Replies to post #35211 on A.I.M. Users Bulletin Board (AIMUSERS)

[Conrad]

OK TF,
I see 3 responses from you so I will reply in sequence(without first reading the others). I prefer that so that the response is related to information at hand:

Made a mistake

>>>>>Stock goes down to $8
PC = $10,000 - $8,000 = $2000 <-------20% drop in price. What I see here is ~~ Standard AIM
It is best to use 5% SAFE and 10% min order size so .....
I would use the standard AIM algorithm as I learned it:
First I think you mean this:
Buy=(10000-8000)-0,05*8000 = 2000-400 = 1600 as I calculate it
$2,000 - $100 (5% safe) = $1900 which is greater than 10% of the $8,000 stock value so BUY
Ten% of 8000= 800. . .1600 > 800 so the Buy Advice of 1600 should stand.
Your Buy = 300 larger. This means that your are using a different Trade Algorithm. That is no problem in itself but I thought you stated that you are using standard AIM with SAFE= 5%(which I have used). You simply have used a bit different formula for calculating you Buy. Fine!
$1900 / $8 = # shares to BUY . Add that to the original 1000 shares
Ok this is trivial.
PC becomes the original $10,000 + 1/2 $1900 BUY order or $11,900
OK. This is trivial too: Old AIM Hat :-)
>>>>>

PC becomes $10,000 + 950 (1/2 of 1900)= 10950

All this I understood already perfectly in 1980 or so! The fact that you would buy 1900 worth of new stock instead of 1600 is no problem and is simply your choice.
I do not see here any connection with Virtual Shares. . .which was the starting point of the discussion :-)