Turtle Trading 101







What happens when legendary trader Richard Dennis put a want ad in the paper to hire traders? What kind of results would ordinary people make if they were given a winning system and a million dollar account? The results will surprise you. This experiment was over an argument that Rich Dennis had with his trading partner over whether traders were born or could be trained. The first class was started in 1984 with about 14 students in the first class. After 2 weeks of training they were given real accounts to trade. The returns were very volatile month by month but like their mentor, most averaged returns of 50-100% a year. In the end Rich Dennis was correct, and his firm successfully produced several traders that became millionaires, one went on to manage a billion dollar fund. Many others went on to successfully manage big money professionally.
The turtles were taught trend following along was risk management. The program wanted to get all the traders to trade the system they were given. They were taught to not think in terms of money, they wanted money to be more abstract so they could think clearly with out the pressure that thinking in terms of cash creates. A bad month, a bad quarter, or even a bad year does not mean much in the grand scheme. They would only trade in a trending market with the goal being to catch the meat of the move. Rich Dennis wanted them to follow rules and avoid making judgements by following emotions or opinions. The turtles were technical based trend following traders with the belief being that price is reality. They traded price action not news or fundamentals. They had two systems they could use. S1 essentially said you would buy or sell short a market if it made a new twenty day high or low. S2 was longer term using and eleven week breakout for an entry signal and a four week breakout in the opposite direction for an exit.

The book The Complete Turtle Trader is where I obtained many of the trading principles that I use to trade successfully.

Below is an excellent talk from one of the original turtles, listen closely, he gives away many gems that lead to successfully trading. These are the same principles that allowed me to capture the Apple and Price line moves this year long, along with a lot of the Groupon short.