Turtle trading strategy forex

Sorry, but I just get the big fuzz around this method. Everyone always says that the biggest problem in trading is to constantly be able to follow one's rules. But I disagree! The biggest problem is finding a working system. You tested this system on one currency pair for two years of Daily data and decided it didn't work. Then you state that a double moving average system would work better on the stock market with no proof. Now for the facts No, it won't win on every market or vehicle traded at the same time Diversification is a key component. How do I know?

Here's a clue Not just the ones you feel like following, not just the ones you understand It's not an easy system to trade because you can go into large drawdowns However most people don't have the discipline or intelligence to follow it properly.

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Please don't say something doesn't work just because it won't work the way that YOU want it to work. This value depends on a position size which a trader has opened. A trader, who opened 0. All those lines represent different risk management approaches - from a more conservative to a more aggressive, namely:. The white line represents the price High and Low range found over the 50 days period. The yellow line - 20 days, the red line - 10 days.

The indicator makes it look like a channel, but you should understand, that at any point of time it is a High-to-Low price range , which we can simply highlight by drawing two parallel horizontal lines thought the High and Low prices of the range. Therefore, when price exceeds the High of the range, Turtle traders enter Long. When price drops below the Low of the range, Turtle traders enter Short. Which of the three ranges should one use: red, yellow or white? The white range offers the most conservative, less risky approach to selecting trades.

It takes a wide range of 50 days, allowing more room for a trend to mature and confirm itself before a Turtle trader changes his position from Buying to Selling and back. While in a trade, the opposite side of the Turtle channel is used as a trailing stop and at the same time a level, at which a trading position is simultaneously reversed to an opposite one.

The thin lines represent 10 days range, the thick lines - 20 days, the extra think lines - 55 days. Active traders Poll - share your live experience or read what others have to say. Forum What is Forex?

You can help thousands improve their trading! Home » Forex systems with MT4 custom indicators. Submitted by User on July 16, - Submitted by Rich Hello everyone! Submitted by Henry on November 26, - Henry priceistrending.

Submitted by Frank on June 25, - Submitted by User on March 27, - Submitted by User on January 4, - Submitted by User on January 23, - Submitted by brightdays on December 28, - Thanks much in advance! Submitted by User on August 21, - For a long position, an entrance was made you would buy when the current price exceeded the high price of the previous twenty days.

If you wanted to take a short position, the reverse was true: an entrance was made a short position when the current price was lower than that of the previous twenty days. But this signal would be ignored if the previous breakout signal would have led to a winning trade. The signal to exit in this system was a ten-day low for long positions or a ten-day high for short positions.

This system took a slightly longer approach though by no means a long-term strategy. It also came with a bit less risk than S1. The signal to enter using this system, for a long position, was when the current price exceeded the high of the previous 55 days. For a short position, the signal to enter was when the price dipped below the low of the last 55 days.

The Turtle Trading Strategy

Unlike with S1, the signal to enter the market applied whether the preceding breakout was a winner. The signal to exit for S2 was when the price hit a day low for long positions or high for short positions. The goal of both of these systems was to help the turtles know when to enter and exit the market.

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Only in hindsight do they become apparent. The entrance signal, therefore, helped alert the turtles to a potential trend. Once a trend has been found, knowing when to exit the strategy is potentially even more challenging, and greed and fear can often cause poor exits.



The exit strategy of both S1 and S2 aimed to eliminate the impact of these two emotions. If a turtle made a trade and profits kept increasing, the turtle might be tempted to stay in the position and make even more money, but if the system the turtle was using said to exit, the turtle had to exit.

Description

One of the hardest parts of trading is deciding when to enter and exit the market. These additional rules related to position sizing and the use of stops. Position sizing requires adjusting the size of a position based on the dollar volatility of that market. Since more volatility means more risk, the goal was to find investment opportunities with similar risk per dollar invested. This way, the turtles could diversify their portfolio among investments with similar levels of risk.

Dennis taught the turtles how to quantify risk using a series of formulas and then limited the amount of risk a turtle could take on. The turtles calculated N by taking the average price movement of the last twenty days. One unit was calculated by taking one percent of the account and dividing it by N times the dollars per point market dollar volatility.

Stops were another essential part of the Turtle Trading strategy. Dennis taught his turtles to decide ahead of time at what point the turtle would cut any losses and move on. The goal was to keep losses small by limiting the impact emotions could have on a trade. This rule was non-negotiable. Once the investment reached the predetermined stop price, the turtle had to exit the strategy.

This helped the turtles avoid a common trap among many traders. Often when a trader places a trade, if the trade appears to be losing money, the trader will hang on in the hopes that things will turn around. While this may happen, it rarely does. The trader who can accept the loss and move on will often lose far less than the trader who clings to a bad investment. Now that we know the rules the turtles used, the question becomes - how successful were they?

The answer - very successful. The experiment lasted for five years. Not all traders made it to the end, and due to the highly volatile nature of the Turtle Trading system, there were also plenty of losses among the turtles. Still, ultimately, Dennis proved himself correct in believing that anyone can be taught how to trade successfully. Not so fast. The Turtle Trading strategy was implemented in the s, almost forty years ago. In general, most popular trading systems with specific rules and guidelines eventually stop working as more traders using similar strategies arbitrage away the profits.

There are other potential reasons why the Turtle Trading strategy may no longer work. An interesting footnote to the story of the Turtle Trading experiment is what happened to Richard Dennis.

Dennis made his first million dollars before turning On some days, Dennis could be millions of dollars down, but he believed that the wins outweighed the losses. And for a long time, they did. But eventually, a time came when this was no longer the case. Whether Dennis was strictly following his Turtle Trading system when he lost all this money is up for debate. After this loss, Dennis retired from trading.

His name now lives on far more in relation to his Turtle Trading experiment than for his successful trading career. But what about the turtles? Did they fare better than Dennis? The turtles which made it through the experiment were those who followed the rules. Not all the turtles managed to make it, though. Some turtles were asked to leave the experiment after they struggled to abide by the rules Dennis had taught his turtles.

For most of the turtles, the most challenging part of following the rules was the exit strategy, which required waiting for a new low.

TURTLE TRADERS STRATEGY - The Complete TurtleTrader by Michael Covel. (Richard Dennis)

Apparently, one turtle was let go before the end of the first year because he failed to follow the exit strategy rules. Those who followed the rules and remained in the experiment made large profits by basing their trades on the Turtle Trader rules. Some even went on to have successful careers as commodity traders. But not all the turtles found success. One of the turtles, Curtis Faith, went on to start his own money management firm. Jerry Parker, on the other hand, still manages Chesapeak Capital. There are a lot of ways to interpret the results of the Turtle Trading experiment.

We could look at the success of the turtles and say that anyone can be taught to trade. We could use the experiment to highlight the differences in the markets of the s and today. Personally, I find the Turtle Trading experiment a fascinating look at the power of emotions in trading decisions. Human nature and our best interests often conflict in trading. Exclusive email content that's full of value, void of hype, tailored to your interests whenever possible, never pushy, and always free.