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Strategies & Market Trends : AIM Questions and Answers -- Ignore unavailable to you. Want to Upgrade?

To: RFH who wrote (57)	10/26/1998 12:27:00 PM
From: OldAIMGuy	Respond to of 221

Hi Rob, Bernie has answered most of your question. Mr. Lichello mentions briefly that we should consider about 5% of our equity side of an AIM account to be the minimum amount to trade. So, if you had $10,000 of your $100 stock, you would use 5 shares as your minimum for trading. That gives you approx. $500 min order size. In an IRA this is just fine as there's no tax calculations to be done. Commissions at most discounters "on-line" would be under three percent of the transaction value. This meets my own personal "business" goal of keeping commissions to less than 5% of transaction costs. There's very little we can control in this business, so we should do the best job we can on controling those things. In a non-IRA account, I'd suggest that you trade in increments of 5 shares, rounding up or down around that figure. The reason will become apparent after several years of trading. This assumes that you are using FIFO tax accounting. You can imagine how many times you might have to combine multiple purchase tickets with current sales tickets at tax time if you bought 7 shares once, 5 shares next, 12 shares next and then sold 9 shares, 5 shares and 16 shares. It takes some fiddling to keep track of what orders came first and how much of each ticket was sold each time. I'm lazy, so try to always keep the trades as a multiple of my lowest minimum trade basis. That keeps the tax paperwork to a minimum. If after you've chosen the minimum number of shares to use, you are not satisfied with the size of the Hold Zone that AIM/Newport dictates, then you may want to nibble at both the Buy and Sell Resistance (SAFE) to bring the range into something practical for the actual market price swings of the stock. Remember that with each buy, you lower the next Sell price and visa versa, so don't take more away from the Buy/Sell Resistance than is necessary. Best regards, Tom