ANDROMEDA & PEGASUS FUTURES TRADING SYSTEMS - BUILT TO LAST!
Fully Disclosed, totally mechanical, multi-market, non-optimized, simple rules. Verified by Futures Truth.        

    System Combinations

    By combining systems like Andromeda together with Pegasus you are not only diversifying across different markets, but also different
    systems and most importantly different time frames. Andromeda is a longer term, trend-following system whose average trade lasts 45 to
    50 trading days, while Pegasus is an intermediary term system that aims for the intermediary term swings within a trend. By comparison, its
    average trade lasts 20 to 25 trading days. Combining the two systems results in a dramatic increase in profits in addition to smoothing out
    the equity curve. Combining systems is clearly the best option of all. Furthermore, system combinations with Position Sizing (money
    management) applied to trade multiple contracts for large accounts, compounds returns and grows the account exponentially at an even
    faster rate. Applying both System Combination together with Position Sizing / Money Management formulas can indeed super charge
    equity growth.

    While system combination typically reduces average drawdowns, they rarely reduce maximum drawdowns. This is because when you
    combine systems (any systems) eventually at some point in time both systems happen to be in a large drawdown at the same time, thus
    the drawdown of one system is augmented by the drawdown in the other system simultaneously. However, even in this extreme scenario,
    you are still benefiting since proportionately speaking, the combined maximum drawdowns of both systems together will still be significantly
    smaller than the sum of the maximum drawdowns of both systems independently, yet the profits will still be the actual full sum of both
    systems together. What this means is that while the maximum combined drawdown will be higher than that of either system on its own, the
    combined profits will be proportionately even greater. Hence, provided that you are adequately capitalized to trade both systems together,
    it is better to combine systems rather than increase your portfolio or your stake in only one system. Proportionately speaking you will
    increase your drawdowns a little but increase your profits a lot. Let’s look at the chart below.

    Please note: the following image is for purposes of illustrating a concept and does not represent any actual performance results on any
    particular system or combination.




























    The chart above shows what usually happens when you start to add different systems. Both profits and drawdowns increase but not
    proportionately. Profits increase much more proportionate to drawdowns. Hence as long as you are properly capitalized it does indeed pay
    off to add on more systems to your trading.

    Proper system combination can indeed reduce the average (typical common) drawdowns but not necessarily the overall total maximum
    drawdown. This is because over time the situation eventually presents itself where both systems happen to be in a large drawdown at the
    same time. This can happen with any combination of systems.

    EXAMPLES OF ANDROMEDA & PEGASUS COMBINATIONS - HYPOTHETICAL PERFORMANCES:

    *The following portfolio examples are the same ones shown in the Portfolios & Performance sample portfolios. For example, the
    Andromeda & Pegasus Small size 5 market portfolio would consist of Corn, Dollar Index, Palladium, 10 Year T-Notes and Eurodollars.
    Please refer to the Andromeda and Pegasus Portfolios & Performance pages on this website for more information on the various portfolios
    compositions.

    Test Conditions:

  • Tested from Jan 1’st 1980 through Apr 15th, 2015. (35+ years)
  • Unless otherwise noted, only net profits shown, i.e. no starting capital
  • $50 deducted per trade per contract for commission & slippage
  • All tests based on single contracts only

    System Combination Example 1:

                                                                    Andromeda Mid-Size with Pegasus Small
                                                                    (12 markets for Andromeda, 5 markets for Pegasus)




























    The total net profits for Andromeda Mid-Size and Pegasus Small for the same time period were $937,032 and $265,016 respectively,
    whereas the combined profit of the two was $1,202,048. Meanwhile, the maximum total daily drawdowns were $52,240 for Andromeda and
    $41,553 for Pegasus respectively, while the combined maximum daily drawdown of the two together was $72,258. The combined maximum
    daily drawdown of the two together was higher than for each one independently, but lower than the sum of the two independent
    drawdowns. Furthermore, the combined profits of the two together was proportionately much higher than the increase in the maximum
    drawdown. More importantly, as seen on the chart above, the two equity curves of the two systems merged nicely to provide evidence of a
    smoother curve and more consistent returns.


    System Combination Example 2:

                                                                   Andromeda Mid-Size with Pegasus Mid-Size
                                                                                        (12 markets in each portfolio)




























    The total net profits for Andromeda Mid-Size and Pegasus Mid-Size for the same time period were $937,032 and $816,009 respectively,
    whereas the combined profit of the two was $1,753,041. Meanwhile, the maximum total daily drawdowns were $52,240 for Andromeda and
    $39,080 for Pegasus respectively, while the combined maximum daily drawdown of the two together was $88,880. The combined maximum
    daily drawdown of the two together was higher than for each one independently, but lower than the sum of the two independent
    drawdowns. Furthermore, the combined profits of the two together was proportionately much higher than the increase in the maximum
    drawdown. More importantly, as seen on the chart above, the two equity curves of the two systems merged nicely to provide evidence of a
    smoother curve and more consistent returns.


    System Combination Example 3:

                                                                    Andromeda Large with Pegasus Mid-Size
                                                                   (22 markets for Andromeda, 12 markets for Pegasus)




























    The total net profits for Andromeda Large and Pegasus Mid-Size for the same time period were $1,488,243 and $816,009 respectively,
    whereas the combined profit of the two was $2,304,252. Meanwhile, the maximum total daily drawdowns were $84,738 for Andromeda and
    $39,080 for Pegasus respectively, while the combined maximum daily drawdown of the two together was $116,734. The combined
    maximum daily drawdown of the two together was higher than for each one independently, but lower than the sum of the two independent
    drawdowns. Furthermore, the combined profits of the two together was proportionately much higher than the increase in the maximum
    drawdown. More importantly, as seen on the chart above, the two equity curves of the two systems merged nicely to provide evidence of a
    smoother curve and more consistent returns.


    System Combination Example 4:

                                                                        Andromeda Large with Pegasus Large
                                                                                        (22 markets in each portfolio)




























    The total net profits for Andromeda Large and Pegasus Large for the same time period were $1,488,243 and $1,350,920 respectively,
    whereas the combined profit of the two was $2,839,163. Meanwhile, the maximum total daily drawdowns were $84,738 for Andromeda and
    $79,985 for Pegasus respectively, while the combined maximum daily drawdown of the two together was $148,172. The combined
    maximum daily drawdown of the two together was higher than for each one independently, but lower than the sum of the two independent
    drawdowns. Furthermore, the combined profits of the two together was proportionately much higher than the increase in the maximum
    drawdown. More importantly, as seen on the chart above, the two equity curves of the two systems merged nicely to provide evidence of a
    smoother curve and more consistent returns.


    System Combination with Position Sizing

    For money management size accounts over $100 Thousand

    Combining system combinations with position sizing takes it all to a whole new level. That is when you go into overdrive! Position Sizing
    (money management) strategies such as Fixed Fractional trading apply the concept of trading multiple contracts to generate compounded
    results. The result is that you grow your account exponentially. Please review the sections titled “Position Sizing Strategies” in the
    Portfolios & Performance manuals for a more detailed explanation of this. When you combine more than one system and then also add
    in position sizing you grow your account to even higher levels. This is the ideal way to trade. Keep in mind though, as previously
    mentioned in this manual, no matter how negatively correlated your systems are, eventually the situation will arise when both systems are
    in a drawdown at the same time; thus you must be properly capitalized in order to trade both systems at the same time.

    Recall in the Portfolios & Performance manuals that when we applied position sizing strategies on Andromeda & Pegasus large 22 market
    portfolios, without capping off the number of contracts per trade, we got total net profits in the Billions! The problem with such scenarios is
    that at those levels you are theoretically trading millions of contracts per trade, i.e. taking on millions of contracts per position. This is
    totally unrealistic. We then tried to run a test applying the same position sizing strategy but this time to a combination of both systems
    together (on the large 22 market portfolio). The numbers were so astronomical that the simulation actually crashed our software!! This is
    because we were now compounding on top of compounding. That is the problem with unrealistic simulations - the numbers get out of
    hand. Consequently we re-ran our system combination with position sizing, but placing a cap of 100 contracts. When 100 contracts per
    position is hit it stays there and does not increase the number of contracts any further. Following is the result that was obtained:

  • $200,000 starting account size
  • risking 2% of equity per trade
  • number of contracts is determined by the equity risked, but capped at a maximum of 100 contracts per trade
  • $100 deducted per trade per contract

    System Combination Example 5:

                                                                       Andromeda Large with Pegasus Large
    with Position Sizing (Money Management) applied
                                                                                        (22 markets in each portfolio)




























    This time, beginning with a starting account size of $200,000 over the 35+ year period the net profits ran up to about $230 Million.
    Combining systems along with applying money management produces the most impressive results. For more discussion on the effect of
    Position Sizing / Money Management, and the Fixed Fractional Trading strategy applied here in this last example, please refer to the
    Andromeda or Pegasus Portfolios & Performance Manuals.  


    _____________________________________________________________________________________________________________

    Disclosures & Disclaimers:

    FUTURES TRADING IS NOT SUITABLE FOR EVERYONE AND PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE
    RESULTS. THERE IS RISK OF SUBSTANTIAL LOSS IN FUTURES TRADING OR WITH ANY TRADING SYSTEM OR PROGRAM. CAREFUL
    EVALUATION OF YOUR PERSONAL FINANCIAL SITUATION MUST BE DONE PRIOR TO DECIDING TO TRADE IN THE FUTURES
    MARKETS OR ANY GIVEN TRADING SYSTEM OR METHODOLOGY.

    Please Note: All performance figures and illustrations were obtained using historical back testing on a computer and are not the results of
    an actual account. No guarantee is inferred that future performance will be like the results shown. Futures trading involves risk. There is a
    risk of loss in Commodity Futures trading.

    U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures trading has large potential rewards, but also
    large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures markets. Don't trade with
    money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures. No representation is being made that any
    account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system
    or methodology is not necessarily indicative of future results.

      CFTC REQUIRED RISK DISCLOSURE STATEMENT:

    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

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

    PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS

Total Net Profit:
$792,558
Average Net Profit per Year:
$24,767
Average Net Profit per Month:
$2064
Copyright © 2002 - 2012 AndromedaFutures.com. All rights reserved.