Replies to post #3953 on A.I.M. Users Bulletin Board (AIMUSERS)

[karw]

Hi Jibes,

I think if you look at september last year and you update on the first of each month, you would have missed the downwards action that took place somewhere around the 21th sept.

If you update at the 15th of each month you would not have missed the action and made a nice profit in the rally that followed.

For slow major downwards trends updating monthly, quarterly, half yearly, yearly etc is beneficial for obvious reasons.

For quick moves downwards (capitulation movements, running for the exit movements) price driven action could take over from fixed monthly day based action. Otherwise you miss the subsequent upside.

Is there a criteria when to move from regular action to price driven action? There are always indicators. Look at Tom Idiot wave for example. All bullish. You own indicator set.

When the market is around or above the mean, take time based action. When the market is well below the mean goto price based action. Amplify the buying when well below, look at Don Carlson adaptation. When well below the mean or reference point the chance of returning to the reference point is greatest, some economist proved that:).

Of course when prices are well above the reference point the same strategy applies symmetrically to selling.

Another indicator is your own happiness. Adapt the parameter set until you are happy.

In europe we see some euro strength related buying opportunities now. Is it slow or fast movement? Who knows?

I am following the amplified buying strategy now, because I know that if I don't, my happiness will suffer. At least that is what life taught me. This time could be different.......

Kind Regards, K

[Conrad]

Jibes, Day, or Month Updating,

This discussion is, of course, as old as the day Lichello showed his Trading System(LAIM) to the next man or woman who thought: “Gee, Whizz, I can do better than THAT!”

The first thing that you encounter with the LAIM is the Residual Buy Advice. If you feed-in stock prices every day you get a substantial Buy Advice almost every day, except when the stock price has risen by an amount to make the Residual Advice=0. For Day Trading this is very annoying as you know the price may not have changed enough anyway. If you feed in prices only once every month the Residual Advice will not bother you(If you did not know about the Residual Advice!).

The Residual Advice has been discussed in depth already and is not an issue in itself anymore for me(the Vortex AIM does not have it), but newcomers to LAIM still will be confronted with this flaw, or feature. For this reason it appears better to update LAIM less frequently so that with the changing stock price the Residual Advice is not even noticed. This awareness of betteris mostly a psychological effect.

As to the real issue of daily or monthly or yearly Updating: The longer you wait and ignore the market the worse it is for you, unless you use GTC Orders, as then you can trade the stock at intervals that you have selected in advance. In this case you need to update only if a trade is executed. The Residual Advice is then not important.

So, from the point of view that AIM is a price driven engine the frequency of updating cannot affect the performance. Its impossible! As the date is not a part of the calculations! With any updating frequency you might hit unfortunate prices and never find the peaks and valleys you hope to hit. If you update very frequently you are very likely to hit the peaks and valleys because you are riding the market and know if the horse is bucking or not: You will be aware of the peaks and valleys.

The only thing that could help you by not looking at the market for a long time is in the case prices have drastically changed so that you missed the Regular Buy/Sell Advice. This is the same as if you consciously use an construction to increase the stock price interval for trading. Anybody can do that by waiting for big price changes or by using a mechanism(We call it IMPROVED AIM).

So, the real guts of the issue is this: Should AIMers hope for better AIM performance via advised ignorance(not looking at the market for a full month or more), or should AIMers invent better structures for their AIMs and take advantage of Market Information so that they can optimise Yield intelligently?

I choose the latter.

This approach had given birth to intelligent AIMs such as the various AIM Variants that have been discussed on this Board.

The frequency of updating any AIM is purely a personal matter. Just like the frequency of love making or sky diving... I am told that either one beats AIM-updating any day!


Conrad