What Can The Turtle Trading Experiment Teach Novice Traders and Coaches Today?

A Coach teaching a beginner how to trade the financial markets

The Turtle Trading Strategy is a trend-following approach developed by Richard Dennis and William Eckhardt in the 1980s. They conducted an experiment to prove that anyone could be taught to trade successfully. They trained a group of novice traders, known as the "Turtles," in a simple yet effective trend-following strategy. The Turtles reportedly earned a combined profit of around $175 million.

The core principles of the Turtle Trading Strategy include position sizing, entry and exit rules, and diversification. The strategy involves buying and selling financial assets based on the direction of long-term price trends, with strict risk management and predefined rules for position sizing and entry/exit points.

Here are additional details regarding the experiment:

Background: Richard Dennis believed that trading could be taught, while William Eckhardt was skeptical. To settle the debate, they conducted an experiment by training a group of people, known as the “Turtles,” in their trading strategy.

A Turtle farm

He referred to his students as "turtles" after remembering the turtle farms he had seen in Singapore and determining that he could cultivate traders just as swiftly and effectively as turtles are raised on farms.

Trading Rules: The Turtles were taught a set of rules for entering and exiting trades, which were based on technical analysis and trend-following principles. They used a breakout system, buying when prices moved above a certain level and selling when they moved below a certain level.

Risk Management: The strategy emphasized strict risk management, including position sizing and stop-loss orders to limit potential losses.

Results: The experiment was successful, with the Turtles reportedly making significant profits. The success of the Turtle Trading strategy demonstrated that trading skills could indeed be taught.

Legacy:  The Turtles reportedly earned a combined profit of around $175 million. The Turtle Trading strategy remains popular among traders and is considered a classic example of a systematic trading approach.

Trivia: Here is the screen shot of the Wall Street Article about the experiment:

Wall Street Journal Screen Shot about the Turtle Experiment

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