Turtle Trading.

Turtle trading is a trading strategy that was developed by Richard Dennis and William Eckhardt in the 1980s.

The strategy is based on the idea that anyone can learn to trade successfully if they have the right mindset and follow a set of rules.

 

The name "turtle trading" comes from the fact that Dennis and Eckhardt compared their students to turtles, because like turtles, they believed that successful traders needed to be patient, disciplined, and persistent.

 

The turtle trading strategy involves using a set of technical indicators and rules to identify trends and make trading decisions. The strategy typically involves buying and selling futures contracts or other financial instruments based on breakouts and trend-following signals.

 

The rules of the turtle trading strategy are designed to limit risk and protect capital. For example, the strategy involves using stop-loss orders to limit losses and to protect profits. The strategy also involves diversifying the portfolio and avoiding taking large positions in any one market or asset.

 

One key aspect of the turtle trading strategy is the use of position sizing. This involves determining the size of each trade based on the volatility of the market and the size of the trading account. The idea is to limit the risk of each trade to a small percentage of the account balance, while still allowing for potential gains.

 

While turtle trading can be an effective strategy for some traders, it is not without its drawbacks. One criticism of the strategy is that it can be too rigid and may not allow for enough flexibility to adapt to changing market conditions. Additionally, the strategy requires a significant amount of discipline and patience, which can be difficult for some traders to maintain over the long term.

 

• Who is Richard Dennis.

 

Richard Dennis was primarily a commodities trader, not a stock trader. However, he had remarkable success in trading commodities and futures contracts, reportedly turning an initial stake of a few thousand dollars into hundreds of millions over the course of his career.

 

One of his most notable trades was in the soybean market in the early 1970s. Dennis reportedly went against the prevailing market sentiment and took a long position in soybeans, which were then considered a low-value agricultural commodity. His position turned out to be extremely profitable, as soybean prices skyrocketed due to a drought and other supply factors. According to some reports, this trade alone netted Dennis tens of millions of dollars in profit.

 

 

Achievements:

 

In the early 1970s, Dennis became one of the most successful commodities traders of his time, reportedly turning an initial stake of $1,600 into $200 million over the course of a decade.

In the 1980s, Dennis and his trading partner William Eckhardt conducted the famous "Turtle Trading" experiment, in which they recruited and trained a group of novice traders to use a specific set of rules and strategies for trading futures contracts. The experiment was a success, with the turtles reportedly earning an average annual return of over 80% over a five-year period.

Dennis was known for his contrarian approach to trading, often taking positions that went against the prevailing market sentiment.

Results of Investment:

 

Dennis' success as a trader made him one of the wealthiest people in the world at the time, with a reported net worth of over $500 million.

He used his wealth to fund various philanthropic causes, including environmental conservation and education initiatives.

Interesting Facts:

 

Dennis dropped out of high school and started his trading career as a runner on the Chicago Mercantile Exchange at the age of 17.

He was known for his unorthodox trading style, often using astrology and other unconventional methods to inform his trading decisions.

Dennis was a student of the famous futures trader Jesse Livermore and credited Livermore's book "Reminiscences of a Stock Operator" as a major influence on his own trading philosophy.

Dennis was a passionate advocate for conservation and founded the Turtles Foundation to support environmental causes.

He was known for his eccentric personality, often wearing a cowboy hat and boots and driving a Porsche with a license plate that read "DR DIRT".

 

• The books about Turtle Trading.

 

Yes, there are several books about Turtle Trading and the trading strategies developed by Richard Dennis and his trading partner William Eckhardt. Here are a few popular ones:

 

"The Complete TurtleTrader: How 23 Novice Investors Became Overnight Millionaires" by Michael W. Covel. This book tells the story of the Turtle Trading experiment and provides insights into the trading strategies and techniques used by the Turtles.

 

"Way of the Turtle: The Secret Methods that Turned Ordinary People into Legendary Traders" by Curtis Faith. This book is written by one of the original Turtles and provides an insider's perspective on the Turtle Trading strategy, including specific trading rules and techniques.

 

"Trend Following: How to Make a Fortune in Bull, Bear, and Black Swan Markets" by Michael W. Covel. While not specifically focused on Turtle Trading, this book covers many of the trend-following strategies and techniques that were used by the Turtles and can be useful for traders interested in this approach.

 

"Market Wizards: Interviews with Top Traders" by Jack D. Schwager. This book includes an interview with Richard Dennis, in which he discusses his trading philosophy and approach.

 

These books can provide valuable insights and guidance for traders interested in Turtle Trading and other trend-following strategies.

 

While the four books mentioned all cover the topic of Turtle Trading and the trading strategies developed by Richard Dennis and his trading partner William Eckhardt, they have different approaches and may emphasize different aspects of the story. However, the central message of all four books is that successful trading requires discipline, risk management, and the ability to identify and follow market trends.

 

Each book provides its own unique perspective and insights into the story of Turtle Trading, but they all emphasize the importance of having a systematic and rules-based approach to trading. They also highlight the psychological challenges of trading and the importance of maintaining emotional discipline and avoiding emotional biases.

 

Overall, while there may be some variation in the specific details and perspectives presented in each book, the central message is that successful trading requires discipline, consistency, and a clear understanding of market trends and risks.

 

• How to do.

 

The Turtle Trading strategy was primarily focused on trading futures contracts, rather than individual stocks or companies. However, the principles underlying the strategy can be applied to any asset class, including stocks.

 

One key principle of the Turtle Trading strategy was to focus on identifying and trading strong, sustained market trends. The Turtles used technical analysis and other tools to identify these trends and then used a systematic approach to enter and exit trades based on specific rules and criteria.

 

In terms of selecting individual stocks, the Turtles would likely have focused on companies that were experiencing strong trends or had other factors that indicated they were likely to perform well in the future. This could include factors such as strong earnings growth, a competitive advantage in their industry, or a strong management team.

 

Overall, the Turtle Trading strategy was focused on identifying and trading trends rather than selecting individual companies. However, the same principles of identifying strong trends and using a systematic approach to trading can be applied to any asset class, including individual stocks.

 

The Turtle Trading strategy used a variety of technical analysis tools to identify strong, sustained market trends. Some of the key indicators and techniques used by the Turtles included:

 

Moving averages: The Turtles used a variety of moving averages to identify trends and to generate trading signals. For example, they might use a long-term moving average (such as a 200-day moving average) to identify the overall trend of the market and a shorter-term moving average (such as a 20-day moving average) to generate trading signals.

 

Breakout trading: The Turtles also used breakout trading to identify strong trends. Breakout trading involves buying or selling when the price of an asset moves above or below a specific level of support or resistance.

 

Price patterns: The Turtles also looked for specific price patterns that indicated a strong trend was emerging. For example, they might look for a "cup and handle" pattern, where the price of an asset forms a rounded bottom followed by a slight pullback before continuing higher.

 

Relative strength: The Turtles also used relative strength analysis to compare the performance of different assets or sectors. By identifying sectors or assets that were outperforming the broader market, they could focus their trading on those areas that were likely to continue to perform well.

 

Overall, the key to identifying strong, sustained market trends was to use a combination of technical analysis tools and to apply a systematic approach to trading based on specific rules and criteria. The Turtles were disciplined traders who followed their rules consistently, which allowed them to identify and capitalize on these trends over time.