Bob, your remarks make me think this over again. Although I no longer call the Residual Buy a flaw, because so many AIMers call it a useful feature, I want to observe this:
Starting op a portfolio
Capital= 20000; CER = 50/50. . . . Share price = 100. . . Save = 0,1
Buy equity = V = 10000
PC= 10000. . . .The question arises: Why is de PC 10000 ???
Suppose after a month I inspect the Portfolio and observe this:
V= 10000. . . Logically I would think: "The price has not changed so the Buy Advice would be 0, but when I use the AIM Instruction Set I see this:
By Advice = (PC- 0,9V)= 10000 -9000 = 1000. . .share price = 100
To buy = 1000/100 = 10 Shares Ij My Min. Buy would be 500 I ought to follow the Instruction Set. . .
V2 = 10000+1000 = 11000
PC2 = 10000+ 500 = 10500
Residual Buy = (10500 - 0,9*11000 = 600 which is still 100> that Min Buy.
This is the Dilemma I find in The Lichello Feature! What is created is a presumably Automatic Investment Management system and after every Buy one is to ignore a Buy Advice. . .
Hoe does this relate to what happens at the recovery at a Dip??? As I see it when one has ignored the Buys to let the price fall until it recovers, then what you are saying is: That because of the recovery the Buy Advice first reduces to overcome the Residual Buy an then it becomes 0 and then after another significant rise in price it has first to overcome the Min Buy Amount. . .right? This could be considered a good delay feature so that the price can rise enough to create a profit since the last Buy. . . but also it could be a problem. . .the price could have dipped to almost generate a Buy and then reverses. . .In that case the price recovery must be much larger. . . It must overcome the Buy = the Residual Buy!!
In that case the first Sell Price might be below the last Buy Price. . . Such a Sell would generate a loss.
