The Parable of the Turtle Traders


In 1984 two now legendary futures traders had a disagreement. William Eckhardt thought that trading was in the blood; if you weren't born to be a trader, you could never become a trader. Richard Dennis disagreed; he thought that it was possible to teach ordinary people how to succeed at trading.

The two decided to perform an experiment to discover which one of them was right. They would train people from a wide variety of backgrounds how to trade the futures markets using a trading system they had devised . Then they would provide their trainees with trading accounts containing large amounts of money to let them try out their new skills. Finally they would check whether the novice traders made money or lost money.

Who was right? Richard Dennis! In the 1989 book "Market Wizards" by Jack Schwager he described the results of the experiment:

We dropped three people who didn't do very well. The other twenty, however, have averaged about 100% profit per year.

Apart from proving his theory, this was also a very profitable exercise for Richard Dennis. At the start each novice had an account containing $100,000. Five years later the average account contained $2,000,000.

In the same book Dennis also described how his trainees came to be known as "The Turtles":

In telling someone about the [training] program I said "We are going to grow traders just like they grow turtles in Singapore". I had visited a farm out there and seen a huge vat with thousands of squirming turtles; that became my image of growing traders.

Jack Schwager tried to interview some of the Turtles for his 1992 book "The New Market Wizards", but he didn't have much luck. They were all very reluctant to reveal any of the secrets of their success:

The Turtles' caution was so extreme that they avoided talking about anything even remotely connected with the system. (I couldn't help but be reminded of the World War II movies where the downed American pilot responds to all the interrogator's questions by repeating his rank, file and serial number) (sic!)

Even so, as Jack Schwager put it, also in "The New Market Wizards", the experiment with the Turtles proved that:

It is possible to develop a system that can beat the market. Moreover, if you can discover such a system and exercise the discipline to follow it, you can succeed in the markets without being a born trader.

As the years went by various people, some original Turtles and some not, tried to profit from selling what they claimed were the rules of "The Original Turtle Trading System". Eventually this led one of Richard Dennis' original trainees, Curtis Faith, to break his vow of silence and to publish what he called "The Original Turtle Trading Rules" on the web and in his 2007 book "Way of the Turtle".

If you are at all interested in becoming a successful trader yourself we highly recommend that you read the books mentioned above in addition to following this course. For your convenience we have gathered them all together with other recommended reading material in our bookstores.:

Also for your convenience we have created a MetaTrader 4 expert advisor which implements a much simplified version of the Turtle Trading System described by Curtis Faith. If you would like to experiment with it on a demo MetaTrader account you can download this "robot" from our website.  As always, we include the source code.

One final thought. Due to the wonders of modern technology, these days you don't need someone to lend you $100,000 in order to get started as a trader. These days $1,000 of your own money, which you can afford to lose, is sufficient.

Comments on The Parable of the Turtle Traders Leave a Comment

July 22, 2009

Jason @ 9:27 am #

Thanks Jim…for the link to your downloads which I have kept on my site. always good to share free trading info in my opinion.

Thought your readers may like the artcile I posted which can be found here.


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