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All the material in this section is based on hypothetical performance. The following
disclaimer should be carefully reviewed. Additionally, prospective clients should be aware
that futures trading involves considerable risk, and you can lose money.
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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.
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SMALL-ACCOUNT TRADING WITH
ABERRATION AND AZTEC |
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The following is a comparison of the Aberration and Aztec small-account
money-management portfolios:
| Portfolio | Required Capitalization | Average Annual
Return | Drawdown |
| Aberration Starter | $10,000 to $30,000 | $13,907 | $10,911 |
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| Aztec Starter | $20,000 to $40,000 | $26,468 | $12,688 |
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| Aberration Mid-Size | $30,000 to $50,000 | $24,491 | $13,456 |
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| Aztec Mid-Size | $40,000 to $60,000 | $53,651 | $16,362 |
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| Aberration Full-Size | $50,000 to $100,000 | $36,650 | $19,175 |
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| Aztec Full-Size | $60,000 to $100,000 | $64,173 | $19,561 |
| This comparison highlights two interesting points: |
- In each of the portfolios, Aztec provides a great deal more profit than the corresponding
Aberration portfolio, for a moderate increase in risk. The capitalization requirements are also
moderately higher for each of the Aztec portfolios.
- Aztec clearly outperforms the next-size Aberration portfolio: the profit is larger;
the drawdown is lower; and the capitalization requirements are less. For example, the Aztec
Starter outperforms the Aberration Mid-Size in profit, $26,468 versus $24,491, in drawdown,
$12,688 versus $13,456, and capitalization requirements, $20,000 to $40,000 versus $30,000 to $50,000.
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Based on these results, and analysis on dual-system portfolios, the following are the recommended
portfolios to trade for escalating account values:
| Capitalization | Portfolio | Average Annual
Return | Drawdown |
| $10,000 to $20,000 | Aberration Starter | $13,907 | $10,911 |
|
| $20,000 to $30,000 | Aztec Starter
(minus Crude Oil and the Yen,
plus Aberration Crude Oil and
Dollar Index) | $21,163 | $10,230 |
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| $30,000 to $40,000 | Aztec Starter | $26,468 | $12,688 |
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| $40,000 to $60,000 | Aztec Mid-Size | $53,651 | $16,362 |
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| $60,000 to $100,000 | Aztec Full-Size | $64,173 | $19,561 |
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LARGE-ACCOUNT TRADING WITH ABERRATION AND AZTEC |
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Small-account traders are limited in the benefits achievable with a combination of Aberration and
Aztec, but large-account traders will greatly increase return for a given risk level by employing both
systems. The following is a summary of Aberration and Aztec performance on their respective
Global portfolios:
| System/Portfolio | Risk Per
Trade |
Profit-Taking
Strategy | Average Annual |
| Return | Drawdown | Ratio |
| Aberration/Global | 2 Percent | Yes | 72.04% | 17.08% | 4.22 |
|
| Aztec/Global | 1 Percent | Yes | 72.84% | 14.41% | 5.05 |
This comparison shows that Aztec yields approximately the same return as Aberration, but
with about a 2.5 percent lower average annual drawdown. The ratio is formed by dividing the average annual
return by the average annual largest drawdown, and it shows that Aztec trading it's Global portfolio
is a better trading solution than Aberration trading it's Global portfolio (a ratio of 5.05 versus
4.22 for Aberration).
Because of margin considerations, a trader cannot trade both Global portfolios together when starting the
Large-Account money-management strategy at about $100,000. Analysis was conducted to determine a good mix of
Aberration and Aztec to trade when an account equity of $100,000 was reached. The following is
the Aberration/Aztec Global One Mix Portfolio:
Global One Mix Portfolio
| Aberration Commodities: |
Corn, Bean Oil, Live Cattle, Cotton, Sugar, Lumber, Palladium, London Aluminum Alloy, Crude Oil,
Propane, Dollar Index, Swiss Franc, Euro-Currency, Mexican Peso, Canadian Dollar, Euro-Euro-Notionnel,
Euro-Bund, Two-Year Note, Five-Year Notes, Australian Bond, and Canadian Bond. |
|
| Aztec Commodities: |
Kansas City Wheat, Rough Rice, Pork Bellies, Coffee, Copper, London Nickel, Natural Gas, Unleaded
Gas, Heating Oil, Japanese Yen, British Pound, Australian Dollar, 10-Year Notes, US Bonds, Muni-Bonds,
Long Gilt, Spanish Bond, Swiss Bond, Simex JGB, and the Nikkei. |
This mix of commodities had the following performance (contrasted with Aberration and Aztec
Global portfolios) when traded at 2 percent of equity per trade for the Aberration commodities, and 1
percent of equity per trade for the Aztec commodities:
| System/Portfolio | Risk Per
Trade |
Profit-Taking
Strategy | Average Annual |
| | Return | Drawdown | Ratio |
| Aberration/Global | 2 Percent | Yes | 72.04% | 17.08% | 4.22 |
| |
| Aztec/Global | 1 Percent | Yes | 72.84% | 14.41% | 5.05 |
| |
| Global One Mix 2/1 | Percent | Yes | 93.31% | 14.92% | 6.25 |
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The Global One Mix shows over a 20 percent return improvement over both the Aberration and
Aztec Global portfolios for an annual risk of 14.92 percent average max drawdown. The superiority
of this trading solution is shown in it's ratio of 6.25 versus that of 5.05 for Aztec and 4.22
for Aberration.
Once the account equity grows to about $200,000, margin requirements are sufficient to trade the
Global portfolios of both Aberration and Aztec. This portfolio is called the Global Two
Mix. A comparison of performance between it and the other Global trading solutions is shown below:
| System/Portfolio | Risk Per
Trade |
Profit-Taking
Strategy | Average Annual |
| Return | Drawdown | Ratio |
| Aberration/Global | 2 Percent | Yes | 72.04% | 17.08% | 4.22 |
| |
| Aztec/Global | 1 Percent | Yes | 72.84% | 14.41% | 5.05 |
| |
| Global One Mix | 2/1 Percent | Yes | 93.31% | 14.92% | 6.25 |
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| Global Two Mix | 2/1 Percent | Yes | 169.65% | 20.45% | 8.30 |
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Should the average annual largest drawdown be too large for a traders risk profile, the percent risk per
trade can be stepped down, with a resultant decrease in both drawdown and return. The following is a
comparison of performance using the Global Two Mix for other risk-per-trade settings:
| System/Portfolio | Risk Per
Trade |
Profit-Taking
Strategy | Average Annual |
| Return | Drawdown | Ratio |
| Global Two Mix | 2/1 Percent | Yes | 169.65% | 20.45% | 8.30 |
| |
| Global Two Mix | 1.5/0.75 Percent | Yes | 119.42% | 16.36% | 7.30 |
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| Global Two Mix | 1.3/0.65 Percent | Yes | 100.53% | 14.59% | 6.89 |
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This analysis can be further extended to yield other risk/return options for the trader.
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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.”
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