This is a discussion on Original Turtle Trading Rules - System 1 Entry within the Trading Systems forums, part of the Methods category; Does anyone actually understand the rules in Way of the Turtle for ignoring breakouts p. Community Links Members List. Feb 2, , 6: Does anyone actually understand the rules in Way of the Turtle for ignoring breakouts p.
If the price exceeded the dav high. If the price dropped, one tick below the low of the List days, the Turtles would sell one Unit to initiate a short position.
System 1 breakout entry signals would be ignored if the last breakout would have resulted in a winning trade. For the purposes of this test: This breakout would be considered a Losing breakout if the price subsequent to die date of the breakout moved 2X against the position before a profitable day exit occurred The direction of the last breakout was irrelevant to this rule.
Thus, a losing long breakout or a losing short breakout would enable the subsequent new breakout to be taken as a valid entry, regardless of its direction long or short. This day breakout was considered the Failsafe Breakout point" Unfortunately Curtis Faith doesn't really explain the purpose of ignoring breakouts so that makes it harder to work exactly what he means. My guess is that the idea is to ensure you only trade at the start of a trend, not once it is well-established.
Firstly if you get a 20 day high a previous 20 day high may have occurred the day before. How does the day exit apply to that? You don't know if that trade will be possible in 9 days. My best guess is to ignore the provision to ignore breakouts if they were less than ten days ago and that what he means is the following: If you have a new 20 day high look for the last 20 day high or low which fell more than ten days ago.
Either it was a high or a low: If the price fell at some point after that high by 2N, then that was a losing trade and it's OK to trade on this new high. If it didn't fall by as much as 2N then don't trade. Really the high that you have now is just a continuation of the trend that was happening then and you're too late to get onto it. Presumably if there was a new high less than 10 days ago then it's considered to be OK to get onto the trade because it's new enough.
After all you can't expect someone to get onto the trend the instant there's a new high so there has to be some time period allowed while the trend is considered to be new trend. If a new low occurred and now a new high has occurred that's a pretty weak argument for there being a new uptrend commencing - you've got conflicting signals.
Only trade if the price came up significantly at least 2N so that it's clear there was no real downtrend. Anyone agree with me or have any better understanding? Feb 3, , OK, I don't think anyone really understands this, perhaps not even the author. If he understood it well he would have explained it better. This guy seems to have trouble with it too http: He says that he would have got into the big price fall by using the System 2 55 day entry.
I guess the conclusion is that the actual rules don't matter that much, as long as there's some sense behind them. Just having something consistent to get you in and out is what you need. Feb 18, , I think what he means is that you need to wait for the "previous" trade to be closed before entering a new one.
For example, a trend system might currently be long of gold. Now, if today you start to trade the same system on gold, you have to wait for the existing trade to end before looking to go long - does that make sense? I've coded these rules up and whilst there are certainly occasions when the pyramid aspect is extremely effective, it can also lead to monster drawdowns.
Faith alludes to this in the book when he describes how nine months profits were immediately erased in the wake of the '87 stock market crash. Feb 18, , 5: OR, the 55d kicks in. I've coded these as well, and they work pretty good. Feb 18, , 7: Who is the final word on what the Turtles did or didn't do?
In Faith's book, he claims he was the only Turtle that stuck to the rules.. Did anyone stick to the rules?? Feb 18, , 8: Originally Posted by meanreversion. Last edited by donaldduke; Feb 18, at 9: I guess this method needs you to be in a move early where rewards will obviously be greater, especially if the system also gives high draw downs and an average win rate.
As for the point re trading if todays high is a new 20 day high, as was yesterdays high, then again, this means youre a day late. There is an indicator cant remember the name that plots bands showing last 20 or x days highs lows. Thread Tools Show Printable Version. Search this Thread Advanced Search. Page 1 of 2. Original Turtle Trading Rules - System 1 Entry I think what he means is that you need to wait for the "previous" trade to be closed before entering a new one.
Original Turtle Trading Rules - System 1 Entry I've coded these rules up and whilst there are certainly occasions when the pyramid aspect is extremely effective, it can also lead to monster drawdowns. Originally Posted by meanreversion Who is the final word on what the Turtles did or didn't do? Original Turtle Trading Rules - System 1 Entry i guess you ignore the 2nd BO if the 1st was successful as it would imply you've already missed the boat. Aug 5, 1: The Original Turtle Trading Rules.
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