The Way of the Turtle

by Curtis M. Faith

1. Introduction
2. Risk Junkies
3. Taming the Turtle Mind
4. The First $2 Million is the Toughest
5. Think like a turtle
6. Trading with an Edge
7. Falling Off the Edge
8. By What MEasure?
9. Risk and Money Management
10. Turtle-Style Building Blocks
11. Turtle-Style Trading: Step by Step
12. Lies Damn Lies, and Backtests
13. On Solid Ground
14. Bulletproof Systems
15. Mastering Your Demons
16. Epilogue
17. The Original Turtle Trading Rules

1. Introduction
   1. Rich and Bill trained the first group in two weeks. This was too long. The second time the training was only one week.
2. Risk Junkies
   1. Difference between investors and traders – traders dont care what the price is relative to value.
   2. Traders trade risk – can subdivide into traders who trade liquidity risk (scalpers, market makers, arbitraguers) and price risk (speculators, position traders).
3. Taming the Turtle Mind
   1. Emotional Rescue
      1. Hope: I hope this goes up.
      2. Fear: I’m going to sit this one out.
      3. Greed: I’m making so much I have to double down.
      4. Despair: This doesn’t work, I’m losing money.
      5. Loss Aversion: preference for avoiding losses over acquiring gains.
      6. Sunk costs effect: The tendency to treat money already spent as more valuable than money that may be spent in the future.
      7. Dispostion effect: The tendency for people to lock in gains and ride losses.
      8. Outcome bias: the tendency to judge a decision by its outcome rather than by the quality of the decision at the time it was made.
      9. Recency bias: Tendency to weigh recent data or expereience more.
      10. Anchoring: relying too heavily, or anchoring, on readily available info.
      11. Bandwagon effect: believing things because other people believe in them.
      12. Believe in the law of small numbers – unjustified conclusion from too little info.
   2. The Turtle Way
      1. Trend Following: Large trends occur fairly infrequently. In addition to losing money when they are no trends, systems lose when trends reverse. Requires large amt of money to trade using reasonable risk limits.
      2. Countertrend Trading: Support and resistance
      3. Swing Trading: Trend following in shorter terms.
      4. Day Trading: Exit market before it closes each day.
4. The First $2 Million is the Toughest
   1. Risk of ruin.
   2. Trade with an edge.
   3. Be consistent.
   4. Keep it Simple. two or three trades might account for all your profits. you need a system you can follow.
5. Think like a turtle
   1. Trade in the present. Don’t dwell on the past or try to predict the future.
   2. Think in terms of probabilites not prediction
   3. Take responsibility for your own trades.
6. Trading with an Edge
   1. Edges are made up of 3 components – portfolio selection. entry signals. exit signals.
7. Falling Off the Edge
8. By What MEasure?
   1. Traders afraid of Drawdowns, low returns, price shocks, and system death.
   2. MAR ratio divides annual return by the largest drawdown.
9. Risk and Money Management -> Stay in the Game!!!
10. Turtle-Style Building Blocks
    1. Breakouts
    2. Moving averages
    3. volatility chanels
    4. time-based exits
    5. simple lookbacks
11. Turtle-Style Trading: Step by Step
12. Lies Damn Lies, and Backtests
    1. Why it may not work
       1. Trader effects -> too many same style
       2. random.
       3. optimization paradox -> wrong timeframe?
       4. Overfitting
          

          Slow but Steady

    2. a
13. On Solid Ground
14. Bulletproof Systems
15. Mastering Your Demons
16. Epilogue
17. The Original Turtle Trading Rules