Hey Hitech,
So many questions! Undoubtedly, you will have to do some digging on your own to answer many of them. Perhaps others here will help to elaborate a bit....
Can you tell me what the Newport software does that your new PCA version does not do
In my opinion, Newport is best for managing real-life AIM stocks and includes Tom's great enhancements to the system.
The PCA system, in it's present version, is best used as a back-testing tool. The upcoming PCA, will combine both features, and is being designed for infinite flexibility as far as the "adjustable parameters" and will be the AIMers dream since we're willing to add anything we can find to enhance the system and make it more usable.
Can you give me your opinion on what is the best way to set A.I.M. parameters for someone who just wants to buy index stocks...I don't mind high risk and the "book" method for AIM is much too conservative for me
The hardest thing is determining the appropriate beginning amount for the cash reserve at the outset. It's possible to start with none, counting on a price rise to fund the reserve, though you must be prepared to pony up cash should the first trades be buys. With either AIM software program, it's possible to be as aggressive as you wish, however as you deviate from the original algorithm, you run the risk of making the wrong "subjective" call.
I think most here would agree on a high sell resistance and a low buy resistance coupled with a minimum trade amount of 5% of the portfolio for index funds since they are fairly tame. I hear UOPIX may be a good AIM vehicle for indexing, though being "aggresive" and using indexes with AIM is quite contradictory, unless your thinking "long-term, over many market cycles".
I am looking for a way to systematically buy dips and sell on the way up to add more cash to buy dips,etc.
Ahh...brilliant strategy! Many investors do just that, but kind of "wing it". What's nice about AIM is that is "sizes" your trades for you "systematically". Then there's the compounding.....
I don't want to watch them every day necessarily but will if that will provide the maximum profits. I would prefer updating about once per week.
There are 2 ways to go. You must choose your own path....
You can execute trades using the "next target price levels", and set GTC orders, or you can choose to update prices on a "time value" basis, and leave the details to AIM. Most seem to gravitate to the former, though your choice of equities should be a consideration on this point. If you were trading a volatile stock, you would want to have your buys and sells executed automatically with GTC's. Using an index fund, bi-weekly updating should work fine over time.
It sure would be nice to do the backtesting to see which provides greater returns - daily/weekly/biweekly/monthly. I gather your software can allow these tests to be done quickly.
It's a bit tedious now, but will be a snap once the PCA upgrade is released. Then we will have the capability to compare the "GTC" and "time" methods, along with the effects of adjusting the numerous parameters.
AIM, on the surface, looks fairly cut and dry, but when you take the time to delve into the complexities, it can be quite an eye-opener. I suggest you spend some time sifting through all the available resources on the AIM related websites. There are many subtle aspects that have been added since the book, and it takes time to evaluate them all and determine what's best for your individual situation.
Regards,
D1 |
