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Strategies & Market Trends : A.I.M Users Group Bulletin Board
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To: LemonHead who wrote (11414)6/6/2000 4:09:00 PM
From: OldAIMGuy  Read Replies (2) of 18928
 
Hi Keith, As "Minimum" transactions we should try to use the 5% of Equity rule of thumb to keep the trade range civil. I usually set both the minimum Share and the min. Dollar amounts near about 5% of the value of the equity. However, sometimes we wake up and find our favorite stock way beyond our minimum transaction range.

Let's say I have 2000 shares of a stock. I put my minimum for trading at 100 shares. I update my files and find that the price has gone beyond what was needed to satisfy the "minimum" requirements to sell 100 shares. Instead AIM's telling me to sell 184 shares at the current price. I still only sell 100 and then wait until the next update period. I do the same on the buy side.

I'm going to make a stab at getting my accounting more automated, but for now, with hand posting it's a pain in the arse to not trade round lots in my regular account. Potentially I could have one sell ticket tied to three FIFO buy tickets or more! That would make me crazy.

It may not be the best way to get things done, but it hasn't handicapped me in 12 years of AIMing. It has been my experience that selling and buying a little less than AIM asks (rounding down) has been better than selling a little more than is requested (rounding up). Hence I always round down. Should I find that magic software that does all the bookkeeping for me, I'll probably trade odd lots.

Hope this further explanation clears this up a bit. If the size of the holding doesn't justify this approach, then maybe you could round to the next lowest 10 shares. Let's say you have an AIM recommended trade of 48 shares. You could round down to 40.

Best regards, Tom
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