Hey now. In December of 1983 Richard Dennis sought to prove that successful traders are made
not born. So he placed an ad in the Wall Street Journal asking for people off the street to take
his two week trading course. From that ad he selected 14 students that he called turtles.
In January of 1984 Dennis funded these traders between $500,000 and $2 million dollars each
from his own funds. What happened next was an 80% compounded rate of return over the next 12 months.
For more information check out the description below. Does this system still work today? Well
I tested it and got mixed results. But i did put together a system based on the original Turtle
trend following strategy that is successful today. But before I show you this profitable strategy,
test it, and tell you how to improve it. I just need you to chomp down on
that subscribe button like this little guy is eating breakfast. Right now!
I call this system the Modern Turtle and it uses four studies. The first
indicator is the Donchian Channel set to the Fibonacci number of 34 for length and colored
in blue. I'm going to remove the basis. This indicator will act as our trigger for entries.
If you are not familiar with the Donchian Channel what it does is create a line showing
the last low and high for the previous period specified. For example if the Donchian Channel
is set to a length of 8 the channel will draw a line above the price at the highest
point of the last 8 candles. The same goes for the bottom channel line but in reverse.
The second indicator will be another Donchian Channel set
to the Fibonacci number of 8 for its length and colored in yellow.
Again I am removing the basis. This indicator will provide our trade exits.
The next indicator is the ATR band set to 2 times the ATR and colored in white. Richard Dennis used
a similar stop-loss method so this indicator will show us where to place our stop-loss level.
The fourth and final indicator is the Exponential Moving Average set to the 200 length and colored
in orange. This indicator will show us the overall trend direction. Let's go over some examples.
This chart is Euro versus the US Dollar daily candles. The rules to enter along on the Modern
Turtle System are: First price must be above the 200 Exponential Moving Average. Second
price must touch the upper Donchian Channel in blue. When that happens the close of the
candle is our trigger. We place our stop at two times the ATR which is the white band below the
trigger candle. We are going to leave the trade open until the price touches the lower band of
the shorter Donchian Channel in yellow while in profit. This one hits a profit of 2.96.
If you enjoy this content make sure you hit that like button.
We have one more long example. Price closes above the 200 EMA. Price touches the upper
Donchian Channel in blue. This is our trigger. We open a trade on the close
of this candle. This one hits the lower band of the smaller channel but we are not in profit,
so we leave this trade open. And this one hits a profit target of 2.11. And now we flip to shorts.
This is what i will test for shorts. First price must be below the 200 Exponential Moving Average.
Price touches the lower Donchian Channel in blue. Third we enter on the close of the candle that
touches the large Donchian Channel. We are going to leave our trade open until price touches the
upper band of the shorter Donchian Channel in yellow while in profit. And this one hits 1.36.
I'm going to show you one more short example. Price is below the 200 EMA. Price touches the
lower band of the large Donchian Channel in blue. Our trade is triggered when the
candle closes. So here we get a touch of the upper yellow band but we are not in profit,
so we keep this position open. Again we have another touch at break even,
but we still keep it open. And then we finally get a touch of the upper yellow band in profit
and close our position for a gain of 0.59. I'm going to give you two ideas on how we
can make the system better along with the Trader's Landing score. And now it's time to do what I do.
Remember this is just 100 tests on one instrument. If you are thinking of using the system please do
all the required testing and be sure to let our community know what you discover. Go ahead and
click the like while i review this test data and go over a couple of ideas on how to optimize this
system. This test was done on the Euro verse the US Dollar, daily candles. It took about 19
years to find the 100 trades. The winning rate was 51%. Most wins in a row was six,
most losses in a row was four. We had a fixed stop-loss for all losers of one percent per trade.
But the biggest winner had a risk to reward ratio of 6.27. Gain on the account would have been 14%.
With this equity curve you start out for years in a consolidation period followed by
an impulsive move up, and then you lose another half decade in consolidation.
What score would you give this strategy?
Let me know in the comments below. I give this system a Trader's Landing score of 5,
because it is profitable and there are plenty of signals for the daily chart. But it doesn't
keep you in a strong trend long enough and thus kills your profit potential. More on that next.
Remember the enemy of great is good. I have two ideas on how we can improve
this system. The first optimization point I would like to examine is using a larger ATR.
You can see here that increasing the ATR would get you into this trend and not stop you out so
close to the entry. The second idea comes from the fact that when we use Donchian Channels we
are not entering at a place of monetary worth. The price has already reached new highs for that
short relative period. We can try to replace the Donchian Channel with something more dynamic like
a SSL Channel which I use to test the system here. This may get us into the trade at a better spot
and thus increase our winning ratio. Which with a dynamic target can greatly increase our equity.
Check out this playlist for more profitable systems. And have a great day, if you want to.