What do all three of these guys have in common? Guys like Bruce Kovner, a former NYC Cab driver who turned $3000 he borrowed off his credit card into a multibillon dollar fortune trading forex or Richard Dennis, who started trading with $300, and turned it into a mind bending $150 million+ or a guy like John Henry. He’s a former Arkansas Soybean and cotton trader who now owns the Boston Red Sox and a NASCAR team.
Let me begin by first asking you a question: What do you think are great traders born or made? The answer to this question will determine whether you can make a fortune in trading or not. The very same question bugged Richard Dennis whether great traders are born or made.
In mid-1983 Richard Dennis, a famous commodities trader was having an ongoing dispute with his long time friend and trading partner Bill Eckhart whether great traders were born or made. Richard believed that he could teach people to become great traders. Bill thought that aptitude and genetics were the determining factors.
So in order to settle this ongoing feud between two great friends and great traders, Richard suggested that they recruit some traders, train them, give them actual amounts to trade to see which one of them was correct.
So a large ad advertising positions for the trading apprentices was placed in the Barron’s, the Wall Street Journal and the New York Times. Now Rich was the most famous trader in the world at that time. So more than 1000 applicants submitted their applications! From these, Rich interviewed 80.
Finally 10 were selected. Later on it became 13 when Rich added three more people he already knew to the list. These people were trained for two weeks and began trading after that. After proving themselves, Dennis funded most of them with $500,000 to $2,000,000 accounts.
Rules You Won’t Follow Don’t Matter
The students became famous as Turtles. The Turtles became the most famous experiment in trading history. As a famous trader and the father of Turtles, Richard Dennis said: “I always say that you could publish my trading rules in the newspaper and no one would follow them. The key is consistency and discipline. Almost anyone can make up the list of rules that are 80% as good as what we taught our people. What they couldn’t do is give them the confidence to stick to those rules when things are going bad.”
Rules that you can or won’t follow will not do you any good. The Turtles had a lot of reasons to be confident of the rules they were given. Turtles had the confidence to follow those rules even during losing periods. Those who didn’t consistently follow the rules didn’t infact make any money and were dropped from the program.
Rules are important in life. More so in trading! Traders who want to be successful should figure out a way to gain enough confidence in their own rules of trading to be able to apply them consistently. Turtle trading experiment can teach you a lot about the importance of having a rule based trading system! You can download your Turtle Trading Rules (37 page pdf). These are the orginal Turtle Trading System Rules as taught by Richard Dennis! Turtle Trading Rules themselves were simple-the secret was the ability to stick to these rules. Emotions are your biggest enemy in trading. Rules help you avoid emotions. Turtle Trading System was a mechanical trading system per excellence that was rule based and almost eliminated emotions in making trading decisions if you had the discipline to follow the rules under all market conditions.
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