These days buy and hold may as well be called buy and hope, which is definitely not a sound strategy. And while there are a near infinite variety of potentially successful trading strategies (as the book Market Wizards shows), some of the most successful strategies have been mechanical trend following systems. You’ve no doubt heard a bit about Richard Dennis, the trend trading pioneer who discussed his mid-1980’s Turtles experiment in Market Wizards. Now, thanks to Michael Covel, we are lucky enough to have access to the whole story. Part one takes place during the experiment, when the Turtles are on the relatively level playing field designed by Richard Dennis.
Page Summary1-Page Book Summary of The Complete TurtleTrader
The two classes of turtles Dennis personally trained earned more than $175 million in only five years. Dennis had proved beyond a doubt that beginners can learn to trade successfully. In case you missed it, I recently did another book review of Michael Covel’s other book, Trend Following. I’m very happy I read both of these books around the same time. So if you’re interested in The Complete Turtle Trader you may want to check out Trend Following too.
How did the Turtles’ performance compare to traditional traders in The Complete TurtleTrader?
The story of how a group of non-traders learned to trade for big profits is one of the great stock market legends. It’s also a great lesson in how sticking to a specific set of proven criteria can help traders realize greater returns. In this case, however, the results are close to flipping a coin, so it’s up to you to decide if this strategy is for you.
In chapter 5 of The Complete Turtle Trader, Michael Covel actually reveals the exact trading systems that the turtles used to build their multi-million dollar fortunes. Customers find the book’s information quality positive, noting it is wonderfully researched and contains lots of learning material, with one customer specifically mentioning it provides basic trend following lessons. Customers enjoy the story quality of the book, finding it interesting and entertaining to read, with one customer noting it is very well researched. Trend following takes a small town guy at a gas station to trading legend worth $100 million? «The single hardest thing I have to do to make people understand how I trade is to convince them how wrong I can be about things, how much of a guess it is.»
- More importantly, they were under contract – they couldn’t just up and go work for a competitor.
- This groundbreaking experiment challenged conventional assumptions, demonstrating the power of nurture and systematic training in achieving success in a highly competitive field often…
- The practical advice and strategies shared are invaluable, offering readers actionable insights they can apply in their own investment endeavors.
- However, some criticized the writing style and lack of detailed trading strategies.
Despite its great successes, however, the downside to turtle trading is at least as great as the upside. Drawdowns should be expected the complete turtletrader review with any trading system, but they tend to be especially deep with trend-following strategies. This is at least partly due to the fact that most breakouts tend to be false moves, resulting in a large number of losing trades. In the end, practitioners say to expect to be correct 40%-50% of the time and to be ready for large drawdowns. Covel delves into the core principles underlying the Turtles’ trading strategies and scrutinizes the impressive outcomes achieved by traders who were mostly novices.
Entrepreneurial spirit: The X-factor in sustained trading success
Dennis believed anyone could be taught to trade the futures markets, while Eckhardt countered that Dennis had a special gift that allowed him to profit from trading. While the exact reason is unclear, Dennis was having some issues of his own. There is a whole chapter on Jerry Parker, a successful Turtle who founded Chesapeake Capital and started managing money for clients. There were couple of guys from the group who tried to make easy money by selling Dennis’s rules. They also tried to trade on their own but failed to repeat the process that they had under Dennis. A second-generation Turtle Salem Abraham got inspired by meeting and talking to Jerry Parker, the original Turtle.
Trend Following™
Customers find the book engaging and well-written, with a straight-forward writing style that makes it a must-read for traders. Moreover, the book provides valuable insights into the Turtle Trader experiment, detailing the development and training of the traders. Additionally, customers appreciate the information quality, with one customer noting it covers basic trend following concepts.
- In practice, this means, for example, buying new four-week highs as an entry signal.
- In the end, practitioners say to expect to be correct 40%-50% of the time and to be ready for large drawdowns.
- Dennis deliberately chose participants for his study from a diverse range of backgrounds and personalities, seeking a mix of unique individuals.
- Some of the Turtles did great, continuing on in the tradition of successful trend traders, others gave trading a shot but failed to repeat their prior performance, and still others became near total losers.
- He and his partner, Eckhardt, had frequent discussions about their success.
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The selected Turtles underwent an intensive two-week training session held at the Union League Club in Chicago. The book thoroughly explains the comprehensive training program, which covers everything from managing risks to the methods for entering and exiting trades, as established by Dennis and Eckhardt. Eckhardt was instrumental in the training process, emphasizing the mathematical concepts that were the bedrock of their approach to trading.
Reviews
This system aimed to capture shorter-term market swings and momentum shifts. The strategies enforced strict guidelines to commence selling upon hitting predefined loss thresholds, thus controlling… This account offers intriguing insights on nature versus nurture, systematic trading, and the path to trading mastery. Richard Dennis, a successful Chicago trader, believed that trading skills could be taught to anyone, while his partner William Eckhardt thought trading success was innate. Not only is it well written and easy and exiting to read, but I learned a tremendous amount.
For those who like inspiring books about successful trading, this one is as good as they come. But beyond the cheer leading, it examines the darker and more complex side of what winning means and how to keep what you’ve made for the long run. For these reasons this book is an easy pick for my list of top ten trading books of all time. Stories like the above are not uncommon – just ask the employees of Bear Stearns.
The advertisements presented an opportunity to learn Dennis’s proprietary trading methods and to manage trades on his behalf, with the promise of a portion of the earnings as motivation. This unorthodox approach to hiring, which strayed from Wall Street’s typical preference for candidates with established track records, attracted the attention of over a thousand individuals keen to receive guidance from an experienced market trader. The advertisement depicted a route to riches that appeared direct, akin to receiving an invitation for auditions with a team of professional sports players, highlighting the lack of need for prior experience. Even without Dennis’ help, individuals can apply the basic rules of turtle trading to their own trading.
The varied assembly demonstrated that individuals from all backgrounds, regardless of their prior knowledge or experience, could successfully adopt and apply Dennis’s trading strategies. I have read about the traders featured in this book and listened to them on podcasts. So I was already aware of much of the content but there was still so much new, too. The moral of the story is that trading can be learned and you don’t need to be born with special skills. However, people with entrepreneurial mindset and toughness to take losses and get back up, were the ones to continue on the success path when trading without a mentor.
The general idea is to buy breakouts and close the trade when prices start consolidating or reversing. Short trades must be made according to the same principles under this system because a market experiences both uptrends and downtrends. While any time frame can be used for the entry signal, the exit signal needs to be significantly shorter in order to maximize profitable trades.
The beginner Turtles were subjected to a comprehensive training regimen aimed at instilling a disciplined and impartial approach to trading, which required strict adherence to established rules and thorough memorization. The experiment’s success proved Dennis’s point that trading skills can be learned, challenging the notion that successful traders are born with special talents or intuition. In 1983, legendary commodity traders Richard Dennis and William Eckhardt held the turtle experiment to prove that anyone could be taught to trade. Using his own money, Dennis taught novice traders his technique, and in five years, they reportedly made over $175 million combined. It is the only narrative account of trader Richard Dennis and his student traders nicknamed the ‘Turtles’. It is the definitive book on the subject and has been translated into German, Japanese, Chinese (Traditional and Simplified), Korean and Russian.
