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In 1983, Richard Dennis, the well-known speculator, had a disagreement with his friend Bill Eckhardt over whether skilled traders were born with the ability, or it was something that could be taught. They decided to test their theories, by teaching 13 beginners to trade. These beginners were known as the 'Turtles', and if they mastered trading, Dennis and Eckhardt would fund trading accounts for them. Over four years, the Turtles managed to earn a rate of return in excess of 80%. So the argument was won, and the Turtles trading system was born.

Volatility normalization is one of the turtles used in the stock trade for indicating volatility of a set of share instrument with each having the similar dollar risk. The concept of exponential moving average of the ATR is manifested and comes from above.

In the turtle trading system, the losses are taken seriously. Let us say, a turtle trader starts with a notional amount of $100 . In case, the trader looses $10 he would, normally, have $90 to manage future trades. However, in turtle trading system, the trader would have to manage the future trades with only $80 till he earns a profit of $10 to cover the loss.

Turtle trading system is based on two models. one being a 20 day breakout system and the other one is 55 day breakout system. If the market opened thru the 20 day hi9gh or low, or traded during the day, that would be singnal to enter. One unit would be bought /sold to initiate the position. However, previous singal would have resulted in a successful trade, this signal would be ingnored in an attempt to avoid whipsawing.

Once established, Turtle trading system will add a unit every 1/2 'N' advance, up to maximum number of units they are permitted (4 single instrument, 6 in closely correlated markets such as Oil and Crude, 10 units in "Loosely Correlated markets, 12 uits overall in a single direction). CONSISTENCY is the prime directive for all these. It was essential to be in all of them, so as not to miss few huge winners that made profits as majority of traders failed.

The Turtles trading system undoubtedly works. However, it requires iron willpower to follow the rules, and not to try and 'bend' the mechanics of the strategy. Most people are not mentally equipped to deal with the constant losses, even though they are handsomely offset by the occassional huge winner.