Turtle trading strategy is a well-known technical trend trading method, its origin can be traced back to the 1980s, by the famous commodity trading advisor (CTA) Richard Dennis (Richard Dennis) and William Eckhard ( William Eckhardt).
Historical Background
Richard Dennis believes that successful trading is not an innate talent, but a skill that can be taught and learned. To prove this point, he and Eckhard conducted a unique experiment in which they recruited a group of inexperienced people, called "turtles," and trained them through a specific set of trading rules.
After several months of training and practical operation, many "Turtle" traders have achieved remarkable success, and this experiment has become a legendary story in the history of trading.
Principles of Turtle Trading
The Turtle trading strategy is based on the observation and tracking of market trends. The core ideas can be summarized in the following points:
Market Trend Identification: Turtle traders use moving averages over time and breakout points to identify long-term trends in the market.
Gradually build positions: When there is a clear trend in the market, turtle traders will gradually build positions, and earn profits from the trend by increasing positions.
Risk Management: Risk management is crucial in the Turtle strategy. Traders will clearly set the risk level of each trade and set stop loss points to limit losses.
Profit Protection: When the market trend starts to disappear, Turtle traders will gradually reduce their positions to protect the profits already obtained.
Turtle Trading Practices
The Turtle Trading Strategy, while relatively simple in principle, requires a great deal of discipline and patience in practice. Here are some key factors in practice:
Systematic Trading: Strictly following the rules is the key to successful Turtle trading. Any interference of subjective emotion may undermine the effectiveness of the strategy.
Long-term perspective: The Turtle trading strategy requires traders to have a long-term perspective and not be affected by short-term market fluctuations.
Continuous Learning and Adjustment: While the fundamentals remain the same, Turtle traders need to continually learn the market and adjust strategies to adapt to changing market conditions.
Summary
The Turtle Trading Strategy is a classic trend-following strategy designed to profit from the long-term trend of the market through a systematic approach and disciplined risk management. While this strategy has been successful over the decades, it's not for everyone. Successful Turtle trading requires strong discipline, patience and a deep understanding of the markets. Thorough training and practice are essential before attempting this strategy.