Aberration Plus

NOTICE: “HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.”

Aberration is a robust trend-following system that works across the commodity groups. Its simplicity and sound methodology has led to an enviable real-time track record during its five years of commercial availability. Recent volatility study has led to an equally simple and sound entry filter that works with all trend-following systems we've tested. When used with Aberration, both Aberration's entry rules and the filter's must be met for entry. In this manner it is a "permissioning" filter.

Additionally, we have developed an exit strategy that maintains a much larger percentage of a trade's open-equity profit than the current exit. This exit strategy significantly reduces drawdown and is particularly useful to the small-account trader.

Across the 57 commodities now provided with the Windows version of Aberration, Aberration netted $1,381,681 on 2,327 trades since 1980, for an average profit per trade of $593. When the volatility filter and exit strategy are incorporated, the net profit rose to $1,461,025 on 2,263 trades, for an average profit per trade of $646. In addition to eliminating 64 trades (2,263 versus 2,327) because both entry conditions were never met, the volatility filter delayed entry on 352 trades. So approximately 15 percent of normal Aberration trades are impacted by the volatility filter.

The following table compares Aberration and Aberration Plus performance on the 57 commodities (75$ slippage and commission deducted for each 60-day trade period).

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.

FUTURES TRADING INVOLVES RISK. THERE IS A RISK OF LOSS IN FUTURES TRADING.

The totals show that Aberration Plus has netted about 5.7 percent more total profit than Aberration since 1980 on these commodities, and about 8.9 percent more profit per trade. But more significantly, Aberration Plus significantly reduces drawdown because of the new exit mechanism. The following breakout compares Aberration and Aberration Plus performance on the Starter Portfolio.

Year	Aberration		Aberration Plus
	Avg. Start-Trade Drawdown (STDD)	Max STDD	Avg. Start-Trade Drawdown (STDD)	Max STDD
1980	2679	6780	2845	6780
1981	1469	4040	1314	4040
1982	1003	2388	989	2388
1983	3011	7008	1873	4845
1984	1297	3738	1330	3725
1985	1214	2636	1483	4118
1986	448	1344	440	1244
1987	1691	5312	1384	5096
1988	794	2500	890	2821
1989	2086	4568	2691	6258
1990	653	2916	438	1190
1991	2523	5742	2370	5473
1992	2118	4930	2237	4930
1993	4934	8800	4666	8800
1994	678	2359	586	2359
1995	3214	6413	2951	5953
1996	4388	9835	3281	7664
1997	3645	6993	2421	6066
1998	2733	7763	2894	8379
1999	2192	10236	2016	9683
2000	5323	10411	5115	9905
Average STDD:	2391		2155 (9.9 percent less)
Max STDD:	10411		9905 (4.9 percent less)
Average 1st Year Profit:	13799		14429 (4.6 percent more)