Forex Methodology – Turtle Trading System
Trading system is based on Trend Follower concept taught by Richard Dennis. The Turtle Rules core requires a trading system to have 6 things.
Turtle trading system is a system created by Richard Dennis. In the early 1980s Dennis became famous thanks to his success. With an initial capital worth no more than $ 400 he was able to double it to over $ 100 million. Dennis is a graduate of DePaul University selling with a BA. Postgraduate degrees are obtained from Tulane University before joining the Chicago Board of Trade.
Dennis initially observed the turtle farmers. The unique way the breeders demonstrate is to make sure whether the turtle child survives or not. Namely by entering them one by one into the water. The drowned turtle is eliminated by the cage because it is considered incapable of living long. While surviving and swimming is considered capable and maintained for later sale.
Then in 1983 Dennis recruited 13 students who were also known as “The Turtles” who came from different backgrounds even who had no previous experience in investment / trading. The goal is to prove that by following a certain rule of trade, one can ‘learn’ to be successful in trading. Each of his students was entrusted to manage the same amount of money and was instructed to follow a rule set by Dennis, also called Turtle Rules. Uniquely, despite having the same rules, the students gave different results. The training program ended in 1988 and some of the Turtles became successful traders and some failed.
Turtle Rules Methodology
Trading system based on the concept of ‘Trend Follower’ and taught by Richard Dennis or commonly known as turtle rules, requires a complete trading system must have 6 things, namely:
- Market – what to buy / sell The first thing to note is what market we will trade, or in other words in the forex world, such as which currency pair we will play. This includes diversification, which can be interpreted as how many currency pairs we will play.
- Size / Volume / Lot – how much to sell / buy. The size of how much to sell / buy affects diversification and money management. Practically the maximum number of Open Positions allowed.
- Entry / Open – when to open Position. If we have created a sophisticated system, then the system will give us a signal when the best time to enter the market.
- Stop – when closing position (in a state of loss) Turtle rules say that traders who do not want to close a position at the time of loss will not survive in the long term.
- Exit – when closing position (in a profit state) In addition to determining the limit of losses, turtle rules also require determining when to exit on the state of profit.
- Tactics – how to buy and sell The ins and outs of how to open a position also need to be taken into account, given that in certain circumstances sometimes our transaction in the status of waiting until profit comes (floating loss status)
From here we can illustrate, that Turtle Trading System System is Trend Follower system or follow Trend. The point if you want to make a profit do not fight Trend.
At the age of 25 Dennis became a millionaire (USD millionaire) – In 1983 recruited and trained 13 people known as ‘The Turtles’. When Black Monday occurred in 1987, Dennis experienced an unexpected loss of $ 10 million and in total to $ 50 million during the period 1987-1988. One thing to note is that Dennis does not always practice the Turtle Rules he has taught his students.