The Original Turtle Trading Rules
The Original Turtle Trading Rules
The Turtle rules were released in order to fight against charlatans, frauds, and scams. In 1984, two different futures on trade got into a disagreement. Eckhart William perceived that trading was something inborn, and it ran in the blood, and one not born a trader will never be trader. On the contrary, Richard Dennis thought that trading is something that can be learned. These two people agreed to conduct an experiment to see who was right. The experiment involved providing his selected participants with a large amount of money, which they can think on their own in conducting business. The participants were grouped into two. Those who were trained on the skills of trading and the second group were not trained. Richard Dennis hypothesis proved right. His group of trained traders became known as the Turtles. They proved that, through effective use of the learned skills, they can manage to increase their initial account by $100, 000 on a yearly basis. The Turtles had their own secrete of success that is connected to a set of systems.
The Turtles believed that the development of a system is the main source of their market success. The discovery of such a system and discipline is exercising the rules of the system has enabled them be successful in the market. With time, various people started claiming that they were the Turtles yet they were not. Through the stolen identity, they started selling some guidelines and rules believed to be part of the trading system of Turtles. This false appeal to the public triggered the original trainees of Richard Dennis, jointly known as the Curtis Faith, to open up and publish as a new set of guidelines known as, “The Original Turtle Trading Rules”. These rules are published in the book, “the Way of the Turtle” (2007) and on the internet. The rules prohibit the selling of stock in a declining market whenever there is a short. A short sale is only carried out when there is a higher price from the previous price of sale.
Dennis trainees known as the Turtles in a two weeks training were taught on a simple system of following a trend that followed a range of commodities under trade. Other aspects involved bond markets, currencies, buying when the market is above its normal range or selling when it’s below. The trend-following system is basically based on trade initiations controlled channel breakouts of prices (Original Turtles 2003).
The N” concept also known as the Whipsaw is for alternating the stop strategy in order to result to a much better profitability. This strategy is, however, challenging to be executed for it leads to lower loss/ win ratio and much greater losses. These stops are placed in at a ½ level of whipsaw with ½ %. The use of the N concept greatly helped the Turtles in adjusting to the market’s volatility. This is a technical strategy based on the assumption that total risks cannot go beyond 2% in every four units. The Turtle traders through this system, aimed to become profitable. I agree with Richard Dennis that trading is a skill that anyone can learn. Trading is not inheritable. The set rules and systems of trading as for the case of Turtle Trading Rules can assist in making a difference on the profitability of trading.
Reference
Original Turtles (2003) the origin of the free rules project. Retrieved from
w.metastocktools.com/downloads/turtlerules.pdf
On October 27, 2012
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