Turtle Trading Strategy: The Secret Trading System That Made Millionaires

Can a simple set of trading rules make you a millionaire?

That’s exactly what Richard Dennis set out to prove in the early 1980s. With a bold belief that trading success wasn't about instinct but discipline, he trained a group of everyday people using a specific set of rules — and they went on to earn millions. These traders became known as the Turtles, and their system became legendary in the world of finance.

In this article, we'll break down the Turtle Trading Strategy, explore how it works, the exact rules these traders followed, and whether the strategy still holds up in today's fast-paced markets.

What is Turtle Trading Strategy?

A Bold Experiment Turned into a Trading Revolution

• In 1983, Richard Dennis, a famous commodities trader, believed great traders could be trained but his friend, William Eckhardt, disagreed - thinking trading skill was innate.
• So, they ran an experiment by training few individuals with no prior experience. Surprisingly the results were phenomenal.

The Strategy Explained Simply

• It's a trend-following system - designed to catch big market moves.
• Turtles didn’t predict where the market would go - they reacted to it.
• The core idea: Buy high (when breaking out), sell higher.

How Does the Turtle Trading Strategy Work?

Entry Strategy: Buy Breakouts

• Buy when price breaks above the 20-day high
• Sell short when it breaks below the 20-day low

Position Sizing: Volatility-Based

• Uses ATR (Average True Range) to size positions
• Goal: Risk the same % of capital on each trade, adjusting for volatility

Risk Management: Stop-Losses

• Place stop-loss at 2 ATRs away from entry
• Risk only 1-2% of portfolio per trade

Exit Strategy: Trailing Stops

• Exit on a 10-day low (if long), or 10-day high (if short)
• Ride the trend, let winners run, cut losers fast

Does Turtle Trading Still Work Today?

Pros

• Clear, rule-based system - great for new traders
• Trend-following still works in some asset classes
• Encourages discipline and risk management

Cons

• Markets are faster, and more efficient today
• More false breakouts due to algorithmic trading
• Requires patience and emotional control — drawdowns can be long

Modern Adaptations

• Use of shorter timeframes or longer breakout windows.
• Adding trend filters (e.g., moving averages, RSI).
• Automated backtesting to fine-tune rules.

How to Apply the Turtle Trading Strategy in Your Trades

Step-by-Step Guide:

1. Choose a liquid asset 

2. Track 20-day highs/lows

3. Use ATR to calculate stop-loss and position size

4. Enter at breakouts; set stop 2 ATRs away

5. Exit at 10-day low/high or using a trailing stop

6. Monitor multiple positions and never overexpose

Recommended Tools/Software:

• TradingView or MetaTrader for charting and alerts
• ATR indicators for sizing
• Spreadsheet or journal for tracking rules adherence

Common Mistakes to Avoid:

• Ignoring risk limits
• Exiting too early due to fear
• Overtrading or forcing entries during sideways markets

Conclusion:

The Turtle Trading Strategy is a timeless lesson in discipline, structure, and letting the market lead. Whether you’re a beginner or seasoned trader, its principles can still provide a solid framework - especially if you customize them for today’s market dynamics.

But remember, no strategy is a guaranteed ticket to wealth. Test it. Learn from it. And most importantly - stick to your rules.