Somewhat Informative, Overly Long | The Complete TurtleTrader: The Legend, the Lessons, the Results |...

The complete Turtle trading story | The Complete TurtleTrader: The Legend, the Lessons, the Results | Michael W. Covel

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	• The Complete TurtleTrader: The Legend, the Lessons, the Results Michael W. Covel Collins Business, 2007 - 272 pages average customer review:based on 72 reviews view larger image
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highly recommended

A look inside a most successful group of traders

In 1984 Richard Dennis, the legendary futures trader, set out to determine if successful traders can be raised like Turtles in Singapore. He provided each of them with an education, a trading system, and the funding to trade. Dennis then sat back and watched what happened as they executed his ideas. The experiment proved a success; many students produced returns of 50-100% in the first year. There were several successful Turtles who have silently created millions of dollars in profits for themselves and their customers. Some Turtles went on to trade for clients - Jerry Parker for instance. Others dropped from sight.

The system rules were very simple and the author provides them in the book. It is almost amazing how straightforward the rules are and how they worked so well. The rules incorporate trading signals with money management - a rather abstract idea to me at first. After studying them however I found it brilliant. Entries and exits are typically trend following entries - you buy highs and sell short lows. The core of the method is position sizing based on the risk of a trade. This idea is what makes the system work; it is what separated the Turtles from the other traders.

One important issue to grasp is the types of statistical errors the authored covered. The short version says it is crucial to take every trading opportunity that comes up. Missing a trade for whatever reason can mean you miss the big payoff. The system is built on the foundation of small losses and big payoffs. The idea is summed up on page 108 - `Dennis said, "Why didn't you trade cocoa? What told you?' Lu said, "Oh I only trade stuff that is on my first page and cocoa wasn't on my first page.' Lu thought he saw Dennis's face fall.' It is more important to take the Cocoa trade and fail than to never have the opportunity to profit. Dennis taught that the markets are random, a concept that would no doubt offend most market gurus today and completely dismiss the use of fundamental data. Markets that are going up are those making new highs, it is that simple. You cannot get caught in the temptation to time the market. Doing so may keep you out of a trade, and that big potential profit.

I liked the book and I am giving it out to friends who have an interest in trading. It is a fresh book, full of enough detail to keep you interested, but not enough to make it too boring. This story is not told that often, and never told in the detail revealed in the book. It was a trading experiment that succeeded and the insights offered are valuable to those who will read and understand them.

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Somewhat Informative, Overly Long

"The Complete Turtle Trader" details the story of an experiment to determine if traders were born, not made (or vice-versa), as well as provide a basic foundation in pattern trading. Fundamental analysis (eg. Warren Buffett) is seen as pointless - value is already reflected in an item's price. Instead, trading is based on mob psychology, and is clearly not income-averaging either.

System I: A four-week price break-out was a signal for market entry, and a two-week breakout in the opposite direction a signal for exit. System I was also combined with "filters" to reduce the number of entries. System II instead used an eleven-week breakout to enter, and a four-week signal to exit. There were also a few add-on rules to cover markets that increased over a sustained period of time.

Traders typically used 2% of their funds for each "bet," and were also warned to avoid correlation within their portfolios (increased overall risk). Another risk-limiting rule was to limit themselves to 4-5 "units" of 2% for any one market.

The experiment demonstrated that most anyone could be taught to be a successful traders, and most made considerable profit for both themselves and their funders.

The "bad news" about "The Complete Turtle Trader" is that most of the book is taken up with minute and largely irrelevant details of initial trader selection, personality differences, etc.

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The complete Turtle trading story

If you are curious about the story of the legendary "Turtles", then this book is for you. If you want to learn how to to trade stocks, this book will touch on all the basics.
What happens when legendary trader Richard Dennis puts a want ad in the paper to hire traders? What kind of results would ordinary people make if they were given a winning system and a million dollar account? The results will surprise you. This experiment was over an argument that Rich Dennis had with his trading partner over whether traders were born or could be trained. The first class was started in 1984 with about 14 students in the first class. After 2 weeks of training they were given accounts to trade. The returns were very volatile month by month but like their mentor, most averaged returns of 50-100% a year. In the end Rich Dennis was correct, and his firm successfully produced several traders that become millionaires, one went on to manage a billion dollar fund. After the program ended and they were set loose on their own their continued success seemed to be based on their ability to be entrepreneurs on their own.
The turtles were taught trend following along was risk management. The program wanted to get all the traders to strictly follow the system they were given. They were taught to not think in terms of money, they wanted money to be more abstract so they could think clearly with out the pressure that thinking in terms of cash creates. A bad month, a bad quarter, or even a bad year does not mean much in the grand scheme. They would only trade in a trending market with the goal being to catch the meat of the move. Rich Dennis wanted them to follow rules and avoid making judgements.The turtles were technical traders with the belief being that price is reality and intelligence is the appearance. They traded price action not news or fundamentals. They had two systems they could use. S1 essentially said you would buy or sell short a market if it made a new twenty day high or low. S2 was longer term using and eleven week breakout for an entry signal and a four week breakout in the opposite direction for an exit.
The author has written an excellent account of the complete Turtle story, interviewing many of the original turtles and updating where they are now and showing several of their accounts performances while in the program. This review has only scratched the surface I highly recommend purchasing this book, it is among the best trading books I have read, for the story and the trading advice.I have made thousands in the market using many of these same trading systems.

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Was Going to Ignore, Then Could Not Put It Down

This book arrived in the mail with no letter. I normally do not read or review unsolicited books, but as I was deep into The Battle for the Soul of Capitalism instead of ignoring it I picked it up and it grabbed me.

This is a fine book, a tale well told with deep detail where there needs to be detail. My only thought as I put it down was, Wow! followed by another thought: what would it take to make Wall Street traders a force for good as John Bogle calls for in his own book?

If you want to be a trader in today's market where you buy on dips and sell on spikes, this book is as good as any.

Here are some others that in my view portend a bright future for moral capitalism and communal ownership:
The Politics of Fortune: A New Agenda For Business Leaders
The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits (Wharton School Publishing Paperbacks)
The Wealth of Networks: How Social Production Transforms Markets and Freedom
Revolutionary Wealth: How it will be created and how it will change our lives
Infinite Wealth: A New World of Collaboration and Abundance in the Knowledge Era
The Tao of Democracy: Using Co-Intelligence to Create a World That Works for All

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Entertaining

Not very useful for trading but it is entertaining. Followed some of what they said and I lost money, maybe that system worked in the 80s and may not work as well in the Internet Era.

reviews: 1, 2, 3, 4, 5, 6, 7, 8, 9, page 10, 11, 12, 13, 14, 15

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