Turtle System
The history of financial trading in the United States spans over 150 years, and during this time, three legendary trading masters emerged. Among them, he was the most legendary, revered as the "Master Speculator of the Century."
At 23, Dennis borrowed $1,600 from his family and used $400 of it for trading. Over the next ten years, he earned $200 million, achieving an unprecedented 500,000-fold return!
01 Dennis’s Trading History
At 17: Dennis became a floor runner at the Chicago Mercantile Exchange.
Years later, he established his own account trading mini-contracts at the MidAmerica Commodity Exchange. However, since he was not yet of the required trading age (21), Dennis had to ask his father to help him trade on the floor.
After graduating from college with a bachelor's degree in philosophy, Dennis also received a scholarship for further study. But his yearning for trading led him to forgo both the scholarship and further education.
Dennis borrowed $1,600 from his family, using $1,200 to buy a seat at the MidAmerica Commodity Exchange and reserving $400 as his trading capital.
This marked the official beginning of his legendary trading journey.
- 1970: $400 grew to $3,000.
- 1973: Trading capital reached $100,000.
·1974: Dennis had earned a profit of $500,000 from trading. By the end of that year, shortly after his 26th birthday, he had become a millionaire.
·1980s: Dennis was a dominant figure in the trading market, often influencing market trends. His performance continued to improve, earning over $50 million in profits annually.
·1987: Dennis suffered significant losses during the stock market crash. However, he remained unperturbed. His remarkable trait was his ability to remain calm and composed in the face of adversity, showing no emotional fluctuations.
He understood the reality that "major losses are inevitable." Emotional fluctuations do not benefit trading; focusing too much on them only affects the bigger picture. Being overly concerned with victories and defeats indicates a lack of confidence in oneself.
In fact, he wouldn’t get overly joyous when trades went well, and naturally, the emotional setbacks were less severe when luck wasn’t on his side.
·1988: Richard Dennis withdrew from the trading scene, leaving behind a legendary legacy.
02 Dennis’s Trading System
Dennis had no renowned mentors; instead, he continuously refined his trading system through self-analysis:
1 Follow the Trend
Do not subjectively judge high and low prices.
People tend to seek safety margins, selling high and buying low. Dennis also tried bottom-fishing and top-picking but repeatedly failed. He believed that even if he got it right occasionally, the returns were far outweighed by the losses from repeated trial and error.
2 Contra-Market Sentiment
80% bullish means the peak is not far; 80% bearish means the bottom is not far.
Many people simply judge the prevailing sentiment based on the views of those around them. However, no one can overlay all market expectations and quantify everyone’s bullish or bearish opinions.
Therefore, this point provides more reference value in breaking our fixed mindset.
3 Risk Control
Dennis learned about risk management after losing a third of his capital.
The key to risk management is persistence—not giving up due to repeated stop-losses, nor becoming complacent due to stable gains. Dennis excelled in this regard.
4 Technical Analysis
Dennis was a technical analyst. Together with his friends, he completed trades using technical analysis and programmed trading systems. However, if the trading system conflicted with his gut feeling, he chose to stay out temporarily.
03 Dennis’s Turtle Trading Rules
"The Turtle Trading Rules" is a must-read book for both professional traders and general investors. In the financial world, there is a famous story.
In 1983, two close friends in the U.S. financial world—Richard Dennis and William Eckhardt—had a disagreement over a question: Are great traders born or can they be trained?
They made a bet on this issue and conducted an experiment to find the answer, known as the "Turtle Trading Experiment."
Dennis and Eckhardt selected 13 "turtles" from 1,000 applicants and taught them trading principles and rules over two weeks.
Over the following four years, the turtles achieved an average annual return of 80% using these trading rules.
The author of "The Turtle Trading Rules" was one of these turtles and a successful one at that.
"This is one of the five best trading books ever written."
-from the Foreword by Van K. Tharp
WAY of the TURTLE
The Secret Methods that Turned Ordinary People into Legendary Traders
"The Turtle Trading Rules"
In the book, he reveals the entire experiment process for the first time, uncovering the mysterious "Turtle Trading Rules" to help you understand:
· How the turtles traded and seized trading opportunities:
· How the turtles measured risk and managed funds:
· How the turtles achieved over 100% annual returns;
- Why some turtles achieved great success while others lost everything,
- How to apply the Turtle Trading Rules to your own trading.
The Turtle Trading System is a well-rounded mechanical trading system that covers all aspects of trading, providing answers for every decision you must make, making it easier for you to execute consistent trades.
A complete trading system encompasses every decision needed for successful trading:
Market—What to buy or sell
Position Size—How much to buy or sell
Entry—When to buy or sell
Stop Loss—When to exit a losing position
Exit—When to exit a profitable position
Strategy—How to execute trades
Market—What to buy or sell. The Turtle Trading System is beloved by many because it covers every decision needed for successful trading. Many expert traders have developed various Turtle-style trading systems based on it.
04 Dennis’s Trading Insights
Regardless, Dennis's remarkable record in the trading market remains unmatched, and his trading principles continue to attract traders today.
For many traders, even if the trading rules were published in the newspaper, no one would follow them. The key lies in consistency and adherence to principles.
When traders make mistakes and incur losses, they are highly likely to evade reality, refuse to acknowledge errors, refuse to reflect, and throw the market and trading out of their minds, unable to think at all.
In fact, making mistakes and suffering losses is precisely the time to think deeply about the market and trading, and thoroughly reflect on mistakes.
Sometimes self-reflection is necessary, and sometimes opportunities should be sought from others. The trading insights from the master speculator Dennis offer the following lessons:
1 Do not take conventional wisdom as gospel
The money I’ve made proves that most people are wrong most of the time in the market. What I understand about the market is that it’s irrational, filled with a mass of chaos.
Once emotions take over, most people make wrong decisions. If things are far from expectations, do not force it, do not trade.
2 Do not add positions or hastily trade to recover losses
A loss will affect your judgment. Therefore, it’s best to take a break and then consider the next trade.
You have a reason for holding a position, so until that reason disappears, it’s best to stick to the position.
The market is in a trend, and this should be the primary reason for us to enter the market. It’s that simple. Sticking to this may be more important than the method or feature you use to identify the trend.
No matter what method you use to enter, the most crucial part is whether there is a primary trend.
3 Make trading decisions without emotional interference
A good trend-following system will keep you close to the market until the trend changes.
4 Be prepared for unexpected situations
I believe another important point is to always be prepared for various unexpected events. Do not underestimate the risks the market may pose.
If I’ve learned any lesson from nearly 20 years of trading experience, it’s that any unexpected and unlikely event can happen in the market at any time.
You should be aware of adverse situations. When they occur, your only option is to exit quickly.
The key to Richard Dennis's success was his prompt summarization of experiences and lessons. He was essentially self-taught, with all his experiences and knowledge learned through market practice.
Many traders do not summarize the reasons for their profits or losses, so they remain baffled about why they earn or lose money.
Some people indeed summarize principles, but they repeatedly make the same mistakes in practice, which verifies the saying: "Everyone knows the principles, but very few actually practice them."
As ordinary traders, we should be even more diligent in summarizing experiences and lessons, continuously learning, and treating every trade with seriousness.
These are some trading insights from the "Turtle Trading System" and the master speculator Dennis. I hope they can aid you in your trading.
For more information, please contact CWG A-hai; ahaidanshenkeliao
