InvestorsHub Logo
Boards
News
Market Data
Markets
Discover
Discover
Subscribe Login/Register
S&P 500
5,102.38
(
1.07%
)
US TECH 100
17,242.80
(
1.56%
)
Dow Jones
38,249.28
(
0.43%
)
Brent Oil
88.42
(
0.30%
)
Bitcoin
63,545.04
(
-1.46%
)
Post# of 621
Next 10
Reply Private New
Public Reply Private Reply New Post
Keep Last Read
Keep Next 10 Report Keyboard Shortcuts
Next 10 Prev Next

Conrad

Send PM Follow Ignore
Followers 13
Posts 2463
Boards Moderated 1
Alias Born 02/23/2002

Conrad

Member Level

Re: None

Monday, 12/29/2003 8:00:33 PM

Monday, December 29, 2003 8:00:33 PM

Post# of 621
Ref. original message on

http://www.investorshub.com/boards/read_msg.asp?message_id=2018321


Hi Jibes,

Quite some time ago I checked out a spread sheet New AIM and made some comments on it. At the time I had forgotten who had invented this AIM variant and I thought that the guy that invented LD-AIM was the culprit, but Steve denied he was a culprit: My hands are clean, he said, or something to that effect. After a while I discovered that New AIM was invented by you! Congratulations! New AIM performed well on the specific example you issued. I got virtually the same end-result with Vortex as with New AIM (both systems tweaked to optimum). Your system uses an idea I use with Vortex now to make it even better than it already was. You used variable buy/sell factors instead of constants and this is a good way to drive the trades on the price differences of the moment, as can be used in the application of the Vortex Method.

I have perused the various options on the AIM variants you have set up and I feel that all your methods, more or less, come down to a common denominator for creating Buy and Sell Multipliers based on different schemes. I conclude from this that all your systems are based on Ratio Trading:

Trade=(Ref. Value – Stock Value)*M

In this scheme one can specify different schemes for the buy/sell multiplier functions separately, plus you can, of course, ad various filters or delay factors for executing trades.

The essence of this technique is identical to the Vortex Method and maybe other Ratio Trading Systems like X-DEF and HUSKY. I think it was Qarel or Karel, or maybe Lost Cowboy, on the AIM Users Board that had coined the term Ratio Trading as being distinctly different from standard AIM. The essential functional difference was explained algebraically as follows, with x being the share value difference variable and A being a Trade Multiplier:

1 Ratio Trading: Trade y = Ax

2 AIM Trading: Trade y = A(x-b)

with b being some arbitrary constant. Note that the Multiplier=A can (and does in various AIM variants) also have a functional relationship to the variable x. In this case the trading ratio would be non-linear.

This results in the effect that for Ratio Trading systems the Trade Advice=0 as long as the share price is constant, or returns to the same value as it was on the previous trade. This is why in AIM Trading the investor is faced with the Residual Trade Advice, which in the past I called The Lichello Flaw (now I see it as a feature).

Would you agree that all your trading systems are ratio trading systems? If yes then we can conclude that your various different systems are all of the same type and that Vortex, along with some others, like some systems invented by Don Carlson, belong in the same family (they are brothers and sisters rather than cousins). J

This brings me to a couple of remarks:

1) The idea of free shares is an fundamental feature of all dynamic trading systems. Free Shares accumulate as an inherent result of reinvesting liquidized profits at a lower share price. This feature is always present as long as Buy Low and Sell High is practiced! As such your Free Shares Option is only unique in the sense that you allocate a specific structure for the buy/sell multiplier functions. I might add that this Free Share feature is specifically the result of what I call the Skewed Share Acquisition Ratio, as explained generically in the Dutch version, Chapter 3, of my book The Vortex Method, and as in Section 6 of the short English version. I conclude therefore this: The Free Shares Model is a Ratio Trading System with a particular buy/sell structure;

2) All the other ratio trading variants you propose differ only in that you have devised specific alternative buy/sell structures, all of which, when adjusted properly, create portfolio growth via the mechanism of the Free Shares accumulation;

3) The specific, unique, buy/sell structures you have devised could be used to be more or less matched to specific share price patterns that are present in the market place. The various buy/sell methods could be placed on a Jibes Pick List so that depending on the type of fund that is being picked the investor can also pick the most suitable buy/sell structure from the Jibes Pick List. The only thing you need for this is to carry out some exhaustive analysis runs for matching the Stock Pattern Types to the Jibes Pick List. This idea follows the Model Building Mode that Mark Hing has provided in A.I. (for as far as I understand it).

I have no critique whatsoever on any of your proposed systems. I appreciate this type of work that your have done: it broadens the possibilities for optimised investing.

It is my opinion that with Vortex I have the best of all the variants that have passed by me. This is self preservation: As soon as one decides that his own system is the best he no longer needs to consider other systems. It saves loads of time!
J

The Vortex Method has ideally 7 parameters for optimising the Trading Functions:

Trade = (PC-SV)*Mt ---à Mt= Trade Multiplier, subject to Rt and Tm
Tm = Trade Minimum(2)
Rt = Trade Resistance(2)
Mt = 1/(1-ft) -----------à ft = Trade Aggression Factor(2)
Cash Equity Ratio(1)

These parameters ad up to 7 different inputs for optimising a portfolio.

This system provides Vortex with the ultimate buy/sell structure that can be adapted to any share price pattern, and after having devised the optimum settings for a particular fund history, I believe that no other system will be able to beat it, save by having additional features such as filters and trade delay systems. Such auxiliary systems can, of course, also be added to Vortex but then the parameters may grow to an unmanageable number for which optimisation becomes almost impossible.

I will not claim that Vortex will beat all other systems for arbitrary examples, for in a specific example one can not be sure that the optimum condition is actually achieved. My claim is valid, I think, only in the extreme case in which frequent optimisation is used. This is a matter of a practical difficulty, but all other systems have this dilemma as well. To achieve perfection far too much optimisation work must be done. In practice one must be satisfied with a comprise.

The large advantage of Vortex is that the trading system is completely flexible and the 7 parameters provide a means to zero-in on the optimum trading strategy quickly. I feel that because of that broad flexibility Vortex has the potential for running neck–on-neck races with most ratio trading systems in the AIM-Extended Family. Specifically, using frequent optimisation runs the Vortex parameters become variables rather than being constants for a long period. This achieves, more or less, the same effect for driving the trades as is used in your New AIM optimally.

Regards,

PS: The English Short Version of the Vortex Method is still available. Form time to time I revise this paper. This English version contains 90% of the essentials of the Vortex Method and how it is defined. The paper focuses on the mathematics. The Vortex spread sheets show the method at work.

Anyone may request this English paper, or the spreads by e-mail.


Conrad Winkelman
What is Vortex AIMing? Look for my Vortex Discussion Forum:
http://investorshub.advfn.com/boards/board.asp?board_id=1341

Public Reply Private Reply New Post
Keep Last Read
Keep Last Read Next 10 Report Keyboard Shortcuts
Next 10 Prev Next

Join the InvestorsHub Community

Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.

Sign Up