The turtle experiment teaches us many things about what it takes to be a successful trader. One of the biggest lessons is the importance of a solid system. Without clear rules for when to enter and exit trades, how to size positions, and where to set stop losses, you’re just trading on gut instinct. Sooner or that’ll lead to overtrading or taking on positions that are way too big.
How does it work?
The core elements of the Turtle Trading system include:
- Entry Signal: A breakout strategy is used to enter the market. Buy when the price broke above the highest high of the last 20 days (for long trades) or sell when it broke below the lowest low of the previous 20 days (for short trades).
- Position Sizing: The system uses a fixed percentage of total capital for each trade or a fixed trade size (optional). The position size is determined based on volatility, calculated using the Average True Range (ATR) indicator. This allows the system to adjust position size depending on market conditions.
- Exit Signal: Exit positions when the price reversed and hit the lowest low (for long positions) or highest high (for short positions) over the past 10 days. This will help you lock in profits when the trend reverses. The orange dots is the recommended manual stops for a long position and the blue dots are the manual stops for a short position.
- Risk Management: Follow strict risk management rules and risk only a small portion of your capital for each trade, typically 1-2% of your total capital.
Trade Signals
The Turtle Scanner will provide trade signals in the form of Buy or Sell arrows on the chart, a pop-up message on the screen or a Telegram message to your PC or mobile device. To take advantage of these signals on lower timeframes, it is recommended that the order be manually submitted at the same time the signal is provided.
- Pop-up message.
- Signal on the chart.
- Telegram message.
Trading Panel
A trading panel is provided to allow you to submit a market order quickly using a predefined position size based on the average true range indicator, which measures the volatility of the symbol.
Automatic Stop Loss
In the Turtle Trading system, stopping losses is vital to risk management. The Average True Range (ATR) indicator is commonly used to determine these stop levels. The ATR measures market volatility, and the Turtles set their stop losses at a specific distance from the entry price, calculated as a multiple of the ATR.
Observations
While the Turtle Trading System is successful in certain market conditions, it has disadvantages. The system is designed to perform well in trending markets, which can lead to frequent false signals and losses in choppy, sideways, or range-bound markets. It also uses breakout strategies that often result in entering and exiting trades after the trend has already started or reversed, potentially missing the most profitable phases of the trend.
How To Install & Remove
Start by installing the cTrader trading platform. Unzip the file and then double-click it to automatically install it onto the platform.
Any Questions?
If you have any questions, please first search our product help forum for the answer; if you cannot find it, post a new question.
Need a Broker
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