Review – The Original Turtle System

Looking for a Trading Plan?

Remember the movie “Trading Places”? (1983) Well a similar experiment was actually carried out by legendary commodity traders Richard Dennis and William Eckhardt. This is the original Turtle Trading System rules. (37 pages)

It is based on the commodities futures markets and is a trend following system. A trend system requires a large capital base and large drawdowns are to be expected. Also, according to Michael Carr, the rules must be followed exactly because the win ratio is only 40-50%.

“The Components of a Complete Trading System covers each of the decisions required for successful trading:
Markets – What to buy or sell
Position Sizing – How much to buy or sell
Entries – When to buy or sell
Stops – When to get out of a losing position
Exits – When to get out of a winning position
Tactics – How to buy or sell

Using a mechanical system is the best way to consistently make money trading. If you know that your system makes money over the long run, it is easier to take the signals and follow the system during periods of losses. If you rely on your own judgment, during trading you may find that you are fearful just when you should be courageous, or courageous when you should be fearful. If you have a profitable mechanical trading system, and you follow it religiously, then your trading will be profitable, and the system will help you survive the emotional struggles that inevitably result from a long series of losses, or large profits.”

The main point the experiment proved is that you can be taught to trade – it doesn’t require an innate talent. For those who don’t have or are still working on a plan, this is an excellent template. It gives the how to and why of each section.