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Turtle Trading

  • #1
  • First Post: May 1, 2005 12:31pm May 1, 2005 12:31pm
Is anyone currently using the entire or part of the turtle trading system??? Please elaborate on your experiences with the system, i.e., successful/unsuccessful, difficult to follow, etc.

I feel the position sizing components have definite merit in any system.

Thanks ahead of time. AK
  • #2
  • May 2, 2005 4:32am May 2, 2005 4:32am
did you see this?

http://www.forexfactory.com/forexfor...ead.php?t=1473
Relax and be happy.
  • #3
  • May 2, 2005 7:08am May 2, 2005 7:08am
Yes I did; thanks for posting that it was very informative. It is was inspired me to ask the question.

I was looking for personal feedback from folks who are using the system.

Thanks - is anyone currently using it???
  • #4
  • May 2, 2005 5:44pm May 2, 2005 5:44pm
I hooe Merlin or someone else will correct me if I'm wrong about this, but my understanding of the Turtles' system is that because of the low strike-rate and high drawdowns, it was always necessary to trade it simultaneously across an absolutely huge range of markets to try to even things out. It was a viable system for 15 - 20 full-time traders, I believe? I'm not sure that an individual trader could hope to try to duplicate it(?) ...
  • #5
  • May 3, 2005 8:00pm May 3, 2005 8:00pm
Quoting tim_nn
I hooe Merlin or someone else will correct me if I'm wrong about this, but my understanding of the Turtles' system is that because of the low strike-rate and high drawdowns, it was always necessary to trade it simultaneously across an absolutely huge range of markets to try to even things out. It was a viable system for 15 - 20 full-time traders, I believe? I'm not sure that an individual trader could hope to try to duplicate it(?) ...
check out this doc...

http://www.forexfactory.com/turtlerules.pdf

it was written by one of the original Turtles. this is what i based the TS code on, and i was able to duplicate it exactly.

the system is not viable anymore. but derivatives of it will work, i trade one myself and i hear Richard Dennis is still using a version.
Relax and be happy.
  • #6
  • May 3, 2005 8:02pm May 3, 2005 8:02pm
Quoting K3NY0N
Yes I did; thanks for posting that it was very informative. It is was inspired me to ask the question.

I was looking for personal feedback from folks who are using the system.

Thanks - is anyone currently using it???
it doesnt work that well in its stock form, but read the document i posted above because many of the components of the system are still viable.
Relax and be happy.
  • #7
  • May 4, 2005 3:44pm May 4, 2005 3:44pm
What has changed to make the turtle system no longer viable? Not trying to argue here, just trying to learn. thanks.
Don Life is expensive, but includes a free trip around the sun.
  • #8
  • May 4, 2005 4:25pm May 4, 2005 4:25pm
The trading methodology that Richard Dennis taught his Turtles was arguably one of the most difficult trading methods for a typical trader to execute. Not only did it require the trader to hold on to winning positions for extraordinary lengths of time and profit, but also it required continually adding to that position if the market moved in the direction of the trade. Since adding to positions raises the average price, the Turtles often gave back substantial profits on retracements and often were stopped out of a trade that rode a significant trend with no profit to show for it. While all trend traders play for the outlier, Turtles played for the outlier of the outliers—typically just one trend a year. The entry was a simple 40 day channel breakout. For whatever reason, it doesn't work anymore, probably because so many tried to emulate Richard Dennis.

Dennis had a personal fortune of $200 million. At the time he was interviewed for "Market Wizards" he was in a serious losing streak. He closed down his fund that year after losing half of it. He also lost half of his net worth. He then quit trading and did other things. Eventually he came back to trading and attempted to use his old system. Supposedly he lost 8 figures in the process of learning that the old system no longer worked. However, Richard Dennis is a trader of a certain caliber and he was able to come up with another profitable system and he's making money again.

The interesting thing about the turtles was the discipline that was required to trade Dennis' system was tremendous. They had virtually no trading experience and most of them did alright at it, while a few did tremendously well and they are now trading their own funds. There is a story of one trader that broke the rules and made a bundle on a trade. Dennis promptly fired him for breaking the rules. The worst trade a trader can make is one that breaks the rules of your system and you win on it. This sets you off on a slippery slope that is incredibly hard to get off of before you ruin your account.

Dennis' amazing success as a trader and with the Turtles is powerful proof that discipline, money management, and risk control are what makes money in trading, not the systems.
  • #9
  • May 7, 2005 2:42pm May 7, 2005 2:42pm
Also, markets change to adapt to these methodologies once they are common knowledge. Look at Dinapoli's Fibonacci numbers. They're NOWHERE near as accurate as they were when he first started...even though they're still very useful today.
  • #10
  • May 7, 2005 5:05pm May 7, 2005 5:05pm
Quoting Dopey
Dennis' amazing success as a trader and with the Turtles is powerful proof that discipline, money management, and risk control are what makes money in trading, not the systems.
Correct. It's all about money management. The systems are secondary.
  • #11
  • Jul 25, 2005 4:12am Jul 25, 2005 4:12am
Quoting q827
Correct. It's all about money management. The systems are secondary.
yeah, but the best money management in the world cant win at a game with a negative expectancy! so is the system really secondary
Relax and be happy.
  • #12
  • Aug 6, 2005 8:00pm Aug 6, 2005 8:00pm
Quoting merlin
yeah, but the best money management in the world cant win at a game with a negative expectancy! so is the system really secondary
My thoughts exactly. From what I can gather, it seems that winning this game consists of two parts: Discipline (money management, risk quantification and control, etc), and constantly evolving your trading system. Trading seems to be incredibly Darwinian.

My cousin's a trader who is having some problems. He said that there are too many people doing the same thing. My reply was, "dude, didn't you ever study efficient markets and the like? Your system is degrading." I don't know if he's adaptable enough to stay ahead of the curve.
  • #13
  • Aug 8, 2005 3:15pm Aug 8, 2005 3:15pm
Quoting Far From Average
My thoughts exactly. From what I can gather, it seems that winning this game consists of two parts: Discipline (money management, risk quantification and control, etc), and constantly evolving your trading system. Trading seems to be incredibly Darwinian.
at one time i would have disagreed with this Darwinian aurgument. but not anymore. one of my favorite quotes is by Fred Gehm > "You can not beat the market, but you can extract money from it for a short time."

its not hard for a system to get ruined. if one hedgefund gets ahold of your strategy, they alone could elliminate the inefficiency that the system capitalizes on. something i found interesting about ed thorp's book "Beat the Market" is that he actually calculated how much money it would take to ruin the system (a warrants/stock hedge system). the figure was not all that high, a few billion i think. one hedgefund can trade a few billion.
Relax and be happy.
  • #14
  • Aug 8, 2005 4:21pm Aug 8, 2005 4:21pm
Quoting merlin
at one time i would have disagreed with this Darwinian aurgument. but not anymore...

its not hard for a system to get ruined. if one hedgefund gets ahold of your strategy, they alone could elliminate the inefficiency that the system capitalizes on.
But do systems ever become viable again? It would seem as a system gets more and more in vogue, that more people would use it and ruin the system. Then, perhaps people would abandon it and it could once again be viable. Is there any possibility of this?
  • #15
  • Aug 8, 2005 5:32pm Aug 8, 2005 5:32pm
yes they sure do start working again. ive pulled old strategies from the trash more than once. when you trade a strategy day in and day out for a year, you learn intricately what conditions the system needs and you can sort of read the cycles.
Relax and be happy.
  • #16
  • Aug 8, 2005 7:11pm Aug 8, 2005 7:11pm
Quoting merlin
yes they sure do start working again. ive pulled old strategies from the trash more than once. when you trade a strategy day in and day out for a year, you learn intricately what conditions the system needs and you can sort of read the cycles.
Fascinating. I feel like a smartie pants now.
  • #17
  • Edited 10:16pm Oct 26, 2007 10:08pm | Edited 10:16pm
Here is sumfin to play with

Set up: (daily short term)

20-day price channel
10-day price channel

Entry= price bust up through 20day channel after p/b
Stop/exit is breach of 10-day channel.



http://img155.imageshack.us/img155/4959/2010eq1.th.png



That’s it now how is that for simplicity? ..lol
Check Mate GAME OVER
  • #18
  • Oct 26, 2007 11:34pm Oct 26, 2007 11:34pm
I have the Turtle book - The Way of the Turtle, for sale if anyone is interested. It's in like new condition, no writing inside. I'll send it priority mail within cont. US for $15. If anyone interested, email me at [email protected].
  • #19
  • Oct 27, 2007 1:07am Oct 27, 2007 1:07am
Quoting merlin
at one time i would have disagreed with this Darwinian aurgument. but not anymore. one of my favorite quotes is by Fred Gehm > "You can not beat the market, but you can extract money from it for a short time."

its not hard for a system to get ruined. if one hedgefund gets ahold of your strategy, they alone could elliminate the inefficiency that the system capitalizes on. something i found interesting about ed thorp's book "Beat the Market" is that he actually calculated how much money it would take to ruin the system (a warrants/stock hedge system). the figure was not all that high, a few billion i think. one hedgefund can trade a few billion.
A majority of systems do get ruined because they have low dynamic response to the market. They're built around an idea or a pattern in the current market. Once this pattern is disturbed (like when everyone starts using a particular system), its effectiveness is reduced or eliminated entirely.

A system with high dynamic response is harder to ruin, because there's a lot more feedback between the system and the market. Even if a lot of people start using the system, there would be a change in the market but at the same time the system would adapt to that change, which would change the market, etc. etc. .

An example of a high dynamic response system is a moving average. The moving average is based off the price itself, so anything that is reflected in the price will be handled by the moving average. Despite a fair amount of traders that use moving averages, they still maintain their effectiveness more or less.

An example of a less dynamic system would be something like Fibonacci lines. These are fixed intervals, and while based on price the intervals remain the same. This is exploiting a pattern in the market, and if it were disturbed too far, the lines would not be as useful.

Exploiting patterns in the market can be quite profitable, for a certain amount of time. Exploiting the behavior of the market can be profitable for much longer, but is harder to do.

Just my thoughts,
~X~
  • #20
  • Oct 29, 2007 2:50pm Oct 29, 2007 2:50pm
a clear 10/20 bust up here out of compression zone...

http://img136.imageshack.us/img136/6154/gbpjpyrl2.png
Check Mate GAME OVER
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