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

To: JZGalt who wrote (5020)	7/12/1998 8:15:00 AM
From: Jim Battaglia	Read Replies (1) \| Respond to of 18928

It means that you will have more tolerance on the sell side. Here is an example: Let's say you own GM presently at 73.87. If you have a O BUY your next sell would be at 76.95.But if you change your buy to a -9 then your sell has been delayed to 93.26. In other words you are taking more risk keeping your money invested but you have greater reward. You need to experiment with the safe numbers in Newport to meet your risk tolerance. I hope I answered your question. Jim

To: JZGalt who wrote (5020)	7/12/1998 9:36:00 PM
From: Bruce A. Bowman	Respond to of 18928

Hi Dave- SAFE (Resistance) levels set the trading range. Minimum trade values lie outside the range. For plain vanilla AIM, i.e. Mr. L's by-the-book values (and excusing the crude graphics): \|------ Buy SAFE = 10%: .1 * 6,667 = -667 \|<---------\| +----------+----------+------------------- -------------- PC = 6,667 --->\|--------->\| Sell SAFE = 10%: .1 * 6,667 = 667 --\| Now assume buy SAFE = -9% and sell SAFE = 10%: Buy SAFE = -.096,667 = 600 ----------\| \|-- -9% ->\| ------- PC = 6,667--------->+---------++------------------- \|-- 10% -->\| Sell SAFE = 10%: .1 6,667 = 667 ----\| For the sake of those not familiar with the AIM algorithm I'll put some numbers with this. Assume 1,667 sh @ 4.000/sh for the initial buy (1,667 * 4 ~= 6,667). The orders would be: Current number of share = 1,667 (CurShares) Minimum trade value = 500 (MinTradeVal) Buy SAFE value = -9% (BuySAFEPct) Sell SAFE value = 10% (SellSAFEPct) Portfolio control = 6,667 (PC) BuySAFE = PC * BuySAFEPct = 6667(-.09) = -600 (BuySAFE) SellSAFE = PC SellSAFEPct = 6667*(.10) = 667 (SellSAFE) Account value at the buy = PC - BuySAFE = 6667 - (-600) = 6667 + 600 = 7267 (AcctValAtBuy) Price = AcctValAtBuy/CurShares = 7267/1667 = 4.359 (BuyPrice) Shares: MinTradeVal/BuyPrice = 500/4.359 = 114.697 (Shares) Account value at the sell = PC - SellSAFE = 6667 + 667 = 7334 (AcctValAtSell) Price = AcctValAtSell/CurShares = 7334/1667 = 4.399 (SellPrice) Shares: MinTradeVal/BuyPrice = 500/4.399 = 113.662 (Shares) So the orders would read: buy 114.697 XYZ at 4.359 limit sell 113.662 XYZ at 4.399 limit These are nonsense orders if we're dealing with stocks and would have to be adjusted to even 32nds and even shares. The thing of interest, though, is the trading range: 0.040 from a buy to a sell. This is an incredibly narrow range, and you'd never encounter it in a stock, but it may not be that far fetched for a MF like a bond fund if you're looking for a lot of trades. Bruce