The state of the market simply means. Eckhardt taught the Turtles that they had to know on a daily basis how much any market goes up and down. If Microsoft on an average trades at 50, but typically bounces up and down on any given day between 48 and 52, then Turtles were taught that the volatility of that market was four. They had their own jargon to describe daily volatilities. More volatile markets generally carried more risk.

The Turtles had to know how much money they had at all times, because every rule they would learn adapted to their given account size at that moment. What is the system or the trading orientation? Eckhardt instructed the Turtles that in advance of the market opening, they had to have their battle plan set for buying and selling. The Turtles had two systems: System One S1 and System Two S2.

These systems governed their entries and exits. S1 essentially said you would buy or sell short a market if it made a new twenty-day high or low.

Risk management was not a concept that the Turtles grasped immediately. Day after day, Eckhardt would emphasize comparisons. Once he told the Turtles to consider two traders who have the same equity, the same system or trading orientation , and the same risk aversion and were both facing the same situation in the market. For both traders, the optimal course of action must be the same.

Now this may sound simple, but human nature causes most people, when faced with a similar situation, to react differently. They tend to outthink the situation, figuring there must be some unique value that they alone can add to make it even better. Dennis and Eckhardt demanded that the Turtles respond the same or they were out of the program and they did end up cutting people. You are not smarter than the market. So follow the rules. Hesitate and they would be toast in the zero-sum market game.

Those were simply facts that everyone could see plain as day. Eckhardt was most interested in the last three questions, which addressed the equity level, the systems, and the risk aversion.

They were subjective questions all grounded in the present. It did not make a difference what the answers to these three questions were a month ago or last week. Put another way, the Turtles could control only how much money they had now, how they decided to enter and exit a trade now, and how much to risk on each trade right now. For example, if Google is trading at today, Google is trading at A trader who trades differentially because of swings in confidence is focusing on his or her own past rather than on current realities.

How to handle profits properly is a separation point between winners and losers. Great traders adjust their trading to the money they have at any one time. Dennis launched an experiment and invited a group of people to trade following those rules. This is how the story of the turtle trading system began.

As you have already understood from the introduction paragraph, turtle trading refers to the type of trend following strategy. The original tactics included a day high breakout futures purchase and day low selling. Of course, the concept involves more rules to consider in addition to specific details that will shape the strategy depending on the market conditions.

To make the most of the turtle trading strategy, you need to be well aware of its baseline rules. There are six major points that traders should take into account when establishing a successful trend following technique:. The first thing is to identify the type of the traded market. Turtle trading works with high volatility markets. It means that it may help when trading:. Position sizing is the core algorithm for the turtle trading strategy. The idea is to make sure that all positions are of the same size despite the type of traded markets.

Besides, it helps to improve diversification. High liquid markets let traders spot fewer contracts and vice versa. The system uses different ways to evaluate the volatility and uses a 2-day exponential moving average. As we consider two different breakouts upside and downside , traders may use two different market entry tactics.

To make things as simple as possible, traders opt for a day breakout no matter if it is high or low. What's more, turtles are supposed to use all the signals. If at least one was missed, it would result in missing a potentially big trade and win. Featured Products The Original Turtles Confidential Notebook. More Information. Turtle Secrets. Future Millionaires Trading Course.

Target Zone Trading. Products You May Like. Original Turtle Rules DVD by Russell Sands. Turtle-Ops Profit Power Guide - Daily Forecast. Turtle-Ops Profit Power Grand Coup. Turtle Workshop Home Study Course. Click to view. Turtle-Ops Profit Power Guide Book Only.

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Get in on a bar breakout 2. Before reversing the trend using the bar breakout, there must be a losing trade in the opposite direction. Always enter on a 55 bar breakout 4. subjective If the market is sideways, use a 55 bar breakout 5.

Once there is a profit in one direction, you can continue to trade in that direction, but to trade in the opposite direction, there must first be a loss. If the trade gets stopped out during the intraday trading, then get back in if the intraday market gives a new signal makes new lows or highs.

Use a 10 day trailing stop 3. The day after the entry, use a 2 ATR protective stop. Sometimes the 10 day trailing stop is too far away. The 10 day trailing stop assures you will not be risking more than 2-ATR on a trade except when there is a gap open against your trade. When the trade is at a 2. Once the 10 day trailing stop or the 2. Once you are ahead by 10 ATR, use a 3 bar pivot as a trailing stop and the 20 bar breakout as a trailing stop.

Enter additional positions at a 55 day breakout, provided the protective stop on the first positions have been moved to breakeven. After a big profit of 10 ATR or more, do not trade in the opposite direction for 45 bars using the 20 bar breakout method. Use the 55 bar breakout instead. Wait for a sideways market to start trading and get in on a 55 bar breakout. Do not expose your account to more than a 2 ATR risk at any time.

Use fractional entry technique 4. If in one trade, wait for that trade to be moved to breakeven before adding any new trades. Trade the strongest commodity within a complex, such as grains and currencies.

Trade when the volatility shrinks. Explain fractional entry technique. Most losing trades are losers from the start. This method reduces risk and allows for maximum profits in a long term trade. Skip to content Entry rules 1. Stop rules 1.

Additional Techniques 1. Money Management Rules 1. Frequently Asked Questions Q. How many periods for ATR? The ATR is based on a 10 day average of the ATR Q. Previous Previous post: Trading Rules from the Gartman Letter.

Turtle trading rules excel sheets can be used to monitor the performance using manual entry and exit points. Today, for a trend-following strategy to work, you need to have a more sophisticated way to manage your risk. At the outset of each trade, a stop loss is placed above or below the entry price. You must be aware of the risks of investing in forex, futures, and options and be willing to accept them in order to trade in these markets. by colibritrader.

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