Turtle Trading is a mechanical trend-following trading system based on Price Momentum signals, specifically the 20 and 55 Day Highs.
In 1983, commodities trader Richard Dennis bet with his business partner Bill Eckhart that he could teach a random group to be great traders.
"We're going to raise traders just like they raise turtles in Singapore"
Richard Donchian, known as the father of modern trend following strategies developed a rule based trading approach which became known as Trend following in the following years. Richard's Trend Following approach is based on the assumption that commodity prices moved in long, sustained moves. Richard developed and used a trading system that incorporated Trading rules, Trading guidelines, and his weekly rule system based on moving averages.
In 1983 Richard Dennis and Bill Eckhart selected 21 men and 2 women. They trained their Turtle traders, for only two weeks. Turtle traders as they were called were trained with a simple trend-following system, trading a range of commodities, currencies and bond markets, buying when a market broke above the top of its recent range or when it broke below the low of the recent range. End of the trial period these selected turtle traiders received a total of $1 million to manage.
The training included the following two strategies:
Turtle Trading System 1
1- Go long (short) when the price exceeds the high (low) of the preceding 20 days.
2- The breakout signal would be ignored if the last breakout would have resulted in a winning trade (but an entry would be made at the 55 day level to avoid missing major market moves).
3- The System 1 exit was a 10 day low for long positions and a 10 day high for short positions.
Want to trade Forex using Turtle trading strategy with a reliable broker? Open an account with any of the below AtoZ Markets approved forex brokers:
Turtle Trading System 2
1- Buy (sell) when the price exceeds the high (low) of the preceding 55 days.
2- All breakouts for System 2 would be taken whether the previous breakout had been a winner or not.
3- The System exit was a 20 day low for long positions and a 20 day high for short positions.
The rules also taught Turtles specific structure about position sizing, the use of stop levels, and to pyramid aggressively - up to a third of total exposure.
A former Turtle Trader, Curtis Faith, apparently improved the performance by adding 40 & 200 SMA, 40-day moving average is greater than the 200-day moving average, to guard against "bear traps" (i.e. prevented the strategy from entering trades on breakouts that occurred in bearish markets).
Where can I learn more?
The original Turtle Traders have reportedly turned their initial $1 million fund into $175 million, however this strategy can also lead to large losses in times of range trading as well as its large profits in times of trending markets.
Should you trade using Turtle trading strategy on your own at all?
Before you start trading turtle trading strategy, you'll want to read this.
Our in-house trading expert Dr Yury Safronau, PhD in Economic Sciences, gives you daily his best forex, metals, and cryptocurrencies to buy and sell signals right now.
His trading strategies which are based on non-linear dynamic models have achieved more than 65 000 pips of profits since 2015. And right now there are some very strong buy and sell signals across several markets you don't want to miss.
Want to see which ones?