A.I.M. Users Bulletin Board

[Conrad]

Just recently I had an interesting discussion with an AIM Investor on the merits of the Vortex Trade Advice feature that gives PC=V after any trade and how it eliminates the Residual Buy Advise in the Lichello AIM.

The discussion centred on what would happen if the PC=V after a Trade would be used in the Lichello AIM.

Essentially if the Lichello Buy-formula is used and arbitrarily after a trade PC=C would be used that would result in that the new PC would be lower than the Lichello PC would be. If the stock price would drop again then the next Buy=(PC2-V3)-s*V3 and considering that PC2=V2 would be lower than the Lichello PC2 the Buy would be smaller than it would have been with the Lichello PC-Update!

In regards to the many discussions that have been held on the rather large Cash Burn Rate(CBR)of the Lichello AIM it is clear that setting PC=V after every trade is aneffective way of reducing the CBR, while at the same time the Residual Buy Advise is eliminated! This is so even when the Lichello Buy Formula is unaltered. So setting PC=V after a Sale is effectively equivalent to any automatic measure that is used to "Apply The Brakes" on the Lichello Buying Machine

This Brake on the buying rate can be achieved by modifying the PC-Update to

PC2=PC1 + f*Buy. . . with f<0,5. . . .So here the "f" is in fact a CBR Braking Factor

Interesting here is that in the Vortex AIM the "f" is called the Aggression Factor. . which of course is exactly the same thing... a low "f" results in a low "Buying Aggression".

This a new look at Vortex AIM: Essentially Vortex AIM is virtually identical to a Standard AIM with its PC modified to PC=V . . .and it operates then in a similar way as Vortex AIM with a f-value of about 0,25

In Vortex the Aggression Factor. . .or Braking Factor if you will. . .is formalised using the PC-Update Formula PC2-PC1 + f*Buy and from that the Buying Formula is automatically tempered for applying the Brakes with using low “f”-values(lower than f ~ 0,25) and applying extra Buying Aggression with “f”-factors greater than approximately f~ 0,5.

So, anyone that likes the idea to set PC=V after any sale for tempering the Lichello Cash Burn Rate might as well use the Vortex Aim

Using delayed trading will automatically increase the magnitude of the next Buy executed at a lower price. This is no different than what happens in the Lichello AIM.