The AIM Strategy — A Plain‑English Guide
AIM (Automatic Investment Management) is a rules‑based method invented by Robert Lichello. It removes emotion from investing by telling you exactly when to buy and sell — and how much — based only on price moving up or down. You never have to predict the market; you just follow the rule.
The big idea: buy more when the price falls, sell some when it rises, always keeping the swings under control. It's a disciplined way to "buy low, sell high" automatically.
How it works
AIM keeps your money in two buckets:
- Holdings — the asset you own (its value moves with the price).
- Cash — your reserve, used to buy more when prices drop.
And it tracks one special number:
- Control value — a slow‑moving reference point for what your holdings "should" be worth. It's the anchor AIM compares the live value against.
Each time you check the strategy, AIM compares your holdings value to the control value:
- Holdings worth a lot more than control → the price has run up → SELL some to lock in gains.
- Holdings worth a lot less than control → the price has dropped → BUY more while it's cheap.
- Close to the control value → HOLD, do nothing.
The word "a lot" matters: AIM only acts when the gap is big enough to clear a safety buffer (the safe percentage). Small wiggles are ignored, so you don't churn in and out on noise.
After a buy, the control value ratchets up a little — locking in part of your new, larger position so future sells protect more of your gains. After a sell, the control value stays put. This ratchet is what makes AIM gradually bank profits over time.
The settings you choose
When you create a strategy you set a few values:
| Setting | What it does | Tip |
|---|---|---|
| Initial cash | Your starting reserve. AIM deploys about half into the asset on the first move, keeping the rest to buy dips. | Keep enough cash to buy several dips. |
| Buy safe (%) | How far the price must fall below the control value before AIM buys. | Higher = fewer, bigger buys. |
| Sell safe (%) | How far the price must rise above the control value before AIM sells. | Higher = lets winners run longer. |
| Ratchet pct | How much of each buy is locked into the control value (0–1). Lichello's classic value is 0.5. | Start at 0.5. |
| Min $ to buy / sell | Ignore trades smaller than this dollar amount, to avoid tiny, frequent orders. | Set a floor that's worth the effort/fees. |
You don't need to get these perfect — use the Backtest tab to try settings on real history before committing.
Finding the right asset for AIM
AIM thrives on volatility without ruin. It makes money from price swinging up and down, not from a straight line in either direction. The ideal asset:
✅ Good fit
- Volatile but durable — it bounces around a lot, yet you believe it will still be around (and broadly valuable) for years. Major coins, blue‑chip stocks, gold.
- Range‑bound or cyclical — it tends to oscillate around a level rather than trend forever in one direction. AIM harvests those oscillations.
- Liquid — easy to buy and sell at a fair price, with tight spreads.
- Something you'd be comfortable holding through a deep drawdown, because AIM will keep buying as it falls.
⚠️ Poor fit
- Steady one‑way climbers — if it only ever goes up, AIM sells too early and a simple buy‑and‑hold beats it. (Check the "Hold return" in a backtest.)
- Terminal decliners — assets that fall and never recover. AIM will keep buying the whole way down and run out of cash. Only run AIM on things you expect to bounce back.
- Illiquid / thinly traded — wide spreads and slippage eat the small edges AIM captures.
- Extremely low volatility — if it barely moves, AIM rarely trades and there's little to harvest.
A quick test: pull up a 1–3 year chart. If it looks like a choppy, jagged sideways or cyclical band, AIM has plenty to work with. If it's a smooth line up (better to just hold) or a smooth line down (avoid), AIM is the wrong tool.
Always backtest first. Use the Backtest tab to replay your chosen asset and settings over a real period. Compare AIM's return to the Hold baseline and watch the max drawdown — if AIM doesn't beat holding, pick a different asset or adjust the safe percentages.
A typical workflow
- Pick a volatile, durable, range‑bound asset you'd be happy to hold.
- Backtest it over a year or two with sensible settings (e.g. buy/sell safe around 5–10%, ratchet 0.5).
- Tune the safe percentages and minimum trade sizes until the result beats holding with a drawdown you can stomach.
- Create the strategy with those settings.
- Check it periodically. AIM will show BUY / SELL / HOLD with the exact amount — just follow it.
AIM rewards patience and consistency. Let the rule do the work.