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The Complete Turtle Trader

As much as I love trading, it’s no coincidence that I frequently have my nose in a trading-related book. I stay away from the how-to books these days, sticking primarily to interview-style books, conceptual trading books, or just ones which tend to tell a good story.

One benefit of writing a blog is the occasional opportunity to check out a book straight from the author, so when Michael Covel [1] offered to send me a copy of The Complete Turtle Trader, it was an easy decision to respond with a resounding “yes.” Now, I’m ashamed to say that it has taken me some time to get to this book (my apologies, Michael!), but once I was able to start reading it, it didn’t take me long at all to finish it.

I quickly realized that The Complete Turtle Trader [2] contained a little bit of everything I like in a trading book. There are numerous quotes from turtle traders and others surrounding the famed experiment which give portions of it an interview feel, there’s plenty of discussion on the concept of the turtle trading method and objectives, and to see the puzzle pieces get put together the way Michael did it certainly tells a good trading story!

About The Turtle Traders

The great turtle trading experiment began in 1983 when Richard Dennis and William Eckhardt decided to take a friendly wager to the next level: they recruited and trained non-traders to see if they could become successful traders using their system. People from many walks of life ultimately joined the team, and the legend began. Dennis and Eckhardt combined for quite a team, with Dennis being described as a pure trader with an incredible feel for market psychology, while Eckhardt was a mathematician who calculated the formulas behind the turtle method. Their decision to hire trainees proved to be extremely successful, and the tale has been told in various ways since then.

Reader Benefits & Impressions

As a full-time trader, I’d certainly heard of the experiment, so I was eager to see what The Complete Turtle Trader had to say. As I progressed through the book, I learned a great deal more about the entire process than I had ever realized before. Amounts made and lost, drop-outs and primadonnas, just what the turtles were doing and trading, and oddly, how much time they spent just letting their positions run.

Here are a few parts of the book which stood out to me:

* Richard Dennis, who funded the experiment, felt that money was purely a way to keep score in the game, which is likely a big part of why he was so successful – his emotions didn’t interfere with his trading process. Interestingly, Dennis was able to successfully blend his bold approach with a healthy dose of respect for the market – two traits which nearly oppose each other but offer the trader two invaluable tools for success.

* The initial training actually began with managing risk. That’s not what one might expect from this famous bet/experiment known for making huge amounts of money, and yet it supports the notion that great traders know how to lose properly.

* Aggressive trading can pay off big, but knowing when to stomp on the gas is the part that many traders miss. Covel mentions that Dennis would go big when he sensed he had an edge, implying that he not only varied his position sizing depending on conditions but also that perhaps he traded much smaller when he lacked conviction. How much difference would it make to your trading results if you hit your favorite setups hard?

* Staying in the present tense and making the best decision “now” will lead to long-term success. Eckhardt knew that how you arrived at your current situation and what you choose to do going forward were separate variables, and he wanted every trader to make the proper decision at all times based on what their rules specified. Covel mentions that Eckhardt “wanted the turtles to literally trade as though they didn’t know what their entry price was.” That speaks volumes to trading your plan and having the discipline to stick with it while ignoring your recent results.

* No guts, no glory. Those who succeeded in the program had undeniable confidence and conviction in their trades, yet balanced that perfectly with a respect for risk. At the end of the day though, the best traders were those who took every opportunity which came along to turn a profit, setting aside any concerns for failure. Courage and determination were far bigger than the rules when it came down to being successful. I’m left with the distinct impression that those who were right frequently with their trades did not make as much as those who nailed the occasional trade with size and held onto it until the trend ended. Much has been made of the Turtle Trading Rules, and yet following them was only a part of how the turtles stayed in the program. Covel states that “if they did not exhibit…a ‘walk-off home run’ mentality every day, they would fail.” Each of them had to have a huge amount of confidence and a major drive to succeed in order to prevail, yet possess the ability to keep their ego in check.

Bottom line: The Complete Turtle Trader [2] is an excellent book which offers loads of wisdom while keeping your interest. The market requires that we’re constantly learning, and this book provided me with a few new lessons while serving to remind me of numerous other valuable trading insights.

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com [3]

[tags]Stock Market, Day Trading, Stock Trading, Swing Trading, Turtle Trader, Investing[/tags]