Help Center

  • Introduction to Forex Market
  • Trading Basics
  • Video Tutorials
  • Articles
  • Glossary of Forex Terms
  • Economic Calendar
  • Forex Heat Map

Turtle Strategy Forex

Turtle Strategy Forex img1

The author of this trading strategy is Richard Dennis, who believed that any person capable of following his plans in a disciplined manner can achieve successful results without the need of being savvy in economics or having the appropriate degrees.

The Turtle Strategy is based on three core rules:

  • The trend is your friend. Work strictly according to the trend;
  • Strict adherence to the rules of the strategy. Richard Denis understood that the strategy can also fail, but it is better to take losses when using the strategy than to profit by making altercations, since losses from following the strategy and profits from breaking the rules are an accident;
  • Simple is good. The simpler the rules, the easier it is to follow them. A large set of complex rules is always hard to fulfill, and mistakes are a lot more likely.

Instruments and Tools

The three primary indicators you will be utilizing with this strategy are:

  • ATR (Average True Range) — shows the market volatility. It will be needed to determine the time of exit from the transaction. The essence behind its use is simple: the better the performance, the greater the likelihood of a trend change;
  • The Classic Turtle Trader indicator — shows breaks with colored dots. To be set up twice. The first time with a period of 20 days and a stop of 10. The second time with a period of 55 days and a stop of -20;
  • Donchian Channel (or Price Channel) is a technical analysis indicator that allows you to determine trends by the minimum and maximum of prices on the chart. It should be set up three times on the chart: for 55, 20 and 10 days.

The strategy is based on the use of daily candles. The size of the Stop Loss is big, at 300-400 points. Back in the times of Dennis, everything was done manually. When the price reached the desired mark, the transaction was closed. Nowadays you can close trades automatically, so you have all the tools you need to be even more successful than Dennis could have imagined.

To determine the price boundaries for the strategy, the Donchian Channel is used, built on the highs and lows for the specified number of days. Breaks can be determined independently, but it will be a lot faster via auxiliary indicators. You can find breaks yourself, but it will be faster and easier to use the auxiliary indicator. The Classic Turtle Trader: by default, red dots show breaks for buy orders, blue ones for sell orders, arrows show potential entry and exit points. To measure the current volatility, the strategy uses the standard ATR indicator, which determines the size of the Stop Loss and the time for opening additional positions during strong fluctuations.

Turtle Strategy Forex img2

How the Strategy Works

The strategy is based on short-term 20-day and 55-day long-term positions. The price’s breakdown serves as your signal.

For short-term trading, an interval of 20 days is to be considered. The maximum and minimum are determined. If the price breaks the maximum by at least 1 point, then this is a signal for making a buy transaction. The price breaking the minimum over the same period is a sell signal. If the previous transaction with this strategy was profitable (whether it was made or not), then it is not recommended to open a new order. If the trend turned on the 10-day extremes in the opposite direction from the opening position, then this is a close signal.

In the long-term case, daily candles with a period of 55 days were used. The principle is the same. If the price breaks the maximum — buy, breaks the minimum — sell. Transactions are recommended to be carried out only in single units (the minimum amount). Furthermore, if the trend is steady, orders are added, but each time no more than a single unit. A signal to close would be the trend moving in the direction opposite to the opening on 20-day extremes.

Tips for Better Results

  • Spread out risks. The strategy will prove to be more profitable if the risks will be spread out over different market sectors;
  • Increased Stop Loss. Try starting out with 5ATR instead of the usual two. A bigger Stop Loss will allow you to protect yourself from rapid market fluctuations;
  • Always adhere to smart money and risk management. Any strategy is first and foremost risk management, and only after — indicators and breaks.

Western Capital