The Turtle Traders Experiment – Can You Replicate Their Success Today?
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Discover the legendary Turtle Traders experiment by Richard Dennis, how ordinary people became market millionaires, and actionable steps to replicate their success today using trading discipline, risk management, and trend-following strategies.
Introduction
In the early 1980s, legendary commodities trader Richard Dennis made a bold claim: trading success is not innate talent but a learned skill. To prove it, he trained a group of ordinary individuals, famously known as the Turtle Traders, using a simple set of trading rules. Within five years, this group reportedly generated over $100 million in profits, making the experiment one of the most fascinating stories in financial history.
The question for today’s traders is: Can you replicate the Turtle Traders’ success in modern markets? Let’s break down what they did, how they did it, and how you can adapt their principles to your own trading journey.
Who Were the Turtle Traders?
Richard Dennis believed trading could be taught like any other skill. He selected a diverse group of men and women from different professions—teachers, guards, engineers—with little to no prior trading experience. These people, called Turtles, were given:
- A small trading account funded by Dennis
- A rule-based trading system
- Clear risk management guidelines
The result? Many of them went on to become multi-millionaire traders in just a few years.
Core Principles of the Turtle Traders
The Turtle strategy was built on three foundational pillars:
- Trend-Following – Buy high when markets are breaking out and sell short when prices break down.
- Systematic Rules – Every entry, exit, and position size was predetermined. No gut feeling.
- Risk Management – Limiting losses was more important than chasing big wins.
How to Replicate the Turtle Trading Method Today – Step by Step
Here is how you can implement a Turtle-style trading system in the modern market:
Step 1: Choose the Right Market
- Preferred Markets: Futures (commodities, indices, forex) or liquid stocks.
- Why? Because high liquidity reduces slippage and allows quick entry/exit.
- Modern Alternative: Use highly traded ETFs (SPY, QQQ) or top 500 liquid stocks if you don’t trade futures.
Step 2: Use Breakout Strategies
The Turtles used two primary breakout systems:
- Short-Term (20-day breakout) – Buy when prices exceed the highest price of the last 20 days or sell short when prices break below the 20-day low.
- Long-Term (55-day breakout) – A longer confirmation system to catch major market moves.
How to do it today:
- Use any trading platform (like TradingView or Thinkorswim).
- Add Donchian Channels or manually track 20-day and 55-day highs/lows.
- Enter positions when price breaks out above these levels.
Step 3: Position Sizing Using ATR
The Turtles calculated position size based on N (volatility) using the Average True Range (ATR).
Modern approach:
- Risk no more than 1-2% of your account on a single trade.
- If volatility (ATR) is high, reduce position size.
- Use a simple formula:Position Size = \frac{Account \times % Risk}{ATR \times Point Value}
Step 4: Set Stop Losses
- The Turtles used a fixed stop at 2 ATR from entry.
- This kept losses manageable and avoided emotional exits.
- Example: If ATR = 10 and you buy at $100, stop loss = $80 (for a short) or $120 (for a long).
Step 5: Follow Rules, Not Emotions
The Turtle Traders were forbidden to override rules based on intuition.
How to replicate this?
- Automate as much as possible using alerts or algorithmic trading.
- Keep a trading journal for accountability.
Step 6: Diversify Across Markets
Dennis instructed Turtles to trade multiple markets to spread risk.
Today’s equivalent:
- Trade multiple asset classes: equities, commodities, ETFs, and forex.
- Keep position correlations low to reduce risk concentration.
The Psychology Factor
Even with a robust system, many fail because of emotional discipline. The Turtle system showed:
- Patience is key: Many trades may have small losses before a big trend emerges.
- Stick to the plan: Breaking rules leads to inconsistent results.
- Think in probabilities: No single trade matters; the strategy’s edge plays out over time.
Key Takeaways
- Trading is a skill, not luck or innate talent.
- A rule-based system combined with risk management can outperform intuition.
- Focus on trend-following, position sizing, and discipline to replicate success.
- Even today, many hedge funds and algorithmic traders follow trend-based systems similar to the Turtle method.
Final Words
The Turtle Traders experiment remains one of the greatest proofs that disciplined execution beats emotional trading. While markets have evolved with more technology and algorithmic trading, the core principles of trend-following, risk control, and rule-based execution remain timeless.
If you are serious about becoming a successful trader, consider starting small, building a rules-based strategy, and following it with iron discipline—just like the Turtles.
Disclaimer
This blog is for educational purposes only and should not be considered financial or investment advice. Trading involves risk, and past performance is not indicative of future results. Always do your own research before investing or trading.
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