The Complete Turtle Trader, Michael W. Covel
Rating: ★★★½☆
I borrowed this book from a friend of mine who also works in finance. He, like me, has more of a fundamentals bent on his financial experience so the idea behind this book – that like the legendary Turtles one can make consistently positive returns following a relatively simple technical trading strategy – seemed a little far fetched at the outset. The book tells the true story of a group of traders who were trained by Richard “Prince of the Pit” Dennis in the early 1980s to settle a bet he had with his business partner: that he could train anyone to trade and consistently realize positive returns using a simple technical strategy. Dennis and his partner corralled a group of people with an extremely diverse set of backgrounds and over a period of five years these traders – dubbed Turtles – traded prop for Dennis’ firm C&D Commodities, in the process reaping millions in profits for their teacher. Today, some of these original Turtles run well known hedge funds that have been consistently profitable since their establishment It’s quite an enthralling read backed up with the actual trading records of the Turtles during their tutelage under Dennis, however I had to remind myself while reading that the author makes his living by selling trend following strategies such as the one described in the book. While technical trading of the sort discussed in the book isn’t something I’d usually devote a lot of time to, after seeing the performance of the original Turtles I must say that I am motivated to at least mock something up for myself to see how it would have worked during recent years!
Publisher’s Weekly: Covel revisits a famous financial trading experiment conducted by Wall Street trader Richard Dennis and extracts its lessons with mixed results. Dennis, who quickly learned how to trade after starting as a runner at the Chicago Mercantile Exchange in 1966 at age 17, had made a reported $200 million by 1983. To settle an argument with fellow trader William Eckhardt about whether trading ability was innate or could be taught, he put an ad in the Wall Street Journal offering to teach candidates how to trade in two weeks, and then backed them with his own money. Of the thousands of people who who applied, 23 turtles were accepted. Their trading made $100 million for Dennis, leading some to become highly successful traders in their own right. Having tracked down most of the people involved, Covel describes the turtle training, including rules for entering and exiting trades as well as Dennis and Eckhardt’s personal lessons, and speculates on why some turtles succeeded more than others. However, there are too many characters with competing interests, and many missing facts. Covel’s own strong views can also get more emphasis than the voices of the principals. Still, the book is a useful training manual distilling the lessons of a fascinating experiment.