Toofuzzy,
Just to complete my remarks on letting the price if an equity drop an executing intermediate virtual buys or to let the price drop without intermediate executions I have calculated the different responses
Capital=20000
CER = 50/50
Price = 100
Hold zone 20% I have chosen an aggression factor of 0,25.
There were 4 price drops to a price of 40,96 the Buy Advice at 40,96 was larger than the remaining Reserve so I executed the forth Buy to get the Reserve ro 0:
Reserve = 0 so 10000 was spend to buy 182 additional shares.
Ntotal = 281 Shares
Equity Value = 115482
Virtual loss = 8452
The I did a single buy @ 40,96 to exhaust the Reserve and I could buy 194 more shares:
Ntotal = 294 Shares
Equity Value = 12042
Virtual loss = 7958
My next trial was to drop the price to 26,21 and then exhaust the Reserve. This allowed me to buy 381 shares:
Ntotal = 481 Shares
Equity Value = 12621
Virtual loss = 7379
Although the general effect of delaying the buying has always been clear fir AIMing and is the essence of Ocroft's earlier post # xxxxx. I find it useful to bring this effect numerically in focus beyond the verbal messages in the subject that are sometimes difficult to "translate" to make it clear how this is happening. From the above it is interesting to note that in this example during a continued equity price drop
1)the equity valueis increasing;
2)the Bail-out loss is decreasing;
3) the number of shares increases.
This really presents a clear "picture" of the potential power of AIMing is if one invest in equity that is volatile and has a near zero chance of becomming worthless
I might add here that the principal effect of using an Aggression Factor > 0 is responsible for adding a little more equity than is lost due to the price erosion. This is clear from the Buying formula
Trade= (PC-V)*1/(1-f). . . .and for zero trading aggression f=0 ----> M=1
This conforms to Lichello's original thought that equity value should remain constant during the up & down trading.
