Cash Management

The term "Cash Management" is often confused with the use of protective stops for risk management within each trade.  We are not now referring to the use of protective stops, but rather a specific method of determining how to size each trade.  In other words, how many contracts should be placed on each trade, what are the reasons for doing so, what is the downside, and what are the benefits of doing so?  

The only job of the Allegro Cash Management System (ACMS) is to systematically indicate how many contracts to place on each trade.  And since we know the performance of each system is different than the performance of another system, we want the logic used for lot sizing to be specific to each system.  In this way we can ensure that each system trade is sized in a manner that allows for the known historical production cycles of each system, which includes the known historical draw-down as well as the production cycles unique to each system.

A cash management plan that is specific and appropriate to the system being traded is, in our opinion, the most critical aspect to building an account balance.  Each system we trade is accompanied by its own Cash Management System, and each is customized to accommodate the specific risks and opportunities that are inherent to each system and market.

The programs are easy to understand and utilize.  All ATS authorized brokers are thoroughly trained and well versed in the correct application of the ACMS program for each system, so members receive the correct lot sizing needed to provide prolific growth during productive periods as well as protection through system draw down.  In this way all members need not be concerned about the correct lot sizing of their trades.  The same Letter of Direction that allows brokers to execute your system trades also allows them to correctly size each trade.    

The ACMS Programs are designed to;

• Risk less of your original start-up capital to minimize down side.

• Be more aggressive with profits earned than with your original account equity.

• Increase lot size when winning to create accelerated growth.

• Reduce lot size when losing to slow down the rate of equity decline.

• Continue to size all trades through this method until the account arrives at a pre-determined plateau for each system.

• Continue to trade the maximum lot size when at plateau, but remove excess profits as earned.

• Reduce lot size after falling below plateau, and continue this method until plateau is again exceeded.

• Profits removed above plateau can be brought home or used to initiate another trading system into your program.

Go to the Visitors Corner section of this website to view the up-to-date presentations of the ACMS program for each system traded.  Review each system individually, as well as both of the "combo" methods used. 

 

 

This is not a prospectus; no offer on our part with respect to the sale or purchase of any securities is intended or implied, and nothing contained herein is to be construed as a recommendation to take a position in any market. It is possible that at this date or some subsequent date the officers, directors and/or shareholders of Allegro Trading Systems, Inc. and its affiliates own securities, or buy or sell securities mentioned in this publication or those not so mentioned. The intent of the Allegro information supplied to STUDENT is for instructional purposes only. Allegro information supplied to STUDENT is designed to discuss the market environment, technical analysis, movement of the price action, configuration of indicators, calculation of the measurement of the trading market and to calculate the levels of risk. The idea is that with repetitious exposure to a disciplined approach of this short term trading methodology, STUDENT can learn to understand the methodology for independent application. The material presented herein has been obtained or derived from sources believed to be accurate, but we do not guarantee its accuracy. There have been no promises, guarantees or warranties suggesting that any trading will result in a profit or will not result in a loss. Results can and will vary between individuals. STUDENT is responsible to use good judgment when trading. All trading system performance claims are based on comparing hypothetical trading results with other trading systems in the financial market. All historical performance trading system results are not achievable in real trading because slippage and the psychological factors of a trader cannot be accurately accounted for.  The "System Performance" records are representative of hypothetical trading results of our trading systems. Reasonable slippage, commission, individual’s emotion, levels of discipline and self-control need to apply independently to estimate the actual trading results. All trading involves high risk; past performance is not necessarily indicative of future results.

Commission Rule 4.41(c)(1) applies to "any publication, distribution or broadcast of any report, letter, circular, memorandum, publication, writing, advertisement or other literature…."

Commission Rule 4.41(b)(1)(I) hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown.