The Turtle Trading Strategy: From Experiment to Algo Trading
Have you ever wondered if trading success is within reach, even for beginners? The answer lies in the famous Turtle Experiment conducted by Richard Dennis and William Eckhardt in 1983. This groundbreaking event demonstrated that with the right set of rules and determination, even novice traders can excel in the markets.
How the Original Turtle Trading Strategy Made $175 Million
At the beginning of the Turtle Experiment Dennis picked 14 volunteers and taught them specific trading rules, providing them with capital from his pocket. The outcome? Over five years, these rookie traders collectively generated an astonishing $175 million in profits.
Watch the Turtle Trading Strategy in AlgoCloud
Inspired by this historic experiment, AlgoCloud presents the “Turtle-Like Strategy.” While not identical to the original rules, this strategy embodies the core principles of trend following. See for yourself!
Turtle Trading Strategy: What You Need to Know
The original turtle trading strategy was built on a simple but powerful concept: buy when the price breaks above the highest high of the last 20 days, and sell when it breaks below the lowest low of the last 10 days. This is a classic trend-following approach — ride the trend as long as it lasts, cut losses quickly when it reverses.
Core rules of the turtle trading strategy:
- Entry signal: A 20-day breakout (price exceeds the highest price of the last 20 trading days)
- Exit signal: A 10-day breakout in the opposite direction (price drops below the lowest low of the last 10 days)
- Position sizing: Based on market volatility (ATR — Average True Range). Higher volatility means smaller positions
- Risk management: Maximum 2% of account risked per trade
Why this works: Markets trend. Not always, but when they do, the moves can be substantial. The turtle trading strategy captures these moves by following the breakout and holding the position until the trend shows signs of reversal. Most individual trades lose small amounts, but the occasional big winner more than compensates.
Adapting the turtle strategy for stocks: The original Turtles traded futures — commodities, currencies, bonds. AlgoCloud’s Turtle-Like Strategy adapts these principles for the stock market. Instead of trading a single futures contract, you can apply the breakout logic across hundreds of stocks simultaneously, using AlgoCloud’s stock picker to rank and select the best candidates.
Why the Turtle Trading Strategy Still Works Today
The core principle behind the strategy — trend following — has survived over 40 years of changing market conditions. Markets still trend because human psychology hasn’t changed: fear and greed create momentum, and momentum creates trends. Whether you’re trading in 1983 or 2026, a disciplined breakout strategy with proper risk management remains a viable approach to consistent returns.
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