The Turtle Experiment, Part 3

I have no doubt whatsoever that one of the first things that comes to mind when people read about the Turtle experiment is the question “Was it successful?”

Richard Dennis taught two classes of “turtles” in person and those individuals went on to earn a profit of over $175 million over the course of five years. So the answer to the above-mentioned question is a resounding “Yes, it was successful”. Richard Dennis’ experiment proved that anyone could learn to trade regardless of who they were before that, as long as they had a good strategy, stuck to that strategy with the necessary discipline and they were willing to learn and grow as traders.

The Turtle Experiment, Part 2

Now that we know the background of the Turtle Experiment, conducted by Richard Dennis, we can delve in the details of the actual trading.

Dennis gathered his first fourteen “turtles” after placing an ad in a popular newspaper and began teaching them his rules – he taught his students a trend-following approach. The idea was that one should buy when there is a breakout above a range and sell when there is a breakout below a range.

The exact rules of Dennis’ strategy have remained a secret for a long time, but for the past decade or so some details have come to light:
-One should check prices for themselves rather than rely on the TV or newspapers for information (the experiment was conducted in 1983).
-One should be flexible when they set parameters for their buy and sell signals.
-One should plan their exit in the same detail as they plan their entry.
-Larger positions should be opened in less volatile markets and smaller positions should be opened in more volatile markets.
-One should not risk more than 2% of their account on a single trade.

The Turtle Experiment, Part 1

After writing about Richard Dennis I decided that the Turtle experiment – an experiment conducted by this famous trader – is much too interesting not to elaborate on it further. So in the next few posts I will give an overview of said experiment.

Let’s start from the beginning.

Richard Dennis decided to conduct the Turtle experiment following a bet with a fellow trader, who argued that Dennis was so wildly successful in his trading because he possessed a special gift, while Dennis himself believed that anyone could learn to trade successfully. In order to prove his point Dennis devised and conducted the Turtle experiment.

Dennis would gather a group of people and teach them his rules of trading and then they would trade with real money. Since Dennis had such an immense trust in his trading ideas he was ready to give his students his own money to trade with. He would train them for two weeks and once those two weeks were up he could begin training another group of people.

Dennis named his students “turtles” after the turtle farms he had seen in Singapore, where farmers grew turtles in an incredibly quick and efficient manner, figuring that he could train his students just as quickly and efficiently.