In Mid 1983 the Famous speculator Richard Dennis argues with his buddy Bill Eckhardt about whether great traders can be trained, or whether it is an innate ability. To settle the argument of nature versus nurture, they decided to teach 13 beginners to trade, and if they can master the rules, fund them with trading accounts. These beginners are known as the ‘Turtles’. Over the next four years, the Turtles earned a collective compound rate of return of over 80%. Argument settled and Turtles trading system started.
Volatility normalization is one of the turtles used in the stock trade for indicating volatility of a set of share instrument with each having the similar dollar risk. The concept of exponential moving average of the ATR is manifested and comes from above.
Turtles had ‘notional’ sized accounts - although an account might notionally start the year at $1,000,000, in the case of a loss of 10%, the size of this account would be reduced by 20%. In other words the trader would have to trade as if he only had $800K, not $900, until such time as the account had got back to the starting figure.
Trading of Turtles are done under 20 day break out system as well as 55 day breakout system. One unit is bought or sold to start the system in 20 day break out system if the market is high or low through the 20 th day. If successful trade is manifested in the previous signals in the market, by passing the signal is best option to avoid whipsawing
The Turtles trading system would add a single Unit for every 1/2′N’ advance once in position. This would be incremented up to the maximum permitted number of units. That is; 4 in a single instrument, 6 in ‘Closely Correlated’ markets (such as oil and crude), 10 units in ‘Loosely Correlated markets and 12 units overall in one direction - CONSISTENCY being the prime directive in all of this. Since most of the trades failed, it was very important to be in ALL of them, otherwise you would miss those few winners which made a huge profit!
The Turtles trading system undoubtedly works. However, it requires iron willpower to follow the rules, and not to try and ‘bend’ the mechanics of the strategy. Most people are not mentally equipped to deal with the constant losses, even though they are handsomely offset by the occassional huge winner.
IN 1983 AFTER HAVING ARGUMENT WITH HIS FRIEND,RICHARD DENNIS DECIDED TO TEACH TRADE TO 13 BEGINNERS AND NAMED THEM TURTLES.HE WAS SUCESSFUL IN MAKING THEM MASTER IN TRADING AND MAKING A PROFIT IN EXCESS OVER 80%.THIS IS HOW TURTLES TRADING SYSTEM STARTED.IN THIS SYSTEM THE LOSSES ARE TAKEN VERY SERIOUSLY.THIS WAS BASED ON 2 DIFFERENT APPROCHES 20 DAY BREAKOUT AND 50 DAY BREAKOUT.ACCORDING TOTHAT,THE TRADING WAS DONE FOR 20 DAYS,THE STOCKS WERE PURCHASED OR SOLD AT PROFITS. THIS SYSTEM HELPEDTHE TRADERS EARNING HUGE PROFITSWHO FOLLOWED THE RULES AND WERE PATIENT AT THE TIME OF LOSSES
- Mark Crisp
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