GEI's own "turtle traders" - Is this a good idea?

[drbubb]

GEI's own "turtle traders" - Is this a good idea?

 

(I am going to run this on Main for a day or two, and then bury it for several weeks.)

 

A new way of learning trading to "get in the swim"

 

I am NOT READY to launch this idea, but I would like a few comments now, so if and when I am ready, I will have a better idea of whether or not is is a workable idea.

 

Do GEI readers know about the Turtle Traders? - see below.

 

My idea is to launch something similar on GEI. I would give an interview survey out to interested parties, and then maybe meet the finalists and choose 3-5 people to become "GEI Turtle Traders". The folks who are chosen would open an account (in their own name), and I would "seed" it with a loan (of maybe $10,000.)

 

+ They would have to follow very precise rules in their trading

+ The funds would be divided into ten parts, and no more than 1/10th would go into each trade

+ Each trade would involve going long (or short) specific stocks with a stop, and the stop would get dragged up (or down) with the moving average

+ The profit (or loss) would get realised ONLY WHEN THE STOP IS HIT

+ After 10 trades, we would evaluate success. If both myself and the trader are happy with the result, we would continue the experiment

+ If the account is in profit after then trades, then the size of each trade would be increased

 

There would be more TRADING RULES, and some other conditions that I am still pondering.

 

I am considering launching this on a "trial basis" with my partner, and once she gains some experience from it, she would help me to monitor the tradin results, and set up new traders.

 

There will also be some rules about how to pick New trades to originate.

 

QUESTIONS:

Do people on GEI like the sound of this?

Do you think many people would want to participate?

What would be the best way tro choose the 3-5 finalist "turtles"?

 

BTW, I will probably only launch this if my current "short" positions perform well, and I am left in a strong cash position.

 

SOME RELATED MATERIALS

===================

Interview : Michael Covel - Trend Following : Learn to Make Millions in Up or Down Markets

Financial Sense page : http://financialsense.com/financial-sense-...trend-following

Link to the MP3 file -- : http://www.financialsensenewshour.com/broa...2010-0714-1.mp3

 

More on the Turtle Traders:

A group of investors who were led by one remarkable man, Richard Dennis (with the help of his partner, William Eckhardt). Dennis was somewhat of an iconoclast, not brought up through the ranks of Fortune 500 company grooming programs, figuring out his own methods for making money.

 

Dennis was a successful investor who believed that investing principles could be taught to anyone. His partner, William Eckhardt, disagreed, tending to believe that the talent was inborn. Their differing views formed the basis for a bet between the two men and led to one of the more remarkable experiments in investing history.

 

Basically, Dennis agreed to find a diverse group of individuals, give each recruit $1 million dollars, put them through two weeks of intensive training, teach them specific investing principles and methods and see how well they'd do after that. To add to the challenge, Dennis and his partner (who agreed to help teach the recruits) hired people from all walks of life.

 

Exactly how diverse was the group? Well, there was a security guard, a restaurant manger, an unemployed student, a bartender, kitchen cook, teacher and even a prison worker. Covel describes in detail how Dennis interviewed and selected each recruit, nicknaming them "The Turtles". He also chronicles their 14 days of intensive training. It wasn't easy but the potential rewards were great.

/more: http://www.amazon.com/review/R1J9FRXTWZIYG...#R1J9FRXTWZIYGE

 

Link to XXX :

[drbubb]

+ Each trade would involve going long (or short) specific stocks with a stop, and the stop would get dragged up (or down) with the moving average

+ The profit (or loss) would get realised ONLY WHEN THE STOP IS HIT

I went long Calls on SSO right on the low in early March 2009...

 

Buying : SSO - xxx $xx Calls at $xxx

 

But I exited too soon, after a decent but not massive profit, of xxx% on my cost.

 

Here's SSO (2x levered etf for SPY) ... update : SPY-update : SDS-update *

 

Had I used a trend following system, I might have exercised the call, and held on, and caught a much bigger more.

This is the sort of system that I am looking to develop.

 

*"Bought SDS calls":

(It wasn't the first time. I had gone short using options earlier this year, and made enough to "take a big bet" on the latest short cycle top. I have over 1,000 options, including: Puts on SPY, QQQ, and Calls on: SDS, BGZ, QID and TZA.)

 

If these positions do well, then a part of the profit might help to fund the GEI Turtle trading experiment that I am suggesting here. So keep your fingers crossed for me.

[00timebandit00]

Sounds good to me! Going to bed shortly and back tomorrow to listen to the interview with MC.

 

Might be a great way to explode the forum with newbies (argh!) by launching a netwide competition.

Too much pressure? I think it would be a VERY popular idea - I'd love to participate.

 

Don't know anything much about trading but I wonder if you could use slightly different rules with

different participants to split test small tweeks in the rules to see what works best?

 

This is the first time I've heard of the turtles. I'd love to know what they had in the intensive

training. Whatever it is it's got to be easier than trolling around forums. There are so many

advantages to learning directly under someone with experience.

 

 

[00timebandit00]

PS, fingers crossed!

 

No idea how you would go about selecting such a group. I guess it depends on what you want to achieve.

[drbubb]

PS, fingers crossed!

No idea how you would go about selecting such a group. I guess it depends on what you want to achieve.

There would be some kind of interview.

I plan to get a book about the Turtles and see what criterion they used.

 

[Silent reader]

This is the first time I've heard of the turtles. I'd love to know what they had in the intensive

training. Whatever it is it's got to be easier than trolling around forums. There are so many

advantages to learning directly under someone with experience.

 

At one point I even considered trying to get a job in the city doing something along these lines, to be fair, I knew that I’d be wasting my time - lol

 

Here is a great tread that Bubble pricker started, it’s a pity it never established roots

 

http://www.greenenergyinvestors.com/index....pic=2716&hl

 

 

 

Dr B, if this is something you move forward with, would the results be available to GEI members on GEI ?

 

Would there be spectator positions available ? I ask this as I personally have no interest in becoming a "Turtle trader" but I would view the actions and results with great interest as I feel this could really give a true insight into what actually happens on trading desks around the world, something that many people never get any insight to.

 

My current thoughts are that your project might be a fantastic way to highlight the differences between and Investor and a trader, and the balancing act of the middle ground between the two.

 

One last thing I'd like to ask, it's quite easy to tell that I'm not one of these high rolling financial wizards "Making shed loads of cash" in the city from their trading desk, and I don't pretend to be, how do Turtle traders fair now days against AI programmes that I'm sure are in existence ? (I hope someone can expand my question further as I really don't know enough about this subject)

 

 

What would be the best way tro choose the 3-5 finalist "turtles"?

 

Contribution to GEI over time, and the respect of other posters. With the final decision with yourself, Simple.

 

Just please don't do it in a "pop idol" style -

 

[ares]

I would certainly be interested in finding out some about your plan and what sort of strategy you would use.

 

I was very interested by the interview with Michael Covel on the FSN and am looking to buy his book as well.

[denarii]

richard dennis' turtle traders used a fully systemcatic trend following system. you cant teach plebs about all the different aspects of knowledge required to properly trade macro.

 

http://originalturtles.tradingblox.com//system.htm

[drbubb]

richard dennis' turtle traders used a fully systemcatic trend following system. you cant teach plebs about all the different aspects of knowledge required to properly trade macro.

http://originalturtles.tradingblox.com//system.htm

 

The Turtle system is "mechanical" this excerpt says:

===========

Most successful traders use a mechanical trading system. This is no coincidence. A good mechanical trading system automates the entire process of trading.

 

The system provides answers for each of the decisions a trader must make while trading. The system makes it easier for a trader to trade consistently because there are a set of rules which specifically define what should be done. The mechanics of trading is not left up to the judgment of the trader.

 

If you know that your system makes money over the long run it is easier to take the signals and trade according to the system during periods of losses. If you are relying on your own judgment during trading you may find that you are fearful just when you should be bold and courageous when you should be cautious.

 

If you have a mechanical trading system that works, and you follow it rigorously your trading will be consistent despite the inner emotional struggles that might come from a long series of losses, or a large profit.

 

Chris Walzek on GoldSeek also has a mechanical trading system.

I plan to learn more about that.

 

What I would do is help out on the selection of the initial trades, and then expect "my Turtles" to follow a set of rules in managing the exit. Obviously, I prefer to work with my Partner for a while on this, and see what difficulties are involved, before we go on and launch it will 3-5 others.

[cranberryDog46]

Sounds a very interesting idea, and I would definitely apply to be one of your turtles.

 

Have read the book, didn't it conclude that it would require $200,000 to diversify a trend following system adequately?

[drbubb]

Sounds a very interesting idea, and I would definitely apply to be one of your turtles.

Have read the book, didn't it conclude that it would require $200,000 to diversify a trend following system adequately?

Technically, he may be right.

But I think there are ways to do it using options, and I am not wealthy enough to seed that sort of sum.

 

I might also think about seeding half of a $10,000 or $20,000 portfolio

[cranberryDog46]

Technically, he may be right.

But I think there are ways to do it using options, and I am not wealthy enough to seed that sort of sum.

 

I might also think about seeding half of a $10,000 or $20,000 portfolio

 

wasn't suggesting you seed $200,000

 

just remember reading the book and being put off from trying their strategies because of that.

 

 

What's the point of this exercise anyway, if you have mechanical strategies you think will be successful why not just trade them?

[Bakez]

From my perhaps limited trading experience, I think it is definitely possible to teach almost anybody how to trade using a 'mechanical' system that relies largely on support, resistance and some mathmatical indicators..

 

The problem however, I believe is the mental attributes required to trade with real money - the ability to think the same and make the same decisions in live trading as you would do with a virtual portfolio. I don't think this is something that is easy to teach, some people may just have it, or it may be made easier through good money management to relieve the pressure, or with experience. I think it is highly related to the mentality in sport, where at the elite level it is generally recognised by coaches to be almost all mental - the athletes that are able to block out all consequences and rewards and just focus on the task generally end up the winners. I don't think it is a coincidence that many elite athletes from lesser paying sports end up working in finance (Mark Spitz one notable example, but there are many swimmers I know that have ended up there), the mental training prepares them well, and obviously the time management and other skills learnt when training 5 hours a day is quite something..

[lowrentyieldmakessense(honest!)]

GEI's own "turtle traders" - Is this a good idea?

 

Do GEI readers know about the Turtle Traders? - see below.

yep read that book about 5 years ago - i dont think their performance was that great from memory

[deeper]

I'm willing to challenge your turtles vs Ted Warren's trading setups which I now use exclusively.

[denarii]

u guys are lucky. curtis galt has taken the rules off his website but i had a copy from when he originally put the website up to undermine michael covell's commercial website. anyway a bit of googling unearthed this:

 

http://bigpicture.typepad.com/comments/files/turtlerules.pdf

 

as for the success of systematic traders for real you can see CTA performances on the autumngold website.

 

FWIW the groups that apply trend following have moved on from simple moving average breakouts to more sophisticated signalling. however the basic objective - using price momentum to signal a new trend is the same.

[00timebandit00]

yep read that book about 5 years ago - i dont think their performance was that great from memory

 

From the blurb on Amazon the book also talks about the emotions when one/some of the turtles did

better than their teacher. I am enjoying this thread. Have put the book on my wish list.

 

Actually on second thought don't like the idea of popstar like contest either.

 

Thanks for PDF link denarii x.

[ares]

u guys are lucky. curtis galt has taken the rules off his website but i had a copy from when he originally put the website up to undermine michael covell's commercial website. anyway a bit of googling unearthed this:

 

http://bigpicture.typepad.com/comments/files/turtlerules.pdf

 

as for the success of systematic traders for real you can see CTA performances on the autumngold website.

 

FWIW the groups that apply trend following have moved on from simple moving average breakouts to more sophisticated signalling. however the basic objective - using price momentum to signal a new trend is the same.

 

Thanks for the link denarii, really good read.

 

The system does seem quite simple, but as stated the ability to keep following it plus more importantly making sure you are ready to trade when you actually do get a trend change.

 

I also wonder how well the position sizing would work with smaller accounts, could this be solved by using a CFD/Spread betting account where you can more finely control position sizing?

[GTG]

Technically, he may be right.

But I think there are ways to do it using options, and I am not wealthy enough to seed that sort of sum.

 

I might also think about seeding half of a $10,000 or $20,000 portfolio

 

A couple of ideas in this respect.

 

This sort of structure might be suitable, and with IB's low cost dealing commissions GEIs turtles could probably get away without having to use options. The universal account would accommodate for all the markets the original turtles traded across. One problem might be the SECs' pattern day trader rules on the Reg T Margin account depending upon the frequency of trades and whether the rule would apply to the individual sub account or the account as a whole.

 

An alternative in view of the low seed capital would be to have the GEI turtles open a spread betting account with say Finspeads where bets can be as low as 50p with margins as low as 5% of notional value and again all markets that the OT's traded is likely to be covered. IG index have a more comprehensive range of markets and they offer free access to ProRealTimes' real time charting software which is normally chargeable as a standalone package. EOD is free so you could register and check it out to see if it would be useful for set up alerts regardless of the choice of broker. I think spreadbetting accounts are only open to UK residents though.

[Bakez]

I personally have an account with IG index and their platform is 2nd to none. You can trade from 10p a point for the first few weeks after opening an account. However spread betting firms have quite strict application process as in 'theory' your losses are limitless, if you can't prove a certain amount of income per year then they will put you on a 'limited risk account' which ironically has more risk as that forces you to use a guaranteed stop loss, which incurs an absolutely ridiculous spread, stacking the odds against you before you even start.

[drbubb]

wasn't suggesting you seed $200,000

just remember reading the book and being put off from trying their strategies because of that.

What's the point of this exercise anyway, if you have mechanical strategies you think will be successful why not just trade them?

I am too busy with my own research and less formal methods of trading to stick to a mechanical system.

This project started out as a way to help my partner create a "portable business" that she could do over the internet, which would allow us to travel more. And then I had the idea of extending it to a few others, if her "rules-based trading" efforts prove fruitful.

 

Also, if the "seeding" of an account works out, I would be looking for an ongoing share of the trading profits from the same account (I am thinking of 20%), so this might be a way of multiplying my own efforts, if we are good at selecting traders, and in picking the ongoing stock ideas.

[drbubb]

u guys are lucky. curtis galt has taken the rules off his website but i had a copy from when he originally put the website up to undermine michael covell's commercial website. anyway a bit of googling unearthed this:

 

http://bigpicture.typepad.com/comments/files/turtlerules.pdf

 

as for the success of systematic traders for real you can see CTA performances on the autumngold website.

 

FWIW the groups that apply trend following have moved on from simple moving average breakouts to more sophisticated signalling. however the basic objective - using price momentum to signal a new trend is the same.

Thanks for that, D.

Some great stuff there, like this:

 

It is Tough to Follow Rules

As famous trader and father of the Turtles, Richard Dennis: "I always say that you could publish my trading rules in the newspaper and no one would follow them. The key is consistency and discipline. Almost anybody can make up rules that are 80% as good as what we taught our people. What they couldn't do is give them the confidence to stick to those rules even when things are going bad." - from Market Wizards, by Jack Schwager

[00timebandit00]

More background on Turtle trading: http://www.turtletrader.com/turtle-trading.html

 

For other newbs the interview on MP3 with Covel provides a helpful overview on trading in general.

 

 

 

 

[cranberryDog46]

Thanks for that, D.

Some great stuff there, like this:

 

It is Tough to Follow Rules

As famous trader and father of the Turtles, Richard Dennis: "I always say that you could publish my trading rules in the newspaper and no one would follow them. The key is consistency and discipline. Almost anybody can make up rules that are 80% as good as what we taught our people. What they couldn't do is give them the confidence to stick to those rules even when things are going bad." - from Market Wizards, by Jack Schwager

 

Have you ever thought about commissioning a software engineer to write a bot,

 

that would be a way of implementing a mechanical system.

 

Does any one know if there are any spread betting sites that have an API like Betfair?

[drbubb]

Have you ever thought about commissioning a software engineer to write a bot,

 

that would be a way of implementing a mechanical system.

Does any one know if there are any spread betting sites that have an API like Betfair?

 

My present thinking is, the trading "software" for the GEI Turtles experiment would have two parts:

 

1/ Stock selection, which I would continue to do, using my present methods

2/ A rules-based system for allocating capital and moving stops

 

Also long as "GEI Turtles" are still working as part of the group, they might have access to #1.

At some later stage, I might teach my "stock selection system", if it has proven itself.

But I would not start out showing others exactly what I do for that.

 

I would try to keep #2 as simple as possible, so that it could easily be done with an Excel spreadsheet and Bigcharts