How to trade Forex Profitably like Richard Dennis and William Eckhardt

How to trade Forex Profitably like Richard Dennis and William Eckhardt

Can you imagine if you could learn trading strategies from some of the world’s best hedge fund managers and traders? Can you envision yourself using the same trading techniques and knowing all the secrets that make a professional trader succeed in the Forex business? If your answer is yes, then this article is for you as you’re about to learn how to trade Forex profitably by using the Turtle Trading System.

How to trade Forex Profitably using the Legendary Turtle Trading System

How to trade Forex Profitably using the Legendary Turtle Trading System

The biggest secret is that there is nothing special about this strategy and the so called “market wizards” are just like everyone else. The reality is that these market wizards have worked harder to discover what works in Forex trading and what doesn’t. So, here you have a great opportunity to learn how to trade Forex profitably like the market wizards.

How to trade Forex Profitably like Richard Dennis and William Eckhardt

The Turtle Trading System is one of the biggest trading experiments in human history and it was quite a popular trend trading system back in the late 80s. Actually the Turtle Trading System was born from two professional traders Richard Dennis and William Eckhardt over an argument. They were trading partners and they had a disagreement on whether or not successful trading can be taught. The Turtle Trading experiment ended up to be overwhelmingly successful proving that trading can be taught if you have the ability to follow a set of rules. By the end of the experiment the traders involved in the Turtle Trading system generated in excess of $100 million in profit.

Where did the Turtles Come From?

After Richard Dennis had returned from a visit to Asia and was being interviewed in the Wall Street Journal about his proposal he said: “We’re going to grow traders just like they grow turtles in Singapore.” When Richard Dennis and William Eckhardt came up with their experiment they had in mind three basic premises behind the Turtles Trading experiment:

  1. Anyone can follow the rules of the system;
  2. By following the rules you get the confidence to continue trading even when a trade goes against you.
  3. Nature vs. nurture that you can teach anyone the rules. You’re not born as a trader and the skills to become a profitable trader can be taught.

The Turtle trading system is a systematic trading strategy that incorporates every feature of a trading system from money management to entry and exit techniques. There will be no discretion involved when it comes to the Turtle Trading System.

The Rules that Made The Turtle Trading System Legendary

The Turtle Trading system is a trend-following strategy specially designed for trading the commodity market, but it can be applied to trading Forex profitably as well. The Turtle Trading system is not for everyone as it requires a lot of patience and discipline to stick to the rules. Because the Turtle Trading system has a very low winning percentage only a minority of traders have the mental strength to continue following the strategy’s rules. Before deciding to trade with the Turtle Trading system you have to make a strong commitment to continue to follow the trading rules in the face of all adversities – drawdowns.

Richard Dennis has made the buy/sell trading rules straightforward and quite simple:

  • Buy on a new 20-day high breakout;
  • Sell on a new 20-day low breakout;

Not every breakout will result into a long lasting trend and in this regard Richard Dennis has developed an exit strategy to minimize the loss incurred. The stop loss is based on the underlying market volatility, which is determined using the following formula. Now this is nothing complicated, so please don’t shut off your mind now…

N= 20-day EMA of the Average True Range (ATR);

N represents the average range in price movement that a particular market experience in a single day. Were the True Range = maximum (H-L, H-PDC, PDC -L).

  • H= Current High;
  • L= Current Low;
  • PDC= Previous Day Close;

The protective stop loss is always determined as being two times the variable N (2xN). When it comes to the take profit, Richard Dennis used two types of systems. The first system used as a general rule a 10 day high/low breakout against your position. While the second system used a 20 day high/low breakout against your position as an exit rule.

How to trade Forex Profitably like Richard Dennis and William Eckhardt

How to trade Forex Profitably like Richard Dennis and William Eckhardt

Why Turtle Trading still works today and beyond?

Many have argued that this trading system is now too slow in the modern world. The Turtle Trading system was first introduced to the general public in the late 80s you might think that this trend-following strategy is outdated, however this is further from the truth. As long as we have the free markets, there will always be market trends developing at various degrees because “markets are driven by humans, and human nature never changes,” as famously quote by Jesse Livermore (another Trading Legend in the early 20th century). We feel that the Turtle Trading System will continue to work now and into the future because it’s essentially a breakout trend trading system that rides on greed (for long positions) and fear (for short positions).

The Turtle Trading system is a viable trend-following strategy that can help you capture the bigger trends in the market and ultimately it’s quite a simple method to trade Forex profitably. The one thing you need to know is that you might have more losing trades than winning trades. But just one winning trade might be enough to cover 20 losing trades. This system surely works but will it work for you?

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