The story of the Turtle Traders is one of the most famous and fascinating chapters in the history of trading. It is a tale of how a group of complete strangers, many of whom had no prior experience in financial markets, became some of the most successful traders of the 1980s. Their journey was a daring experiment, pioneered by one of the most influential figures in modern trading: Richard Dennis, a legendary commodities trader.
The Origins of the Turtle Traders
The story begins in the early 1980s, at the peak of Richard Dennis’s success in the commodities market. Dennis had made his fortune by trading in various markets, particularly in futures contracts. He had begun his trading career with very little capital, but through a combination of skill, intuition, and relentless drive, he turned a few thousand dollars into a multi-million-pound fortune.
Dennis had a belief that had been forming over years of personal experience in the markets: successful trading was not an innate talent, but rather a set of rules and techniques that could be taught and replicated. He had come to believe that anyone, regardless of their background or education, could learn to trade profitably—if they were given the right set of rules to follow and the discipline to adhere to them.
But Dennis’s belief in the teachability of trading would soon be put to the test in a high-stakes, high-reward experiment that would forever change the world of trading. In 1983, he and his business partner, William Eckhardt, decided to settle a longstanding debate: Could trading success be taught to anyone, even complete beginners, with no prior experience in the markets?
Dennis believed the answer was “yes.” Eckhardt, on the other hand, was more sceptical and believed that innate qualities such as intuition and psychology played a far more significant role. To settle this debate, Dennis proposed an audacious experiment: he would take a group of inexperienced individuals, train them in his systematic trading strategies, and see whether they could succeed in the financial markets.
Thus, the Turtle Trading experiment was born.
The Selection Process: The Search for Turtles
Dennis and Eckhardt posted an advert in the Wall Street Journal in 1983, seeking individuals who were “interested in making a lot of money” and “would like to learn how to trade”. The ad was open to anyone, with no specific requirements in terms of prior experience or financial background. They wanted to recruit people from a variety of walks of life, believing that success in trading wasn’t about a particular personality type or set of skills, but about following a proven system.
Hundreds of applicants responded to the ad, and from this pool, Dennis selected a group of 23 individuals, many of whom had no prior knowledge of finance or trading. Some were students, others were factory workers, and a few had been in jobs like taxi driving or law enforcement. Despite their vastly different backgrounds, they shared one thing in common: they were willing to commit to learning Dennis’s trading system.
The group was nicknamed the “Turtles”, a name Dennis gave them in reference to the old Chinese proverb about the speed of a turtle compared to the swiftness of a hare. He likened the turtles to traders who, though not necessarily the fastest or the most instinctively gifted, could still outperform their peers by sticking to a disciplined and systematic approach.
The Training: A System of Rules
Dennis and his team put the Turtles through an intensive two-week training programme in which they learned the rules of his trading strategy. At the heart of this strategy was the principle of trend-following, where trades were based on the momentum of the market. Dennis believed that markets moved in trends, and by identifying these trends early, traders could make significant profits.
The strategy was simple, yet powerful. The Turtles were taught to buy when prices broke above a certain level and to sell when they broke below a specific threshold. They also used strict risk management rules, limiting the size of each trade and cutting losses early. The system was mechanical, with minimal room for intuition or emotion.
Dennis emphasised that success in trading wasn’t about making big, risky bets but about consistency and discipline. The Turtles were trained to follow the rules to the letter, no matter what the market was doing. Patience, discipline, and adherence to the system were emphasised at every turn.
The Trading: A Success Beyond Expectations
Once the Turtles had completed their training, they were given real money to trade, and the results were remarkable. Over the course of the next few years, the Turtles went on to generate returns of around 80% per annum, far surpassing the performance of most professional traders at the time.
The success of the Turtle Traders was a testament to the power of a well-structured, systematic approach to trading. By following a simple, yet highly effective set of rules, the Turtles were able to avoid the common pitfalls that often trap more experienced traders, such as letting emotions dictate their decisions or overcomplicating their strategies.
But their success wasn’t just due to the system itself; it was also about the mindset and discipline they brought to their trading. By sticking to the rules, no matter how tempting it might have been to make exceptions or deviate from the plan, they were able to harness the power of compounding profits and minimise risk in the long term.
The Legacy: Impact on the Trading World
The Turtle Trading experiment was an overwhelming success, and it revolutionised the way people thought about trading. Dennis’s belief that trading success could be taught, rather than being an innate talent, was proven to be correct. The Turtles not only made money, but they also demonstrated the importance of having a clear system, discipline, and patience in trading.
Over time, the Turtle Traders went on to become highly successful in their own right, some even going on to start their own trading firms. Curtis Faith, one of the most well-known Turtles, later wrote a book titled The Way of the Turtle, in which he detailed his experiences and the lessons he learned from the experiment. Faith’s book has become a must-read for traders who want to understand the principles behind the Turtle Trading system and apply them to their own trading strategies.
The Turtle Trading story is often cited as an example of the power of systematic trading, risk management, and discipline. It also serves as a reminder that success in trading is not about being a “born trader” or relying on gut feelings—it’s about following a set of rules, understanding risk, and executing consistently. The Turtle Traders proved that anyone, regardless of their background, could learn to trade profitably if given the right tools and approach.
Conclusion: The Enduring Lesson of the Turtle Traders
The Turtle Traders’ success has endured as one of the most compelling stories in trading history. It demonstrates that successful trading is not a mysterious art but a set of principles and practices that can be learned, refined, and applied by anyone who is willing to put in the effort.
Today, the principles of Turtle Trading continue to influence traders around the world. The lessons of discipline, simplicity, and consistency remain at the core of many successful trading strategies. As markets evolve and new technologies emerge, the legacy of the Turtle Traders lives on as a timeless example of how a well-executed system can lead to remarkable success, regardless of one’s starting point.
The Turtle Trading story serves as a powerful reminder: anyone can become a successful trader—if they are willing to learn, follow a disciplined approach, and trust the process.
