My winning trades on their final closure on 6 August were great examples of my own version of trading using a slightly tweaked turtle trading strategy.
I will write separately about the turtle traders as it's a fascinating story. Until then I will explain my winning turtle trade below. I have captured the original entries as captured in the image below.
The typical turtle trading strategy requires entry on a 20 day high, if going long and an entry at the 20 day low if going short. For the GBP/NZD pair I entered my first position on price closing at a 20 day high.
Further trades, as per the rules were added as the price hits higher prices at set price intervals. These intervals are calculated based on the Average True Range 'ATR'. The ATR is also used to calculate the stop loss position. In my version of the strategy I have a maximum number of adds to the original position of 3. All these trades up to a maximum of 4 trades will all be of the same position size.
Under the traditional turtle trading strategy the profits are taken at the lowest price of the last 10 days or the original stop based on the last trade entry. This can be very difficult as a profit taking strategy as it's possible to see handsome amounts of profits wiped out. Personally I felt that in terms of preserving capital and the psychological damage of such situations I wanted to come up with a methodology where sensible amounts of profit are taken, without removing the possibility of a 'home run' trade.
I therefore devised a strategy to take profits along the journey to maximise the probability of minimising large drawdowns by taking partial profits along the way. For each of the individual trade entries my rules for taking profits are as follows:
when the profit on the individual trades reach 3 times the risk taken then I am to take 25% of the profits of that trade;
if price still continues to the upside, wait until the profits rise once again to reach 3 times the original risk of the trade and close 33% of the position
Then, the remaining 50% of the original position size should be closed based on the original turtle rules which is either the stop loss in place based on the final trade of the series or the 10 day low. As a note, please ignore the use of the word 'high' in the image below I meant to use the word 'low'.
I had taken profits off the table based on the rules I created for myself and the remainder of my position was stopped out where it was supposed to. There was quite a deep sell off for a number of days after price reached a high.
The best thing about using a turtle trade type strategy is that it is so easy to follow in terms of the rules for entry and exit, it takes away the complexity. No indicators, trend lines, support and resistance or volume, just pure and simple price action based on a high or low price. Of course the original turtle trade rules don't work anymore on back testing. However, since the trading strategy is simple a few small tweaks have certainly made this one of my most profitable strategies, despite only quite recently putting into operation.
The net profits of the 4 trade entries were excellent, see the snapshot below.
Do make comments or like the post if you would like to see a full detailed breakdown of my version of the rules for a turtle trading strategy, along with what I have changed from those original rules.
Trade Clearly!
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