Richard “Prince of the Pit” Dennis believed trading could be taught. In 1983–85, alongside William Eckhardt, he trained 23 novices over two weeks using a strict set of trend-following rules—later known as the “Turtle Trading” experiment. By 1988, these “Turtles” had reportedly generated over $175 million in profits :contentReference[oaicite:1]{index=1}.
📌 Core Principles
- Trend-Following: Traders entered on breakouts—20-day for shorter horizons, 55-day for longer—capturing sustained market moves :contentReference[oaicite:2]{index=2}.
- Volatility-Based Position Sizing: Using a volatility metric (N = ATR), risk was capped at ~1% per trade :contentReference[oaicite:3]{index=3}.
- Pyramiding: Positions were added incrementally—after 0.5 N moves—to ride momentum without increasing risk :contentReference[oaicite:4]{index=4}.
- Stop-Loss Discipline: Initial stops set at 2N away from entry, with strict follow-through :contentReference[oaicite:5]{index=5}.
🧠 Psychological Discipline
- Follow the rules—no discretion. The system relied on consistency over prediction :contentReference[oaicite:6]{index=6}.
- Prepare for low success rates. The system accepts frequent small losses but large winners :contentReference[oaicite:7]{index=7}.
🔍 Market Selection & Adaptation
Turtles traded diverse liquid markets—commodities, currencies, bonds, indices. The system's simplicity meant it could be adapted across asset classes, including modern markets :contentReference[oaicite:8]{index=8}.
📈 Results & Legacy
The original Turtles made compound annual returns reportedly around 80%, collectively earning ~ $175M in under five years :contentReference[oaicite:9]{index=9}.
Despite Dennis’s own 1987–88 drawdowns—he lost much of his fortune during Black Monday—the Turtle experiment remains one of the most cited proofs that rule-based trading can be systematically profitable :contentReference[oaicite:10]{index=10}.
🎯 Why It Matters Today
- Proves novices can be trained successfully with discipline and rules.
- Trend-following with volatility control remains relevant in current markets :contentReference[oaicite:11]{index=11}.
- Emphasizes behavior under adversity—a key risk factor.