Replies to post #12449 on A.I.M. Users Bulletin Board (AIMUSERS)

[Mr Core Position]

RFH Min Orders and TransactionAmounts -- I set small values, but do not necessarily take a "minimum" order calculated.
I also look for a minimum move in NET price (as opposed to just the broker quote/transaction price) from the last transaction -- CONSIDERING COMMISSIONS.

My program gives you a list of quantities to buy or sell for
various prices. Also shows the "no transaction" zone, though like I mentioned above, you do not necessarily want to take a trade just outside that zone, as the move times quantity may not be enough for you.

http://home.earthlink.net/~beand/cpt/demoaimfixedcbs.htm
http://home.earthlink.net/~beand/cpt/aim_fixed_cbs_userdoc.htm

You will note that Lichello's main example showed fairly large moves between transactions. 10 -> 8 -> -20%, etc.

He also showed fairly large quantities and did not consider
commissions. If you are a small trader, you will see that the percent move you assume by looking at quote/transaction prices may be nowhere close to the percent move calculated by looking at your REAL LIFE NET PRICES CONSIDERING COMMISSIONS

My program calculates trades considering commissions or if you want an UNREALISTIC view, with no commissions.

[The Grabber]

Hi Robert:

If I reduce the minimum amount to buy or sell from 100 shares to, say, 5 shares, how should I adjust the minimum dollars to trade?

In Newport, Min Share and Min $ decisions are independent. It will take the larger (value wise) of the 2 I believe. So set your min $ at a level that is comfortable to you. I think most folks look at their commission charge as a % to the Min $. If you're paying $10.00 a trade and your Min $ setting is $1,000.00, then it is costing you 1% to make that trade.

Should it be a percentage of the total value of the stock holdings? Or perhaps a percentage of the total account value?

Lichello would likely only have had it be against the Stock Value. His algorithm relies on it and Portfolio Control entirely (Safe being a percentage of Stock Value as well).

Hope this helps.

FWIW, I rarely make a trade for less than $1,000. So, with Limit orders costing me $12.95, my 'Comfort Level' threshold is 1.3%. In practice, my average trade value is about $1,800 (including initial Buys). For all of 2003. my commissions and fees averaged $12.29 per trade (many filled at the open, so I only pay $9.95 for those). All of that amounted to 0.7% of total value traded over the year.

Regards, Steve

[OldAIMGuy]

Hi RFH, RE: minimum $$ to trade....
I'm currently using 5% of the Portfolio Control value as my minimum trade amount in dollars. This seems to be working quite well and has some nice bear market perks as well.

Best regards, Tom
PS: you can find Portfolio Control in Newport by pusing "SHIFT+F4"

[Toofuzzy]

Hi RFH

When I set up my AIM accounts they were set up so that 5% of STOCK VALUE would be an ammount that I would be willing to trade. I do dot worry about the # of shares or odd lots. On my higher priced ETF's sometimes AIM wants me to sell only 6 shares (and I started with $10,000 in stock). Selling so few shares and the commission / share bugs me now. So if I had to do it over I would probably start with fewer and larger accounts than the 10 that I have (10 diferent industries)

I am not farmilia with the software you are using but I would not use # of shares as a criteria for min amount to trade, just % of stock value. For me that is 5% but on a smaller account maybe you set it to 10% but reduce SAFE to 5% to compensate.

If you use min to trade is % of stock value it then automaticly scales as your account grows larger (hopefully).

Toofuzzy