Background
Richard Dennis turned $1,600 into an estimated $200 million trading futures by age 37. In 1983, he settled a bet with partner William Eckhardt by recruiting and training 23 novice traders ('the Turtles') using a fully systematic trend-following methodology. The Turtles reportedly earned $175 million in profits, proving that trading could be taught through specific rules.
Core Methodology
The Turtle Trading system is a complete, rule-based trend-following methodology: it uses two Donchian Channel breakout systems (20-day and 55-day) for entries, ATR-based position sizing for risk management, and trailing stops for exits. There is zero discretion — every decision is rule-based.
Key Trading Rules
- System 1: Buy on 20-day high breakout (highest high of last 20 days). Sell on 20-day low breakdown.
- System 2: Buy on 55-day high breakout. Sell on 55-day low breakdown.
- Position sizing: 1 ATR (20-day) = 1% of account. This automatically adjusts for each market's volatility.
- Maximum units per market: 4. Maximum correlated markets: 6. Maximum total: 12.
- Stop loss: 2 ATR from entry price. Exit losing trades mechanically — no hope.
- Pyramiding: add units at 0.5 ATR intervals as the position moves in your favor, up to 4 units.
Key Concepts
Books & Resources
Way of the Turtle by Curtis Faith. The Complete TurtleTrader by Michael Covel. Trend Following by Michael Covel. The original Turtle Trading rules (available free online).