Replies to post #37762 on A.I.M. Users Bulletin Board (AIMUSERS)

[The Grabber]

Hi Tom!

I still like my formulae better. ;-)

They mathematically line up better with Lichello and easily accomodate Minimum $.

Formulae are easy in Excel as well.

They were worked out with paper, pencil and calulator at lunch over a number of weeks. My version of thought experiments.

[ls7550]

Re AIM Hold Zone calculation

N = Portfolio Control divided by Number of Shares

For the next sell price divide N by 1 minus safe minus minimum trade % i.e. if safe = 10%, minimum trade size = 5% then 1 - 0.1 - 0.05 = 0.85 (so N / 0.85)

For next buy price divide N by 1 + safe + minimum trade % i.e. if safe = 10% minimum trade size = 5% then 1 + 0.1 + 0.05 = 1.15 (so N / 1.15)

[SFSecurity]

Hi Tom, First of all when I upgraded Firefox it did "Hide the stickies" so I did not see them. When I finally noticed the setting they popped up.

Now that is solved I refreshed my memory of yours where you say:

NSP - Next Sell Price
NBP - Next Buy Price
SO - # of shares owned
MSO - Min. # Trade Shares/Order
PC - Portfolio Control

                        PC  
  NSP =        --------------------- 
                 SO (0.9 - (MSO/SO))  
    
                         PC  
  NBP =        ---------------------  
                  SO (1.1 + (MSO/SO))

One could change the formula to use a percentage of the stock rather than a fixed number by changing the formulas to:

NSP - Next Sell Price
NBP - Next Buy Price
SO - # of shares owned
PSO - Min. % Trade Shares/Order as whole number times 5 (5% would be 5*5=25, 10% would be 10*5=50
PC - Portfolio Control

                          PC  
  NSP =        -----------------------  
               SO (0.9 - ((PSO*5)/SO))  
    
                          PC  
  NBP =        -----------------------  
               SO (1.1 + ((PSO*5)/SO))

So, if the percentage was 5% with PC being $5000 and the number of shares 500 at $10/share the results would be:

                        5000 
  NSP =        ----------------------  
                500 (0.9 - (25/500))  
    
                        5000 
  NBP =        ----------------------  
                500 (1.1 + (25/500))

for a next sale at $11.75 and a next buy at $8.70.

If one wanted to sell 1% of the shares then the prices would be a sell at $11.24 and a buy at $9.01.

If one wanted to sell 10% of the shares then the prices would be a sell at $12.50 and a buy at $8.33.

If one wanted to sell 20% of the shares then the prices would be a sell at $14.29 and a buy at $7.69.

Best,

Allen

[fluxsmith]

I know I’m responding to an ancient post, but I recently worked out formulas for the same algebraically from standard aim rules. This formula (which is simpler and gives the same results) and mine both exhibit the same problem. When holdings are down to 1 share (which is plausible as I’m using leaps), it gives a negative sell price. Does anyone have a variation on the formula which gives a valid result when holdings are 1 share?