{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/learnpriceaction.com\/turtle-trading-strategy-richard-dennis-william-eckhardt\/#BlogPosting","mainEntityOfPage":"https:\/\/learnpriceaction.com\/turtle-trading-strategy-richard-dennis-william-eckhardt\/","headline":"Turtle Trading Strategy: Richard Dennis & William Eckhardt","name":"Turtle Trading Strategy: Richard Dennis & William Eckhardt","description":"By following a simple rule set, can a novice trader become\u00a0an outstanding professional trader in a short period of time? Pablo Picasso said, \u201cLearn the rules like a pro, so you can break them like an\u00a0artist\u201d. A man named Richard Dennis trained a group of non-professional\u00a0traders\u00a0into\u00a0the ‘Turtle Traders’ who then went onto make $100 million […]","datePublished":"2018-11-14","dateModified":"2020-08-20","author":{"@type":"Person","@id":"https:\/\/learnpriceaction.com\/author\/ohwellcarlosgmail-com\/#Person","name":"Investagal","url":"https:\/\/learnpriceaction.com\/author\/ohwellcarlosgmail-com\/","identifier":2,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/99f2bbeea61d996cedb7b2da01d709d36fff00a7cace7f15c5e390bbf2a4a716?s=96&d=wavatar&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/99f2bbeea61d996cedb7b2da01d709d36fff00a7cace7f15c5e390bbf2a4a716?s=96&d=wavatar&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Learn Price Action","logo":{"@type":"ImageObject","@id":"https:\/\/learnpriceaction.com\/wp-content\/uploads\/2018\/09\/Learn-Price-Action-Logo.png","url":"https:\/\/learnpriceaction.com\/wp-content\/uploads\/2018\/09\/Learn-Price-Action-Logo.png","width":600,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/learnpriceaction.com\/wp-content\/uploads\/2018\/07\/Turtle-trading.png","url":"https:\/\/learnpriceaction.com\/wp-content\/uploads\/2018\/07\/Turtle-trading.png","height":630,"width":1200},"url":"https:\/\/learnpriceaction.com\/turtle-trading-strategy-richard-dennis-william-eckhardt\/","about":["Stock Market and Forex Lessons"],"wordCount":1106,"articleBody":"By following a simple rule set, can a novice trader become\u00a0an outstanding professional trader in a short period of time?Pablo Picasso said, \u201cLearn the rules like a pro, so you can break them like an\u00a0artist\u201d.A man named Richard Dennis trained a group of non-professional\u00a0traders\u00a0into\u00a0the ‘Turtle Traders’ who then went onto make $100 million dollars, proving this can be done. Table of ContentsToggleWho are the Turtle Traders?\u00a0Richard Dennis & William EckhardtWho is Richard Dennis?\u00a0Who is William Eckhardt?\u00a0The Turtle Trading Strategy and Rules\u00a0What Markets Did the Turtle Trade?\u00a0Position Sizing\u00a0Pyramiding\u00a0Into PositionsHow Turtles Entered Trades\u00a0How Turtles Exited Trades\u00a0LastlyWho are the Turtle Traders?\u00a0The turtle traders are one of the most compelling experiments in the history of trading.It all started\u00a0with\u00a0two men named Richard Dennis &\u00a0William\u00a0Eckhardt. The two commodity traders were having an ongoing dispute about whether a great trader\u2019s skill could be\u00a0reduced to a set of fixed rules.To settle this matter,\u00a0Dennis suggested that they recruit and train\u00a0traders\u00a0to see which one is correct. They then took\u00a0out a large advertisement asking for trading apprentices in\u00a0Barron\u2019s, the Wall Street Journal and the New York Times.\u00a0The successful applicants consisted of\u00a021 men and 2 women. They were invited to Chicago for two weeks of training and trading with small accounts. After proving themselves, Dennis funded the recruit traders with one million dollar accounts. Dennis was quoted as saying;\u201cWe are going to grow traders like they grow turtles in Singapore\u201d.  As a result, the traders were called \u201cthe turtles\u201d.\u00a0The ‘turtle traders’ became one of the most famous experiments in the history of trading because they went on to earn an aggregated sum of over $100,000,000 dollars.\u00a0With a simple set of rules, Dennis proved that he could turn a novice trader into an excellent trader.\u00a0The turtle trader story is an\u00a0inspiration that still inspires modern day traders today.Richard Dennis & William Eckhardt Who is Richard Dennis?\u00a0Richard Dennis was once known as the \u201cPrince of the Pit\u201d.He is a famous commodities speculator and reportedly made $200 million in about 10 years with the $1,600 money he borrowed.He\u00a0started his career in commodities when he was only 17 years old as a floor trader order runner at Chicago Mercantile Exchange.Using mini contracts, he started to trade his own account at the Mid America Commodity Exchange. In 1973, Richard Dennis earned $100,000 in profit.In 1974, he capitalized on a runway soybean market to make $500,000 in profits. At the end of 1974, he became an outstanding millionaire.\u00a0 Who is William Eckhardt?\u00a0William Eckhardt is a commodity and futures trader and fund manager.In 1991 he founded Eckhardt Trading\u00a0Company (ETC), an alternative investment management firm. It specializes in the trading of global financial futures and\u00a0commodities.Eckhardt is a trader and friend of Richard Dennis who was involved in the turtle trader experiment.\u00a0 The Turtle Trading Strategy and Rules\u00a0The turtle traders were taught how to implement a trend following strategy by Richard Dennis. The idea is to buy futures breaking out to the upside of the trading range and sell short when the downside breaks out.\u00a0This is a strategy where you attempt to ride the momentum of an asset, whether it is\u00a0trending up or down.The turtle trading system is a rule-based system developed by Richard Dennis where the turtles became successful traders. The system includes every aspect a trader needs to know, including how to trade, how much to buy and sell, and importantly when to get out of a trade. What Markets Did the Turtle Trade?\u00a0In general; the turtles traded large and liquid markets due to the size of the trades they were entering into.Except for meat and grains, they traded all the liquid markets.\u00a0\u00a0Here\u2019s an idea of what the turtles traded:\u00a010 & 30 Year U.S. Treasury Bond & 90 Day U.S. Treasury Bills.\u00a0Commodities: cocoa, coffee, cotton, sugar, heating oil, crude oil, and unleaded gas.\u00a0Currencies: Swiss Franc, British Pound, Japanese Yen, and Canadian dollar.\u00a0Metals: gold, silver, and copper.Index Futures Position Sizing\u00a0When it came to position sizing, the turtle traders used a sophisticated position sizing algorithm. They based the size of their positions on the volatility of an asset.If a turtle amassed a position in a highly volatile market, it would be offset by a position in a lower volatility market.With the information provided by Dennis, the turtles could figure out how much they should hold on each trade position.In a highly volatile market, the turtles would have smaller amounts. On the other hand, they would have larger amounts in a low volatility market.\u00a0 Pyramiding\u00a0Into PositionsThe turtles used \u201cpyramiding\u201d to take larger positions if the market moved in their favor. This could increase their profits when they made large winning trades.They also added one unit to the position each time the price moved favorably.\u00a0\u00a0This was not the actual breakout price because this was based on the transaction price. How Turtles Entered Trades\u00a0The turtle traders used two simple entry\u00a0systems:\u00a0The short-term system based on 20-day breakout\u00a0They entered (one unit) when the price moved above the high for the last 20 days or dropped below the low of the last 20 days.\u00a0The long-term system based on 55-day breakout\u00a0They entered (one unit) when the price moved above the high for the last 55 days,\u00a0\u00a0The turtles always ended a trade on the breakout before the daily close of the markets.\u00a0 How Turtles Exited Trades\u00a0The turtle traders used a stop loss at all times to make sure their losses did not spiral out of control.All stop losses were worked out before the trades entry and similar to their position sizing they employed different stops depending on the volatility of the market. The more volatile the market, the wider the stop that would be used so that trades would not be whipsawed out before going on to become winners. LastlyTurtle trading is one of the most famous experiments to have ever been recorded in the history of trading.By following a clear cut and simple rule set, profit become consistent.This strategy worked well in Dennis\u2019s era. Trends still occur in all markets opening the way for a lot of opportunities for traders to create their own trend trading systems and rule sets.\u00a0 \u201cTrading was even more teachable than I imagined… In a strange sort of\u00a0way\u00a0it was almost humbling\u201d\u00a0\u00a0-Richard DennisWall Street Journal\u00a0 "}