AIM or TA (Technical Analysis)
Some AIMers (users of Robert Lichello's Automatic Investment Management algorithm), while seeing the benefits of using Good Until Canceled (Good till Canceled - GTC) orders, often try to second guess what to do.
If you as a trader hold off on putting in a GTC order to see what the market will do; that means you are trying to outguess the market.
As I have mentioned before (sort of at least), frequently a GTC is just touched or exceeded by a few points, triggering the order.
Here is a BUY order example of what I mean.
If you didn't have the GTC BUY LIMIT order in, you would have to sit at the monitor, and when/if the price hit your target, you would then STILL have to decide at that point - do a market order (or a close limit), or wait and see if the price declines more. Now, if the price doesn't decline more, but turns around, you have missed the BUY.
And, how far would you wait for the price to decline PAST your actual target price before you decide to act?
Yes, I know, some have mentioned watching the price drop, then when it "shows signs" of turning around, then buy. At the hopefully, much lower price. But, remember, it could turn around at your target price, which would be missed, just as well as at some lower price. That is trying to play technical analysis (TA) which to me is WAG (wild ass guessing). (And believe me, I've tried that game.)
My TA is now limited to shaving a few cents every now and then, as mentioned in my post of 2007-02-26. If I come up with the TA holy grail - I'll let you know (for a price, of course ;>) )
So, which are you doing -- AIMing, or trying to outguess the market?
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