“In drumming up a list of candidates to be interviewed for this project, Dennis was an essential name. He is one of the foremost trading legends of our time – a trader who a number of others interviewed in this book cited with the phrase, “I’m not in his league.” (Jack Schwager)
A Trading Legend and an Inspiration
Not only was Dennis a great trader the story of the Turtles is an inspiration to me and I am sure many other traders because it gave people the confidence to go and trade. After all Dennis had taught novices to make several hundred million dollars after 14 days of intensive training so why can't anyone do it?
The answer is anyone can learn to win but the road to success is not the one most traders think is and also, the skills required to win require a complete change of mindset and behaviour. You should read our other article on William Eckhardt who was a partner of Dennis and disagreed that traders could be taught to trade, Dennis insisted that traders could be and the Turtle experiment was put into action and Dennis trained a group of novices to trade quickly and with stunning results.
An Experiment and Stunning Results
“I tried to codify all the things I knew about the markets. We taught them a little bit about probability, money management, and trading. It turned out I was right. I don’t say that to pat myself on the back, but even I am surprised how well it worked. It’s frightening how well it worked.”
Well it worked well and showed the power of how much money, a simple trading system could make if it was applied with the right attitude which was to follow the systems rules and EXACTLY as they were given and to trade them with discipline without deviating from the rules.
Consistency and Disciplined Application of a Plan
"I always say you could publish rules in a newspaper and no one would follow them. The key is consistency and discipline." and “Almost anybody can make up a list of rules that are 80 percent as good as what we taught our people. What they couldn’t do is give them the confidence to stick to those rules even when things are going bad.”
This is so true and its because - ANY trading system needs to be applied with discipline. On this site you can get two free systems which make money long term Richard Donchians 4 Week Rule and of course the Turtle trading rules which are now free – they both work but traders have to endure emotions they don't want to when following the strategies. If they followed the trading strategies long term
they would make profits but they don't want to and look around for a short cut to success – they want profits quickly and with no losing periods but that's not the world of trading Forex.
If you want to win at Forex trading perhaps the most important point to keep in mind is you won't ever achieve success unless, you accept that you will need to control your emotions. No system wins on its own – the trader makes it win by trading it the RIGHT Way which is with emotional control and discipline.
Trading for Long Term Profits
“On any individual trade it is almost all luck. It is just a matter of statistics. If you take something that has a 53 percent chance of working each time, over the long run there is a 100 percent chance of it working. If I review the results of two different traders, looking at anything less than one year doesn’t make any sense. It might be a couple of years before you can determine if one is better than the other.”
Trading in the short term is mostly luck due to the random distribution of profits and losses the market gives you but longer term if you have a trading edge, your win loss ratio and the average profits you make or lose per trade start to average out and if your trading rules or system are based on sound logic with a definable edge you will win. The key is to understand that your edge will only work over the long term and you will have to ignore short term pull backs in equity
The Importance of Trading for a Reason Until the Reason Is No longer There
“When you have a position, you put it on for a reason, and you’ve got to keep it until the reason no longer exits. Don’t take profits just for the sake of taking profits. You have to have a strategy to trade, know how it works, and follow through on it.”
The above is great advice for traders who want to take their winning trading signals out the market to quickly which is a common error and is caused by a lack of confidence in their trading strategy which leads to not maintaining discipline. If you want to be a successful trader in trend following, you need to hold the profits, while your emotions are telling you to take them and bank them. If you don't do this your account equity will fall, as profits are not being held for long enough to make them big enough to cover your losing trades – equity declines until eventually, the trader is just another loser.
Expect the unexpected
“There is another point that I think is as important: You should expect the unexpected in this business; expect the extreme. Don’t think in terms of boundaries that limit what the market might do. If there is any lesson I have learned in the nearly twenty years that I’ve been in this business, it is that the unexpected and the impossible happen every now and then”
The above is a very true quote and we have discussed it elsewhere on this site – its when you think that something can't happen it can and if you don't accept the reality of what you see, you will soon lose your money and this is good advice for all traders who risk to much of their money on the sure fire trading signal or the trade which “cannot fail to make money” and does.
The Intensity of the Trading Experience
“The trading experience is so intense that there is a natural tendency to want to avoid thinking about it once the day is over. I am that way when things are working. But, when they are not, it spurs me to want to think about what I’m doing and how I might do better. When things go bad, traders shouldn’t stick their heads in the sand and just hope it gets better”
How true is the above quote? Money is being risked and short of physical threats to our body or sex nothing else comes close to getting our emotions involved as much as the thought of losing money. Most losing traders hope things will get better ( which of course they don't) the serious Forex trader makes things get better by taking positive action and correcting his mistake ASAP.
Born in Chicago he began trading as a teenager with just a small stake of $400 he saved up from his pizza delivery job and as his father once famously said:
“Let’s just say Richie ran that four hundred bucks up pretty good.”
As we know Dennis would build a fortune of hundreds of millions of dollars and will always be remembered above all else for his Turtle experiment which was an inspiration to traders when he did it back in the eighties and still remains an inspiration to traders that maybe just maybe, they can achieve some of the success the Turtles did. Maybe you won't achieve such stunning gains but everyone has the opportunity to trade and win. Of course You may not make hundreds of millions of dollars but the fact is - there is nothing to stop you or anyone else achieving trading success.