy(the Virtual) as you called it) and add up the various Buys that AIM would have triggered.

This makes me wonder about Regular AIM:

With Buy X1 there is a Residual Buy Advice X1r (Residue), which is not executed. When the next Buy X2 comes around there is again a Residue X2r.

Normally when you Execute X1 and leave X1r "on the books", so to speak, then I assume X1r is 'remembered" by the AIM Buy-function and it makes X2 based on the remembered Residu.

Suppose now that instead of executing X1 in the Dummy one does not. This leaves a Residue = X1+X1r "on the books" in AIM. What happens with the magnitude of the Second Buy X2' and its Residue X2r' ???

What will be the case"

X2'+X2r' = X2+X2r. . . .A

or

X2'+X2r' > X2+X2r. . . .B

???

I find this an intriguing issue. . . .It is a fundamental question on the effect of deferred Buys in the next Buy. . . Hmmmm. . . I wonder. . . .

Now that I have thought about it, Vortex Aim having a pure Ratio Algorithm:
Buy= (PC-V)*M represents a Linear Function (PC-V) but at the share price drops the value of V can become smaller or larger., depending on how aggressive the buying is:

If V becomes smaller then (PC-V) becomes smaller. . . The Reserve is stretched for deeper buying. . .theoretically when (PC-V)------ > 0 and V----- > 0 the Buy Advice ----- > 0. This can theoretically run into a situation that when V= 0 there is still a Reserve left. . . This is previously discussed as the Braking Effect of Vortex AIM when conservative parameters are used

If V becomes larger then (PC-V) becomes larger and the Buys become larger, exhausting the Reserve rapidly and the Buy Advice stops at some R=0 at V> 0 and as V ----- > 0 all of the invested capital is lost as no bus have been acvtiovated(Same as in Ocroft's Case)

In AIM BTB

Buy = (PC-s*V)

This is an Offset Function. For some value of V, as price drops Buy----> 0. There is no summation of previously advised buys!!!!

This is very interesting from the perspective of an equity that drops more than one cares to think about. So delaying the Normal Buy X1 execution will amount to a progressive Advice Reduction, just like it does in Vortex AIM.

I just wonder now how these two strategies work out for Standard AIM as a function of the SAFE s:

Option 1 is to execute the AIM Advice virtually and then afterwards ad up X1 + X2 + X3. . .+Xn = Buy when the desired Price Recovery of say 10% From the Dip Point Occurs. As was noted you deplete the Reserve rapidly and have to see the price dip more with out being able to buy the share at the Dip Price(or close to it.

Option 2 is not to execute the Advice virtually and wait till the price drop stops and the recovery occurs. This then will get you to a point at which the Advice = 0. . .You can wait then to see what happens. If the price drops so low that you decide to Bail Out then nothing is lost. . .just like trhis is so with Option 1. If however you think the equity is still worth buying at the point Buy Advice = 0(or lower), then you can still spend the full Reserve on the Up-trend Buy Point. You have then optimised the Dip Buying!

The meaning of this is that it makes no difference which Option you use if the price drops much more than one expects it will. It only makes a difference if the price drops remains within an acceptable level at which point one still wants to buy the equity even though the Reserve has already become 0. Then Option 2 is the better one as it allows you to follow the Algorithm to a much lower price and you can buy the equity near the very Bottom!

True . . .If the Recovery occurs near the point R=0 then Option 1 is the better one because you have R=0 while for Option 2 you have still money left in the Reserve.