The Original Turtle Trading Rules

Background Richard Dennis, set up a group of 13

people and tranned them about trading stock market (year 1989).

Two months later after done with tranning, Dennis funded each of people with $500,000 to $2,000,000

Background

Over next four years, they earned an average annual compound rate of return of 80%

1. A Complete Trading SystemSystem provides answer for trading

System follows a set of rulesNo human emotion involves in trading

Buy

Sell

Buy

2. Know what to buy and sellThe Turtles traded all liquid U.S markets

except the grains (small contracts)and the meats(a corruption problem).

Industries Aerospace & Defense Chemicals Exchange Traded Funds Oil, Gas &

Energy Agriculture, Paper &Packaging Clean Tech Food Manufacturing & Products Publishing& Media Automotive Closed End Funds & Investment Companies Healthcare & Pharmaceutical Real Estate Banks, Financial Services & Insurance Computers, Technology & Internet Industrial & Manufacturing Telecommunications Biotechnology Consumer & Retail Products Leisure & EntertainmentTransportation Building & Construction Distr. Unit Trusts & FundsMetals & Mining Utilities Business & Support Services Electronics & Engineering

3. Position Sizing True Range = Maximum(H-L,H-

PDC,PDC-L) where H - Current High

L - Current Low PDC - Previous Day's Close

N = (19 X PDN + TR)/20 where PDN - Previous Day's N TR - Current Day's True Range

Dollar Volatility AdjustmentDollar Volatility = N * Dollars per Point

Unit Size = 1% of Account / Market Dollar Volatility

3. Position Sizing

3. Position Sizinghttp://www.turtletrades.com/calculate-N.php?thesymbol=MSFT

3. Position SizingLevel Type Maximum Unit1 Single Market 4

Units2 Closely Correlated Market 6 Units3 Loosely Correlated Market 10 Units4 Single Direction - Long or Short 12 Units

Single Market

Closely Correlated Market -- heating oil and crude oil; gold and silver

Loosely Correlated Market -- gold and copper ; silver and copper

Single Direction

3. Position SizingAdjusting Trading Size The Turtle were

instructed to decreased the size of account by 20% if we went down 10%

Trading $1,000,000 -> account went down

(10%) $100,000 = left $900,000 Next Trading we have $800,000 -> account

went down (10%) $80,000 = left 720,000 Next Trading we have $640,000

4. Entries System 1 - A short term system based on a 20-day

breakout. System 2 - A simpler long-term system based on a 55-

days breakout.System 1 Entry Price > average 20-day high = buy one unit (long

position) Price < average 20-day low = sell one unit (short

position)System 2 Entry Price > average 55-day high = buy one unit (long

position) Price < average 55-day low = sell one unit (short

position)

4. Entries

5. Stops"There are old traders; and there are bold traders; but

there are no old bold traders" Traders that don't use stops go broke.

Since N = 1% of Account Equity , So the maximum stop would be 2% (2N)

For Example Crude Oil

N = 1.20 55 days breakout = 28.30

Entry Price Stop

First Unit 28.30 27.70

Second Unit 28.90 27.70

Third Unit 29.50 27.70

5. StopsN = 1.20 55 days breakout = 28.30

Entry Price Stop

First Unit 28.30 27.70

Second Unit 28.90 27.70

Third Unit 29.50 28.90

Fourth Unit 30.10 29.50

5. Stops

6. ExitsThe system 1 exit = 10 days low/high for

long positions The system 2 exit = 20 days low/high for

long positions

“Waiting for a 10 or 20 days new low can often mean watching 20%, 40%

even 100% of significant profits evaporate”

7. Tacticslimit orders is better than market orders-offer a

chance for better fills and less slippage bid price > ask price = tradingFast MarketA market can move thousands of dollars per

contract in a few minutes - do not panic and wait for the market to trade

Simultaneous Entry SignalsIf a market occurs the stretch of a few hours ,

take the trade as they came.Buy Strength and Sell Weaknessuse Visual examination

Today

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