Q............
Tom, I checked the Q&A section and the SI messages for the answer to this question but could not find any. A.I.M. Longhand and the Newport program give me double buy orders.
For example:
- I enter the new weekly price and it gives me an order to buy 28 shares.
- I go to the trade screen and enter the 28 shares and the new weekly
price.
- I hit enter and go back to the view screen where I see an order to buy an additional 15 shares. I then go back to trade screen to buy the 15 shares.
Then the view screen shows "hold".
Why is it telling me to buy twice ? Why not just one buy order for 43
shares (the first 28 plus the second 15) ?????
Can you explain why this happens ? Is it something I am doing wrong in setting my Buy/Sell Resistance ???
Best regards, Rob
A.............
Hi Rob,
The simple answer is that, as Mr. Lichello says in his book, with rapid price declines sometimes AIM will "pump the brakes." AIM will give an initial order for shares that will satisfy the immediate requirements set up by the Portfolio Control, SAFE and the value of the portfolio. Then, if the price remains at that level until the next update period, AIM will "finish" buying at that price by adding some more shares. It's meant as a safety valve. It lets you make a sizable buy but conserves cash for more buying if the price stays down or drops further by the next period.
The more complete answer is that with every purchase, AIM adds 1/2 the value of the purchase to Portfolio Control. By doing so, it raises the threshold at which the next buy can take place. In this instance, it raised it enough to create a second buying opportunity.
My advise is to only make one buy per week (if you can resist!) If the price remains as is until next week, then add the remaining shares to your holding. If the market is declining for a period of time, this will let you conserve cash and most likely buy more efficiently than doing all the buying in one week. If the price rises and you don't get that buy, don't be concerned as you have already bought a bunch more shares. I don't remember where in Mr. L's book this is described. If I find the passage, I'll send it along later.
Best regards, Tom |
