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Technical Analysis on Turtle Trading:

Technical Analysis on Turtle Trading: I was recently asked to comment on Turtle Trading. I was I have been doing some reading by the original turtles to see if I get any insight into their thinking. I was surprised to see that about half the class eventually lost money or made very little. Can you address these questions?
As someone who actually submitted an application to Richard Dennis in the 80’s to become a Turtle, I welcome providing you my thoughts.
Turtle Trading as the name evolved from the individuals that Richard Dennis taught how to trade commodities, is a great system. It is a Trend Following System. It is one of methods followed nightly in our Daily Alert Service for all asset classes.
One reason for the lack of success by many is that they are trying to apply a Turtle method to every asset. The other reason is they are trying to apply Turtle Trading to the wrong asset. If you tried to use Turtle or various versions of the Turtle method to trade the Dow, Dow futures, and leveraged Dow, you would be frustrated and abandon Turtle trading as useless. However, as the premise of our research shows, it is more important to match the Trading Plan to the asset. Obviously, Turtle Trading is not the Holy Grail for trading the Dow. If you used the Turtle 20-20 with the Russell 2000 over the past 12 years, you have had over a 14% annual return for the period. The Dow would have provided you less than a 1.5% return of the same 12 year period.
There are several different parameters that can be used for Turtle Trading. When I say parameters, I mean the N period used for the high, the N period used for the low, various stop parameters, and even combining the breakout method with other indicators such as the MACD.
Our data mining research includes many of these variations.
The only Turtle Trading System we recommend using is the original Turtle Breakout 20-20 or a Turtle Breakout 26-26 to attempt to avoid some whipsaws at the 20-20 pivot points.
We look to determine if Turtle Trading is appropriate for the asset, not look at Turtle Trading as a Holy Grail system.
The limitations for Turtle Trading is the same as most Trend Trading Systems. It produces a great number of whipsaw trades with small gains or small losses. The big winners come in a few trades.
This brings us to one of the main reasons that many traders that were taught Turtle Trading Methods failed. When they worked for Richard Dennis, they had to take every trade and no matter how profitable they were during the trade, they must follow the rules and stay in the trade until the exit rule conditions were met. The traders using Turtle Trading techniques will often after a nice profit end the trade prematurely. They justify their actions with phrases like “you can never go broke taking a profit”. The reality is that they often do go broke taking that early profit as they only sit idle while the asset trades continually higher or lower producing outrageously large profits.
The long Turtle Trade in the Russell 2000 (RUT) from November 2 1999 to March 22, 2000 made 138 points when the index was index was trading at 432. The short trade in the Russell(RUT) 2000 from September 2008 to December 2008 when the entry price of the Russell 2000 was 679, made over 200 points of profit. These are enormous percentage gains on a single trade that do not occur often. If you do not have the disciple to take every trade and stay in it until it is over, you will need to find a trading system that fits your personality better.
Conclusion: Turtle Trading is one of the best Trend Following Trading Systems. You must trade it on appropriates assets. You must have the trading disciple to take many trades that do not produce large gains. You must realize as in all trend following systems, you will still not be picking the top or bottom of the trade and attempts to outguess the excellent rules Richard Dennis used will result in frustration.

For research on "What works with Turtle Trading, or to ask the researcher, mark@seleznovcapitaladvisors.com