Q & A

• How much starting capital do I need?
• How many systems should I start with?
• How do the cash management programs apply to my account?
• Why is it important to take each and every trade?
• How fast will my account grow?
• Can I use my IRA funds to trade the systems?
• Can I add or withdraw funds from my trading account?
• What is the difference between hypothetical performance and real time trading results?
• What does correlative relationship mean and how is it useful to me?
• Why do I want a smooth equity curve?
• What are the profit incentive fees paid to Allegro Trading Systems
• How many brokerages provide the Allegro Trading Systems?

That depends on the number of systems you wish to trade at the initiation of your program.  Lot sizing for each system is determined by the cash management program for that system.  Recommended lot sizing keeps the "lots traded/capital" ratio well within brokerage margin requirements.

Here are some guidelines regarding minimum funding for each system;

• S&P Intraday System - $15,000
• NASDAQ Intraday System - $15,000 
• Intraday 2-Combo - $20,000*

• S&P 400 (MidCap) Intraday System - $15,000 (now available as a stand-alone system)

• Russell 2000 Intraday System - $15,000 (now available as a stand-alone system)
• Intraday 4-Combo - $30,000**

*We feel that most new programs should begin with the Intraday 2-Combo funded with at least $20,000.  A member trades both intraday systems from one source of funds used in a single cash management program designed for trading the two systems in tandem with each other.  In this manner, the lot sizing for each system is governed by the combined production of both systems.  The result is a smoother equity curve derived from the historical correlative relationship between the two systems. 

**An account balance of $30,000 or higher can trade the 4-Combo program.  Like the 2-Combo program, the lot sizing for each system is governed by the combined production of all systems, resulting in a smoother equity curve.

That depends on the available capital at the initiation of your program.  A better way to approach the question is "how much is available?" so we can determine the best mix of systems to be used, and then how much capital should be allocated to which systems.

Diversity is important.  Proper capitalization for each system is more important.  Diversity can be accomplished in the fullness of time and after early growth has been achieved.  We prefer "fewer systems, each adequately capitalized" over "many systems, each thinly capitalized". 

The cash management programs are unique to each system traded within the account.  For example, a large account trading multiple systems will have only one total balance within the account.  But, the balance will be fragmented within the separate cash management programs.  In this manner we can size the trades for each system in accordance with the known historical production cycles of each system.  We also manage risks to the historical draw down cycles of each system.

The very nature of system trading mandates taking every single trade generated by the system.  The objective is to acquire the entire production stream of a system while not worrying about the outcome of any one trade or small group of trades.  Often times a single large "heal-up" winning trade will occur immediately after a string of small losing trades, and the losing trades are typically what causes one to skip the heal-up trades.  These behaviors are the primary reason we offer our system participation only through the broker-assist program.  When professional brokers are paid only to deliver the system production to your account, the impact of otherwise devastating emotional decision making by the trader is virtually eliminated.

No one knows when a system will produce a very hot streak of winning trades or a cold streak of losing trades.  No one even knows the outcome of the very next trade, or the very trade we are in at any given moment.  Avoidance of attempts to cherry pick trades based on some emotional state of being is critical to a good disciplined approach.  The Allegro Trading Systems methodology has eliminated these problems for all members.

No one knows.  It is impossible to predict the timing of prolific production cycles or draw down cycles within each system.  What we all trust is that account growth has occurred historically with a consistent application of the methods used.  Past performance does not guarantee future profits.  We believe that timing can be an ally when taking a longer term view, and timing can be an enemy when taking a very short term view.  Correctly sizing all trades as prescribed by the cash management programs tends to make time an ally.  We encourage patience and a long term view of 5 years or more.        

Yes.  Your brokerage can help you establish an account using your IRA funds.

Yes.  The trading account is owned by you, and only you can move funds into or out of the account.  The trades are executed through a Letter of Direction issued to the executing brokerage.  Frequent additions and withdrawals are discouraged since it leads to an inconsistent growth plan, but you own and control the funds at all times.

There is a three part answer to this question.  Hypothetical data is the product of back-testing a strategy and then presenting the data in a manner that suggests those are the results you would have seen in real time trading had the strategy been in place at the time.  Real time trading performance can mean two different things.  First, system signals recorded in live conditions (after completion of back-testing) has far greater meaning about what would have been achieved by anyone actually executing the trades at the moment the signal occurred.  Second, real time trading results can be displayed by presenting a brokerage statement that proves that the trades actually were executed in real time. 

All three forms of data presentation have the same problem.  They all tend to imply that past performance has a predictive value about what will occur in the future when using the same strategy.  The past, in and of itself, never predicts the future with great accuracy.  It is only an indicator, and even then is heavily reliant on accuracy in obtaining the past performance.  Performance data should always be viewed in this manner.  

A good correlative relationship between two or more systems essentially means that they are rarely in draw down at the same time.  When this is true the well correlated systems will spend more time either profiting or treading water (by offsetting each other) than they will spend in combined total draw down.  The greater time spent profiting will far more than offset the time spent in combined draw down, which leads to greater growth and a smoother equity growth curve.  Trading well correlated systems also eliminates the need to guess which systems will do better than others at any given time.

When successfully trading systems with good correlative relationships, lot sizes of the losing system(s) are not reduced as sharply which can accelerate the recovery time.  Simultaneously, lot sizes of the winning system(s) continue to increase which further accelerates the overall growth rate.

Remember too, that even correlative studies tend to depend on historical cycles repeating themselves into the future.  While valid research increases the odds of doing so successfully, there is no strategy derived from past performance that assures future success.  Our objective is to perform valid research in a manner that will continually push the odds more and more in our favor.  Nothing is ever guaranteed.  

Because the objective is to grow cash in a manner that also controls risk.  A smooth equity curve can keep us at or near new equity highs.  The closer we stay to new equity highs, the less time we spend trying to recover from draw down, which accelerates the rate of making new equity highs again and again.

There are no profit incentive fees or management incentive fees of any kind.  A one-time membership fee for each system is our only charge.  Our revenue upside is gained when success is achieved in your early trading and you purchase additional systems to add into your program.  Adding in more systems prematurely will be heavily discouraged.  We succeed when you succeed, and you will be counseled to trade in a controlled manner concurrent with your available trading capital.

One. The principals of Allegro Trading Systems formed a brokerage in July of 2005 for the purpose of providing a sanitized and focused environment.  This is needed to ensure correct execution of every trade, and correct application of the cash management programs on behalf of each system traded for each member participant.  These are full time brokerage functions that are not suited for brokerages with many other activities. 

Members needing additional brokerage services for activity that is in addition to the trading of our systems will be accommodated through a strategic alliance partner of the brokerage.  The strategic alliance was established for this purpose, and so that Austin Trading Group brokers remain undistracted and focused on high quality execution of the entire Allegro Trading Systems program.