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Re: lrp42 post# 577

Friday, 09/28/2012 10:54:17 PM

Friday, September 28, 2012 10:54:17 PM

Post# of 621
I got into this sort of investing in the early 1980-ties after reading the Money Spinner but did not take-up in that Min Trade Interval and then started reading Lichello. It was only after I discovered the Residual Buy(RB)that I wanted to get rid of it. . .not for the same reason you have though. . .My reason was more logical: "Why design a Trade Advisor Function and then have a Buy Advice again at the same price? That is silly. . .After one designs a Trade Advice then at the same price the Trade Advise=0 must come out of it. . .I am an Engineersmile A design must make sense! I called the RBf The Lichello Flaw smile. . .Got a lot of Flack on that.

I had not really analysed the effect of the RB but it was discussed then as a too great a Cash Burn Rate(CBR) for AIM. After I created Vortex AIM simply to get Advice= 0 after every Buy, using the PC-Update to give PC=V I automatically got a Bonus with the Buy Function

Buy = )PV-V)*M ---------> M= 1/(1-f)

With f being the PC-Update Fraction instead of the 0,5 for AIM. Using the value of f as a Trade Size Controller(Trade Aggression Factor) I had no longer a need for the SAFE because I could set the trade size as I wanted using the Aggression Factor.

But the problem of the Cash Burn Rate is still always there IF the trade size are too large, but to set P=V after a Buy has the Advantage of providing a natural Brake, similar to the SAFE acting as a brake on the buying with constant Hold Zone. Using a Hold Zone of 20 % for prise of 100 the Trade Prices become 80, 64, 52, 41. . . progressively smaller in an exponential decay manner . .this is good for preserving cash for declining prices but not good when the price decline reverses. This is the point where the use of a Filter comes in. . .you wait for an reversal and invest at close to the bottom

At one point I considered using Exponent ional Trade Multiplier that would make the Trades bigger as the price reached the limit of the Trading Range. . .but this does not work for Deep Divers and the Mathematics became too complex to get it done.

Recently I abandoned creating new mathematical adaptation to Vortex on . . I now think that frequent optimisation of the parameters is the solution. . I have a good way of doing it. Beyond that if the price get out of the trading range I tend to think the filter option is to be used.

Conrad Winkelman
What is Vortex AIMing? Look for my Vortex Discussion Forum:
http://investorshub.advfn.com/boards/board.asp?board_id=1341

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