The Original Turtle Trading Rules

Background  Richard Dennis, set up a group of 13 people and tranned them about trading stock market (year 1989). Two months later after done with tranning, Dennis funded each of people with $500,000 to $2,000,000

Background Over next four years, they earned an average annual compound rate of return of 80%

1. A Complete Trading System System provides answer for trading System follows a set of rules No human emotion involves in trading Buy Buy Sell

2. Know what to buy and sell The Turtles traded all liquid U.S markets except the grains (small contracts)and the meats(a corruption problem). Industries Aerospace & Defense Chemicals Exchange Traded Funds Oil, Gas & Energy Agriculture, Paper &Packaging Clean Tech Food Manufacturing & Products Publishing& Media Automotive Closed End Funds & Investment Companies Healthcare & Pharmaceutical Real Estate Banks, Financial Services & Insurance Computers, Technology & Internet Industrial & Manufacturing Telecommunications Biotechnology Consumer & Retail Products Leisure & Entertainment Transportation Building & Construction Distr. Unit Trusts & Funds Metals & Mining Utilities Business & Support Services Electronics & Engineering

3. Position Sizing Dollar Volatility Adjustment True Range = Maximum(H-L,H-PDC,PDC-L) where H - Current High L - Current Low PDC - Previous Day's Close N = (19 X PDN + TR)/20 where PDN - Previous Day's N TR - Current Day's True Range Dollar Volatility Adjustment Dollar Volatility = N * Dollars per Point Unit Size = 1% of Account / Market Dollar Volatility

3. Position Sizing

3. Position Sizing http://www.turtletrades.com/calculate- N.php?thesymbol=MSFT

3. Position Sizing Level Type Maximum Unit 1 Single Market 4 Units Closely Correlated Market 6 Units Loosely Correlated Market 10 Units Single Direction - Long or Short 12 Units Single Market Closely Correlated Market -- heating oil and crude oil; gold and silver Loosely Correlated Market -- gold and copper ; silver and copper Single Direction

3. Position Sizing Adjusting Trading Size The Turtle were instructed to decreased the size of account by 20% if we went down 10% Trading $1,000,000 -> account went down (10%) $100,000 = left $900,000 Next Trading we have $800,000 -> account went down (10%) $80,000 = left 720,000 Next Trading we have $640,000

4. Entries System 1 - A short term system based on a 20-day breakout. System 2 - A simpler long-term system based on a 55- days breakout. System 1 Entry Price > average 20-day high = buy one unit (long position) Price < average 20-day low = sell one unit (short position) System 2 Entry Price > average 55-day high = buy one unit (long position) Price < average 55-day low = sell one unit (short position)

4. Entries

5. Stops "There are old traders; and there are bold traders; but there are no old bold traders" Traders that don't use stops go broke. Since N = 1% of Account Equity , So the maximum stop would be 2% (2N) For Example Crude Oil N = 1.20 55 days breakout = 28.30 Entry Price Stop First Unit 28.30 27.70 Second Unit 28.90 27.70 Third Unit 29.50 27.70

5. Stops N = 1.20 55 days breakout = 28.30 Entry Price Stop First Unit 28.30 27.70 Second Unit 28.90 27.70 Third Unit 29.50 28.90 Fourth Unit 30.10 29.50

5. Stops

6. Exits The system 1 exit = 10 days low/high for long positions The system 2 exit = 20 days low/high for long positions “Waiting for a 10 or 20 days new low can often mean watching 20%, 40% even 100% of significant profits evaporate”

7. Tactics limit orders is better than market orders-offer a chance for better fills and less slippage bid price > ask price = trading Fast Market A market can move thousands of dollars per contract in a few minutes - do not panic and wait for the market to trade Simultaneous Entry Signals If a market occurs the stretch of a few hours , take the trade as they came. Buy Strength and Sell Weakness use Visual examination

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