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  1. #1
    Moderator Kolyo's Avatar

    Turtle Trading and Trend Following !!!

    Hi guys,

    I am starting to present in the General Discussion Forum some interesting and important topics from the trading world, which will be important also for us - binary traders. Some of them will be more historical and some more new ones, but all of these topics will be related to trading one or another way.

    Today I will start with the topic of Trend Following and its original variant – the Turtle Trading System. The name Turtle System begins with the bet between two of the great names in the Trading world during the 80s – Richard Dennis and William Eckhardt. According to Dennis that successful trading could be taught and learned, opposite to Eckhardt belief that it couldn’t be taught. In December 1983 Dennis take 21 men and 2 women to tech them to trade, according to his rules. Soon after that he gave every one of the Turtles an account of suze between 250k and 2 million $ to trade. Five year latter the turtles collected something like 175 millions $ and proved that everyone could trade if taught properly.

    The original turtles system is designed that way – cutting loses quickly and let the profits run during the large market moves. In ranging markets this system will lead to some loses, but in trending periods it will generate very big profits, as the positions are pyramiding steadily. The initial turtle strategy was very profitable during the 80s but have flat returns latter. Although some modifications of the original system turtle strategies are still vital and successful.

    I am starting this thread to ask you do you thing that similar system could be implemented in binary options trading too?

    We have fixed profits of course which don’t allow us to ride the trends with a single option contract, but we could change the entry points and the duration of the contracts. If we have clear indications of trend in place we could enter with large number of options in different moments with different entry points and durations in the direction of the trend. This way even if some of them end out of the money, the prevailing part of the trades will return all the loses and will give fair amount of profit.

  2. #2
    Active Member
    isn't that basically hedging?

  3. #3
    Moderator Kolyo's Avatar
    Hi, spiderbyte87.

    Turtle system is not a hedging one. It is a trend following. That mean it is trying to ride the trend. The turtle system is designed with relatively small SL and big take profits, but I think it could be adapted also for binary trading, where we couldn’t change SL/TP, but we could change the duration of the contracts for example. If we anticipate that a trend is coming we could enter with a number of options in the direction of the trend at different levels, if the trend actually happen we could profit from most of the contracts. If it didn’t happen we still will have profits from some of them. So I could agree with you that described this way it could be used also as a hedging strategy, but actually it is not.

  4. #4
    Senior Member LeeChang's Avatar
    Interesting retrospect and system! I think the Turtle System was mostly designed for commodity markets in the early 80s but lately it largely fail to perform well. There are many strategies inspired by the turtle trading system, but they are quit different from it.

  5. #5
    Veteran Member Dan21's Avatar
    Turtle trading is very interesting trend following system, which is proved to be profitable in the long run but I couldn’t see a way that it could be adapted to binary options trading. Probably there is a way but I don’t see it, as binary options are fixed odds trading and the only way to profit from the trend development is to place trades on the direction of the trend.

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