Replies to post #41523 on A.I.M. Users Bulletin Board (AIMUSERS)

[lbdina]

Tom…excellent explanation on the use of the ZigZag and how you set Safe and Min Transaction levels accordingly. It was very clear. Examples like you provided are always of great help.

I think I have learned enough to stick my toes in the water and will probably start one or two AIM programs this week. I need to check a few things with Vanguard first so I understand their ETF trading policies, any limitations, and whether I can buy and sell Vanguard ETFs not listed on their website, etc. Since all my investment money is there, it is easy and convenient to stick with Vanguard.

I'm excited about getting started.

Adam, thanks for pointing me to the ZigZag feature on StockCharts.

Regards,

Lou

[SFSecurity]

Happy New Year Tom. About ZigZag, for whatever reason when I open your links the ZigZag does not display so I went to Stock Charts and recreated the 20% and also a 15% chart. See below.

20% ZigZag

15% ZigZag
A point to note: The "Size" has been changed from the default 700 to the maximum of 900 so more time is shown to give one more to see about possible actions one might take. (BTW, if you change the "Bar" from the default of 5 to 3 or 4 you can see even further back.)

Assuming the 20% Safe (10% buy, 0% sell and 5% each buy and sell amount) if one had been in RYT in 1/2014 the first sale point indicated is up ~+27% and the buy would be down ~-20% and the next sale indicated is up ~-48%. Given these figures following ZigZag closely reduces ones buy/sells.

Looking at the 15% Safe (7% buy 0% sell and 4% buy/sell amount) chart the first indicated sell is at the same point and so is the first buy, but then there is a second sell at ~+26% and a second buy at ~-17.5% and the final sell at about ~+42.7%.

Given the figures above and AIM's need for volatility I think it is best to combine the buy/sell calculator with the ZigZag but be sure to look at a variety of percentages for the ZigZag to see what the best combo is.

An additional thought is one might calculate the buy/sell prices as usual but double the actual percentage of stock/ETF to buy/sell in order to make the the actual size of the transaction big enough to be justifiable.

Warmest Regards and Happy New Year to all,

Allen