HiTech,
I plugged your example in a PCA.
Started with 250 shares at 20.
At 35, you sold 82 shares
At 21, you bought 53 shares
At 40, you sold 60 shares
After these 3 trades are executed, you end up with 161 shares with an average cost of $5.22 per share. Not Bad.
AIM profit is $5605 compared to $5000 for the buy/holder.
It does not matter that the price didn't go below the original price of 20. Once the price had climbed enough and gone back down, you would
get a buy signal.
As LH stated, fooling with the Port. Control is usually a mistake, and should only be used in conjunction with a Vealie. A long time ago, I spent some time "tinkering" with the PC in a spreadsheet. I convoluted it all sorts of ways, and all sorts of bizarre things happened, none of them good. You will run out of cash or the compounding mechanism won't work properly. In the short run, it seemed to change the trading advice OK, but the effect over time is to completely screw up the whole thing. I know Tom has mentioned that he almost didn't want to include a PC adjustment in Newport, because of the "sensitivity" of it, and didn't want anyone to make the mistake of changing it unless they knew exactly what they were doing. We didn't include a PC adjustment in PCA for the same reason. There are plenty of other adjustments that will accomplish what you are trying to do.
In the same example stated above, if I change the buy resistance to 0, AIM profit is $5924, and your average cost ends up at $4.58 a share. the trades are:
sell 82 shares at 35
buy 70 shares at 21
sell 71 shares at 40
In conclusion, the worst thing you can do is fool with the PC unless it's for a specific purpose and you are very familiar with the effects. I have back-tested many many stocks, and can attest that adjusting the resistances, minimums, and cash levels are sufficient to provide flexibility.
Hope this helps.
D1 |
