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Strategies & Market Trends : A.I.M Users Group Bulletin Board
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To: axp who wrote (14431)2/3/2001 6:06:38 PM
From: axp  Read Replies (1) of 18928
 
I'm responding to my own post after actually attempting the strategy (a little) but also after doing more historical analysis.

The practice of setting a stop loss sell order when AIM signals a buy may work to improve the buy price a little, but in general, the same volatility that makes a good AIM stock also takes out the vast majority of stop orders within a few days. A large enough stop margin that avoids selling for extended runs also misses out on what would otherwise be good sell opportunities.

Someone else recently posted that they use GTC orders at the next sell or buy price. I did some modeling with this and my conclusion is that it's detrimental. With either a spike up or down you don't get as good a price as if you waited till the regular update period.

And speaking of update period, yet another poster emphasized how important it was to stick to the regular update period and not fool around too much in between. I agree with this conclusion. It appears that as you increase the AIM update frequence (daily, hourly, etc) you hurt performance by not letting trends run their course, not to mention increased trading costs. There was wisdom in the BTB advice to update monthly, but weekly may be a more optimal frequency and with computers to help there is not any significant additional work. Besides, I need to satisfy my investing addiction more than once a month!
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