PDF Summary:The Complete TurtleTrader, by Michael W. Covel

The unlikely story of the "Turtles" captured the imagination of traders everywhere. In The Complete TurtleTrader, Michael W. Covel chronicles Richard Dennis's grand experiment: he took a group of novices, taught them his structured trading approach, and watched them become wildly successful—proving trading prowess can be taught.

You'll learn the complete details of Dennis's strategy and market rules, the Turtles' demanding training regimen, and their real trading outcomes as they dove into the trading world armed with a systematic approach, mental discipline, and an entrepreneurial spirit. This account offers intriguing insights on nature versus nurture, systematic trading, and the path to trading mastery.

(continued)...

The approach involves progressively enhancing the investment in positions that yield profits.

A defining characteristic of the Turtle system was its aggressive "pyramiding" approach, whereby they increased their position size as a trade moved in their favor. They augmented their profits by strategically increasing their investment in successful trades at specific price levels, which maximized their gains during prolonged market trends. Covel emphasizes the critical importance of the Turtles' use of the pyramiding strategy in achieving their extraordinary profits, highlighting its efficiency in leveraging market trends with the capacity for rapid expansion. However, he also emphasizes the risks associated with this approach, particularly the potential for amplified losses should market conditions deteriorate during a period of escalating investment.

The extraordinary trading achievements of the Turtles.

Impressive annualized returns and low-drawdown performance.

Covel offers a thorough analysis showcasing the extraordinary achievements of the Turtles during the project and in their subsequent careers. He highlights their remarkable yearly returns, frequently exceeding a twofold increase of their initial investment, coupled with their significantly minimal reductions in investment value, demonstrating a steady and skillful approach to mitigating financial exposure. The methodical approach developed by Dennis consistently generated profits for novice traders, underscoring the effectiveness of his trading techniques.

Variations in results among the Turtles and the root reasons for these differences.

Despite the program's overall success, the author reports significant variations in outcomes among the different individuals involved in the Turtle trading initiative. Some achieved stellar returns, while others struggled to maintain consistency. Covel delves into the root causes of these fluctuations, ascribing them to effective risk management, the maintenance of emotional equilibrium, and strict compliance with established guidelines. He emphasizes not just the significant influence of the system but also the unique manner of its application and the personal psychological traits that contribute to sustained achievement.

The Turtles' trading outcomes were evaluated by comparing them to Dennis's own trading results and the general market movements.

Covel demonstrates that the Turtles' trading achievements not only surpassed general market performance but were also on par with Dennis's own successes. The Turtles' strategy, characterized by its systematic approach to pinpointing and capitalizing on market movements, led to steadier investment returns with fewer and less severe dips, unlike their mentor who often relied on making choices based on personal judgment. This examination highlights the significance of implementing a systematic approach to trading, which diminishes the impact of emotions and increases the chances of sustained profitability.

Other Perspectives

• The reliance on breakout moments for trade initiation and termination may not account for false breakouts, which can lead to losses.
• System One's focus on short-term market swings might result in higher transaction costs and tax implications due to the frequency of trades.
• System Two's longer-term approach could miss out on short-term profit opportunities and may require more patience and capital to withstand drawdowns.
• Strict guidelines for trade execution may not always be optimal in fast-changing or unpredictable market conditions where flexibility could be beneficial.
• The "N" based position sizing assumes that past volatility is a reliable indicator of future risk, which may not always hold true.
• The pyramiding strategy increases exposure during profitable trends, but it also risks significant losses if the market reverses abruptly and the positions are not exited in time.
• High annualized returns and low drawdown performance in the past do not guarantee future results, especially in different market conditions.
• Variations in results among the Turtles could also suggest that the system is sensitive to individual execution and may not be easily replicable by all traders.
• Comparing the Turtles' outcomes to general market performance does not account for survivorship bias, where only successful Turtles are considered in the analysis.
• A systematic approach to trading, while reducing emotional decision-making, may not adapt quickly to new market information or unexpected events.

Following the program's end, the participants, who were referred to as the Turtles, pursued diverse paths and experienced varying degrees of success.

The story delves into the diverse trajectories that the Turtles embarked on following their education, scrutinizing the array of elements influencing their enduring triumphs or setbacks, and the manner in which they maintained a connection with their collective Turtle persona as time progressed.

A number of Turtles sustained considerable success over a prolonged duration.

Jerry Parker founded Chesapeake Capital.

Over time, it became clear that Jerry Parker was the standout success story among the Turtle traders. Covel charts Parker's professional journey after leaving Dennis, highlighting the establishment of Chesapeake Capital in Richmond, Virginia, and his sustained record of impressive financial performance spanning more than two decades. He attributes Parker's success to a combination of factors, including his steadfast adherence to the principles established by the Turtles, his adaptability in modifying the approach to manage client funds effectively, and his enterprising nature in creating a thriving business.

Paul Rabar and Tom Shanks likewise attained significant accomplishments as participants in the Turtle program.

In his work, Covel emphasizes the sustained achievements of other Turtles, including Paul Rabar, Tom Shanks, and Parker. He details their career paths, emphasizing Rabar's traditional route through Wall Street and Shanks's early struggles with discretionary trading, before they both returned to the disciplined approach they learned under Dennis's guidance. The depictions reveal that the success of the Turtle approach hinges on its unwavering execution, and they underscore the significance of adaptability and strict compliance with the core principles of monitoring market movements.

Some of the Turtles encountered difficulties or were unable to replicate the level of success they experienced in their Turtle-era.

They faced challenges in handling their own financial affairs as well as in overseeing the financial concerns of those they represented.

Covel explores the challenges the Turtles faced as they transitioned from managing funds under Dennis's guidance to taking sole responsibility for their own financial ventures and those of their clients. He underscores the psychological toll of taking on personal risk, the complexities of business management, and the difficulty in attracting and retaining customers in a highly competitive industry. The challenges faced highlight the importance of having a strong emotional makeup and business acumen, as well as entrepreneurial skills, which are crucial for success in the trading world and go beyond merely following a specific set of rules for trading.

The unsuccessful trading endeavor serves as a case in point, featuring Curtis Faith.

The story explores the difficulties the Turtles encountered in sustaining their success after the program ended, highlighting Curtis Faith's journey in particular. Despite being lauded for his outstanding contributions to the Turtle trading endeavor, Faith's subsequent venture, Acceleration Capital, met its demise amid allegations of poor oversight and deceptive practices. Covel scrutinizes the evolution of Faith's professional life, highlighting his apparent disregard for the essential principles of disciplined trading within the Turtle strategy, as well as his questionable business practices. The downfall of Faith's professional life underscores the critical importance of blending trading expertise with robust business acumen and adherence to ethical standards.

The different approaches Turtles took to marketing themselves and their "Turtle" brand.

Some members of the Turtle collective sought to downplay their connection to or distance themselves from the Turtle designation.

Covel emphasizes the diverse approaches the Turtles adopted in determining their level of engagement or disengagement with the Turtle trading project. Some took deliberate action to distance themselves from the brand, concerned that their reputation might suffer or that they would be seen as mere followers of Dennis's strategies. They emphasized their growth within the realm of financial market operations, concentrating on their unique strategies and deep understanding of specific areas within the financial markets.

Some individuals, including Russell Sands, sought to capitalize on the fascination linked to the story of the Turtle trading strategy.

Several individuals involved in the Turtle experiment capitalized on the fascination and prestige linked to the initiative. Covel highlights the tension that arose when Russell Sands decided to hold workshops aimed at disseminating the trading methods pioneered by Dennis, emphasizing the ongoing dispute between preserving the proprietary nature of the Turtle trading approach and leveraging it for financial gain. This strain highlights the practical difficulties in reconciling personal profit with collective allegiance and the intricate economic consequences stemming from a renowned trading trial.

Other Perspectives

• The success of Jerry Parker and Chesapeake Capital may not solely be attributed to the Turtle principles; market conditions and other external factors could have played a significant role.
• The accomplishments of Paul Rabar and Tom Shanks might also be influenced by their individual skills, decision-making, and possibly luck, in addition to the Turtle training.
• The challenges faced by some Turtles in handling financial affairs could be indicative of broader industry challenges rather than personal shortcomings.
• Curtis Faith's unsuccessful venture could be seen as a learning opportunity or a reflection of the high-risk nature of trading, rather than just a failure to adhere to Turtle principles.
• The different approaches to marketing the Turtle brand could reflect a healthy diversity of strategies and personal branding choices rather than a divergence from the Turtle ethos.

The legacy of the Turtle experiment is reflected in the achievements of the dedicated Turtles.

Covel explores the enduring impact of the Turtle experiment on the trading sector, scrutinizing the persistent debate over the question of whether trading skills are inborn or can be acquired through learning. He emphasizes the emergence of a subsequent generation and scrutinizes the lasting lessons gleaned from this remarkable experiment.

The narrative of the Turtles inspired and stirred the interest of a wide-ranging audience beyond the original group.

The experiment involving the Turtles stands as a critical moment in the ongoing discussion about whether talent is innate or can be developed.

The author portrays the Turtle experiment as a pivotal moment in the continuous debate over natural talent versus acquired skills. The extraordinary successes of novice traders from diverse backgrounds, who amassed significant gains by following a methodical strategy, strongly support the notion that the skills for trading can be acquired through learning rather than being solely innate. This groundbreaking experiment challenged conventional assumptions, demonstrating the power of nurture and systematic training in achieving success in a highly competitive field often associated with innate ability.

The narrative of the Turtles remains a subject of profound fascination and scrutiny within the trading circles.

The tale of the Turtles continues to inspire and motivate traders globally. Covel emphasizes the enduring attractiveness and broad implementation of the investment techniques originated by the Turtles across individual investors and major financial organizations. The method's simplicity and effectiveness, coupled with the clear accomplishments of its practitioners, offer a compelling case for those seeking a structured and profitable way to participate in trading activities within financial markets. The story of the Turtles continues to resonate, highlighting the importance of systematic thinking and the fascination with a real-world experiment that challenged traditional beliefs about trading achievement.

The emergence of what was termed the "second-generation" Turtles signified an important evolution.

Salem Abraham, along with others, implemented the trading methodologies originally developed by the Turtles.

Covel highlights the emergence of traders who, although they were not participants in the original experiment, embraced the Turtles' trading methodologies. He emphasizes the path of a trader from Texas, Salem Abraham, who achieved considerable success after being introduced to the Turtle system by Jerry Parker. Abraham's journey exemplifies the lasting impact and the ability of Dennis's trading principles to be applied universally, reaffirming that with appropriate instruction, self-control, and an enterprising spirit, anyone can replicate the accomplishments of those mentored by Dennis.

Their remarkable methods for executing transactions and commercial acumen.

Covel emphasizes that the financial results achieved by subsequent groups of Turtles often surpassed the achievements of the earlier ones. This further undermines the idea that skill is innate, emphasizing the importance of utilizing a systematic but adaptable strategy, executed with relentless passion and a tendency for creativity. The author emphasizes the business acumen of the traders, illustrating their adeptness not only in mastering the Turtle system but also in creating thriving businesses, thereby underscoring the extensive applicability of the competencies acquired through this unique experiment.

The enduring principles and foundational concepts originated from the experiment involving Turtle trading.

It is essential to trade using a systematic strategy that strictly follows a specific set of established rules.

The author underscores the primary lesson from the Turtle experiment: the importance of adopting a systematic strategy for trading that adheres to a specific set of guidelines. Covel highlights the advantages of discarding subjective decision-making and emotional inclinations, opting instead for a predetermined collection of explicit guidelines that determine the exact timing for initiating and concluding trades. This methodical strategy minimizes rash decisions, effectively controls exposure to financial loss, and enhances the probability of generating steady earnings.

The value of mentorship, self-discipline, and an entrepreneurial mindset.

Covel emphasizes the comprehensive insights gained through the Turtle trading experiment. He emphasizes the crucial role that Dennis and Eckhardt played in nurturing confidence and discipline among the novice traders. The author emphasizes the importance of maintaining discipline and perseverance in adhering to established rules, particularly through times of uncertainty or repeated challenges. Covel emphasizes the significance of cultivating an inventive mindset, which is crucial for long-term success, including the drive to create a new business, the skill to manage risks skillfully, and the agility to adjust to ever-changing market dynamics.

The trading principles of the Turtles remain relevant in today's market environment.

Covel makes a persuasive argument for the enduring relevance of the Turtles' trading strategies in today's market environment. Even as technology advances and market conditions evolve, the core principles of systematic trading, careful management of monetary risk, and the preservation of mental discipline remain essential for enduring economic prosperity. The initial group of traders and those who adopted their methods later on have thrived across different market conditions, showcasing a strategy that has consistently helped individuals achieve significant financial success.

Other Perspectives

• The success of the Turtles could be attributed to specific market conditions at the time, which may not be replicable in today's diverse and evolved markets.
• The narrative may suffer from survivorship bias, highlighting only the successes and not accounting for those who failed despite following the same methods.
• The experiment's results might not conclusively prove that trading skills can be taught, as the sample size was relatively small and lacked a control group.
• Systematic strategies, while valuable, may not be sufficient in isolation, as markets are influenced by a complex array of factors that can't always be captured by predefined rules.
• The importance of mentorship and an entrepreneurial mindset might overshadow other critical factors such as access to capital, networking, and luck.
• The relevance of the Turtles' trading principles in today's market environment might be overstated, as technological advancements and algorithmic trading have significantly changed the landscape of trading.
• The second generation of Turtles' success does not necessarily validate the original experiment, as these individuals may have had other advantages or made modifications to the original methodology.