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Turtle Trading System: Following in the Footsteps of Richard Dennis's Success

The Turtle Trading System, developed by Richard Dennis in the early 1980s, is a trading methodology that achieved remarkable success. Richard Dennis turned his initial capital of only around $400 into over $100 million using this system. Consequently, the system became widely renowned and adopted by many traders worldwide.

Origins and Inspiration

The system was inspired by the unique way turtle farmers assess whether turtle hatchlings can survive. Farmers would individually place turtles into water. If a turtle sank, it was deemed unable to survive and was eliminated. Those that could swim and survive were considered capable and were nurtured for sale.

Recruitment of "The Turtles"

In 1983, Richard Dennis recruited 13 students known as "The Turtles." They came from various backgrounds, with some having no prior trading experience. Dennis provided specific rules, known as Turtle Rules, and each student was given the responsibility to manage an equal amount of funds.

Turtle Rules: Six Main Components

The Turtle Trading System has six main components that a complete trading system must possess:

  1. Market: Determining the currency pair or other instruments to be traded, including diversification considerations.
  2. Size/Volume/Lot: Determining how much of an asset to buy or sell, related to diversification and risk management.
  3. Entry/Open: Determining when to enter a position. Sophisticated systems will provide signals for the best time to enter the market.
  4. Stop: Determining when to close positions in a losing state. Turtle Rules emphasize the importance of closing losing positions for the trader's sustainability.
  5. Exit: Determining when to close positions in a profitable state. Turtle Rules focus not only on losses but also on profits.
  6. Tactics: Determining specific ways to buy and sell. This includes the intricacies of position opening strategies, especially in waiting conditions or floating losses.

Core of the Turtle Trading System: Trend Following
This methodology is based on the 'Trend Follower' concept. The Turtle Trading System emphasizes the importance of following trends and not fighting the market's direction. By observing and following trends, traders are expected to increase their chances of long-term success.

The Turtle Trading System, famous for Richard Dennis's success, serves as the foundation for many traders to develop their own trading systems. Focusing on trend following, strict risk management, and clear rules are at the core of this system's success. For traders interested in it, understanding and applying the principles of the Turtle Trading System can provide a solid foundation in their trading journey.


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