In Mid 1983 the Famous speculator Richard Dennis argues with his buddy Bill Eckhardt about whether great traders can be trained, or whether it is an innate ability. To settle the argument of nature versus nurture, they decided to teach 13 beginners to trade, and if they can master the rules, fund them with trading accounts. These beginners are known as the 'Turtles'. Over the next four years, the Turtles earned a collective compound rate of return of over 80%. Argument settled and Turtles trading system started.

The Turtles introduced the concept of "Volatility Normalization". In simple words, volatility normaliztion suggests that the more volatile an instrument, smaller is the trade. This means every instrument carries the same dollar risk. This is from where oft-repeated term *N, the 20 day exponential moving average of the ATR (true range) derives.

In the turtle trading system, the losses are taken seriously. Let us say, a turtle trader starts with a notional amount of $100 . In case, the trader looses $10 he would, normally, have $90 to manage future trades. However, in turtle trading system, the trader would have to manage the future trades with only $80 till he earns a profit of $10 to cover the loss.

Trading of Turtles are done under 20 day break out system as well as 55 day breakout system. One unit is bought or sold to start the system in 20 day break out system if the market is high or low through the 20 th day. If successful trade is manifested in the previous signals in the market, by passing the signal is best option to avoid whipsawing

The Turtles trading system would add a single Unit for every 1/2'N' advance once in position. This would be incremented up to the maximum permitted number of units. That is; 4 in a single instrument, 6 in 'Closely Correlated' markets (such as oil and crude), 10 units in 'Loosely Correlated markets and 12 units overall in one direction - CONSISTENCY being the prime directive in all of this. Since most of the trades failed, it was very important to be in ALL of them, otherwise you would miss those few winners which made a huge profit!

The Turtles trading system does work in your favour provided you follow the rules of such trading religiously and don't fancy bending the mechanics of this strategy. Most people are elated at the huge profits they get on some day, but they are invariably ill-equipped to stay calm and accept frequent losses.