Sam,
I have been looking at the technical aspects of using the progressive Buy & Sell techniques using the ladder system I mentioned before. Here is an example I worked out on Excel that has some automatic features in it.
Buying from a Midpoint Reserve Value
Step #. . .% Buy. . . .Buy Amount. . .1000=Midpoint Reserve
1. . . . . . . . .10. . . . . . . . .100. . . . . . . .900 <-----Reserve Residue
2. . . . . . . . .13. . . . . . . . .117 . . . . . . .783
3. . . . . . . . .20. . . . . . . . .157 . . . . . . .626
4. . . . . . . . .38. . . . . . . . .238 . . . . . . .388
5. . . . . . . . .100 . . . . . . . .388 . . . . . . .0
Total invested = 1000 at a significant lower share price than at the starting point.
The Steps could be any fixed percentage increase in share price till the share price hits the Bottom of the Trading Range. At that point the Reserve has been completely used up. The percentage in the percentage column gives the progressive Buy Amount for each step to the top. You can see here that as the price reaches the trading range lower limit it get progressively larger so that it get invested efficiently. The progression is a the cubic function. Curve fitting shows a very close fit fort this function:
Buy Percentage = 0,2999x^3 - 0,3645x^2 + 0,3266X + 10 (For 1 => x <= 5)
At the Midpoint (Step # 0) y=0 by definition for the application. In this application I have not yet matched the Buy-Sell procedures to the Vortex AIM procedures as that would be a complex change I am not prepare to implement. The examples here only define how you would invest from the starting point of an investment on the basis of the price drops. In Principle the way Vortex AIM works is on the basis of an iterative structure. This means that after every trade the whole system is again in a starting condition, except the values of the quantities involved are different. This is the same for the Ladder System shown here. After a trade you can again apply the Buy Ladder in an identical manner. You have again a Reserve Value but for every step up the ladder as the price chance you increase the value of x by 1. The only difference is then that after a series of price drops the likelihood of a price rise becomes more likely. If that happens you revaluate the situation and the trading range appears to widen you can change the ladder to say 6 or seven steps up and down .
When at the start the price starts rising there is likewise a Ladder for Selling. I have used an identical ladder for dumping equity as the price rises:
Step #. .% Sell. .Sell Amount. . .1000=Midpoint Equity Value
1. . . . . . .10. . . . . . 110. . . . . . 990 <-----Equity value Residue
2. . . . . . .13. . . . . . 142. . . . . . 947
3. . . . . . .20. . . . . . 208. . . . . . 834
4. . . . . . .38. . . . . . 349. . . . . . 568
5. . . . . . .100 . . . . . 625. . . . . . 0
The cubic equation for this progression for selling is:
Sell Percentage =0,6307x^3 - 1,5548x^2 + 2,4799 + 10 (For 1 => x <= 5)
Total equity sold = 1434. . .an Average ROI=43,4 % on start investment, and a ROTAI=50% for the same period because the invested capital was averaged at 868. If the original 1000 starting equity value would have been left without selling any part of it the total value would heve been 1500 and the profit would also be 50%. This shows that with selling off the equity stepwise the %-yield would remain constant at 50% ROTAI, but the risk of losing the whole investment due to a sudden drop in value is much, much lower! That remains the great advantage of AIMing.
When the prise is rising then the rise-percentage for every step is entered into the functional relationship for calculating the Sell size. In this case above I have used 10% as the Holding Zone step size after each Sell. For example as the equity price rises 10% then the Midpoint Value of 1000 becomes 1100, and a sell of 10%= 110 and that leaves an equity value of 990. And so for the next step, each time you wait till the price rises by 10%.
The question here, in Regards to an Vortex Aiming procedure, is what to do if the price change does not go 5 steps in one run but reverses before the 5 steps are completed and the equity price is not at the Mid Point of the Trading Range?
One option is simply to wait out the reversing trend till the price is back at Midpoint of the Trading Range and us the new values as a new starting point. This would be the simplest solution as then you have again 5 steps up and 5 steps down for a repetition of the procedure.
Another question is what to do when the price has arrived on the limits of the Trading Range?
Suppose the price has gone 5 steps up and you are 100 % in cash. What to do when the price drops? At what point should one again invest if the first option (waiting for the price reaches the Midpoint price)is not desirable? The answer is simple: "At what price will the equity become worth buying again? From the price history one can see what the new Trading Range will be and you can wait till the Midpoint is reached and you can repeat the procedure.
The above procedures can be applied to clearly identified trading channels. If equities do not exhibit trading channel behaviour one is left to use common sense and on prognoses for the future. One would then better rely on methods that Warren Buffet uses (Analysis of financial statements and picking the right equities and then trade on opportune moments dictated by the market)
In regards to building the Ladder System with progressive Buy & Sell functions as outlined above these can not be build into VORTEX AIM without a complete restructuring of the Advice Generator. However VORTEX AIM is so flexible that you can enter the progressive trades that are recommended by the Progressive Ladder System calculation directly into VORTEX AIM. You simply ignore the Vortex Advice and enter the buy or sell you want.
In VORTEX. . .it simply carries it out the trades and the system carries on as usual.
It simply means that from the behaviour of the equity prices you calculate the progressive Trade Advice using a separate calculation scheme as I have shown above.
This method is possible when you are using the VORTEX Windows version or the VORTEX Excel versions. With the VORTEX Excel version you can simply calculate the trades on the same Excel Work Sheet.
The Progressive Ladder calculation is very simple. If it is not tied into the Vortex algorithms. It only requires a bit of extra manual work to run an Vortex AIM system that way.
Regards,