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Strategies & Market Trends : A.I.M Users Group Bulletin Board -- Ignore unavailable to you. Want to Upgrade?

To: Steve Grabczyk who wrote (15116)	3/6/2001 5:37:27 AM
From: Bernie Goldberg	Read Replies (1) \| Respond to of 18929

Hi Steve, Wandering along the same mental road if it is allowed. Wouldn't on also have take into consideration the possibility that the price could move up 15% on Wednesday and then another 3% on Thursday. This might cause a sell on Wednesday and miss out on the sale on Thursday. IMO if you felt that the price was going to increase, the best way of increasing the position compounding angle would be to hold on to your shares for the longer period. Just meandering on a different road. Bernie

To: Steve Grabczyk who wrote (15116)	3/6/2001 8:39:12 AM
From: rgammon	Respond to of 18929

Steve, Tom, I completely agree with Steve comment "I'm still convinced that over the long haul, trading frequency should be determined by the stock price vs. the settings and nothing more. Anything beyond that would be contrary to RL's original approach (even though he recommended an infrequent schedule)." Like Steve, I use a common cash drawer for all AIM investments. We could all be paralyzed by the 'what-ifs'. If the stock in Steve's example rose 15% Mon-Wed, and we DIDN'T have in a GTC sell order, and the price declined thru Friday, we would kick ourselves. I am not convinced that we can recognize a long term trend until the trend breaks, or until the trend has been in place for more than 6 months (and then only if we are regularly looking at graphs). Robert

To: Steve Grabczyk who wrote (15116)	3/6/2001 9:28:53 AM
From: OldAIMGuy	Respond to of 18929

Hi Steve, Please note that the proposed rule of thumb was just for buy orders, not sell orders. This was for a cash conservation consideration (how's that for an alliteration?) Best regards, Tom

To: Steve Grabczyk who wrote (15116)	3/6/2001 10:33:58 AM
From: labestul	Respond to of 18929

Hi Steve, I read your post and just had to throw in my two cents worth. Firstly you said I'm still convinced that over the long haul, trading frequency should be determined by the stock price vs. the settings and nothing more. Anything beyond that would be contrary to RL's original approach (even though he recommended an infrequent schedule). In my opinion this statement does not completely describe Lichello's approach. To me the most important aspect of Lichello's method is that trading frequency does not depend solely on stock price and settings. It depends primarily on the frequency with which one inspects the current market value of the stock. Thus if one looks at things monthly for example then trading is restricted to at most once per month though it could be less frequent than this depending upon the stock price (at the time of inspection) and the various settings. In effect the Lichello method says that trades can only be made at each inspection time point (provided that the price and settings concur) and that no trades can be made between the inspection time points. We can consider the length of the distance between inspection time points to be one of the variables in the Lichello formula the same as buy and sell safes for example. Thus some people may use weekly rather than monthly distances between time points. Of course no matter how short the distance there is always a chance that we have missed one or more transaction possibilities between inspection points. This is not necessarily a bad thing. I believe that one of the uses of these inspection time points is that one can be slowed down in too rapid a trend either up or down. This is a good thing. Thus arguably the longer the better (up to a point). On the other hand if there is no essential trend or if the trend is very slow then one can miss out on the volatility of a stock. This argues in favour of shorter and shorter periods. The GTC method is, in effect, one for which the distance between inspection points is zero. I personally like Tom's method of using GTC orders but limiting the number of consecutive like transactions on the same side of the moving average to one per week. This seems to me to be a rational and realistic compromise. By the way ... your example For example, if a price moved up 15% on Mon-Wed, and then moved down 13% back to it's original price on Thu-Fri; Looking at the close on Friday won't do squat. But if you had settings of 5% resistance and 5% minimum trade, then you might very well execute both a buy and a sell instead of no action. is in theory a good one. It is certainly possible that if a given stock is volatile enough one could have both a sell and a buy in the same week. I am constantly looking for such volatility. However I should point out that given your specific example with those settings and that indicated price movement, it might be possible to have a sell that week but it is mathematically impossible to have a buy as well. This observation does not negate your point. It merely points out that the example does not illustrate your point. Just some of my own mental machinations on my part. Barry