Turtle Trading #2 A Complete Trading System

The Turtle Trading System was considered as a complete trading system.

What are components of a complete trading system?

A complete system must cover each of the decisions required for successful trading, which consists of 6 components as follows.

1. Markets – What to buy or sell
Normally, traders want to trade in high volume markets that trend well. So, traders should not stick with only one market if they do not want to reduce their chance to ride a trend.

This is the first decision traders have to make; what to buy or sell.

2. Position sizing – How much to buy or sell
This is the most important aspect of trading but is handled improperly by most traders.
The decision about how much to buy or sell affects both diversification and money management.

3. Entries – When to buy or sell
An automated trading system generates signals for buying and selling when market conditions match its definitions.

4. Stops – When to get out of a losing position
If traders want to succeed in long term, they have to know when to cut their losses. The most important in cutting losses is to decide the stops before entering the trades.

5. Exits – When to get out of a winning position
Traders should also have their exits in mind before entering the trades. A complete trading system must also address the exits of winning positions.

6. Tactics – How to buy or sell
Once signals are generated by systems, traders have to make tactical considerations how to execute their trades. This will be seen clearly in larger accounts that entry and exit can result in market impact.

The turtle rules covered all these aspects of trading. That is why it was a complete trading system.


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