Hi Ray
However, by keeping the same minimum trade amount each time then why bother with increasing the PC by one-half of the purchase? Why not just keep the PC the same throughout the entire program?
PC is the core central price around which AIM works and as such generally needs to be uplifted over time to reflect the time value increases (inflation) in stock prices (and/or growth in the portfolios value).
In essence testing
Buy Trade = PC - 1.1(SV)
Sell Trade = 0.9(SV) - PC
to see if the buy of sell trade amounts equal or exceed the minimum trade $$$ size amount.
Maintaining the same capital (in dollars to answer Steve's question) trade amounts per trade will just mean that over time you'll generally just end up trading more frequently (assuming a price event driven AIM management style).
At such times when the trade size becomes relatively small however either you'd most likely be considering separating out the AIM program into two programs or more programs anyway for greater diversity or perhaps simply be consider uplifting the minimum trade amount.
The main point however is how (as Don Carlson highlighted to me) Level Cost generally proves to be better choice over that of each of Level Sell, Level Gain and Level Shares.
Instead, why not just perform a "Constant Value" or "Constant Dollar" or "Core Position" program instead of an AIM program?
AIM is more clever and typically follows through with subsequent trades in the SAME direction that are 5% away from the previous trade price (and hence 25% away from a trade in the OPPOSING direction assuming a 30% hold zone range). So over a 40% price range cycle an AIM account that is set to a 30% hold zone will capture 2 full 30% price cycle events. In contrast the likes of Vortex that set PC=SV after each trade will in comparison miss one of those cycles as its next trade is (generally) set to be equal distant between the next buy and sell after each trade.
As an example historically we see 0.3 average full 30% cycles (buy-sell or sell-buy pairs of 30% price swing range) per annum against the longer term time adjusted Dow prices. Extend that to a 40% range and the count drops to an average 0.2 cycles p.a.
To put some approximate guideline figures to these values imagine that a $100 start stock price falls to $85 so AIM flags an initial buy (first trade in an AIM program is equidistant between buy and sell).
The price might then fall to $80 and AIM flags another buy (in contrast Vortex that set PC=SV after the first trade would likely not pick up on this second trade and instead be waiting for a deeper decline before making a subsequent buy trade).
The price then reverses up to $110 and AIM flags a sell. And then when the price rises another $5 to $115 AIM signals another sell.
Collectively AIM captures two full round trip buy/sell cycles of a $30 stock price gains each (in contrast a Vortex style might have captured 1 buy and 2 sell trades and have a current stock price hold zone of $100 to $130 compared to AIM's $90 to $120 hold zone).
Bear in mind that these are contrived figures intended purely for demonstrative purposes.
Regards. Clive.
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