Updated: May 25, 2021

The Complete TurtleTrader by Michael Covel. (Richard Dennis)



The Complete Turtle Trader, by Michael Covel.

The true story of how 23 novice investors became overnight millionaires.

Market wizard Richard Dennis the trend following pioneer, discloses his mid-1980’s turtle trading experiment where his group of novice traders strictly followed his rules, and over a 4-year period, made $150,000,000.

We take a glimpse at the story, the stats, and learn what we can from the trading system.

Richard Dennis started from humble beginnings in the early 1970’s, starting as a runner on a trading floor at the age of 17, and a few years later traded his own account.

He originally borrowed $1600 and spent $1200 on a seat at the MidAmerica Commodity Exchange, he soon turned the remaining $400 into $3000 in a short space of time, and between 1970 to 1973 he turned his equity into $100,000. A year later he returned a profit of $500,000 trading soybeans, and by 1975 he was a millionaire at the age of 26.

Dennis later formed a partnership with fellow trader William Eckhardt, a PHD mathematician who also successfully applied his knowledge to the stock market.

Both Dennis and Eckhardt fell into a philosophical disagreement. Dennis believed that his trading system could be taught to anyone providing there were a set of rules, whereas Eckhardt disagreed.

The argument became a catalyst towards the creation of the Turtle Trading program.

The name was inspired by a previous trip to Singapore to which Dennis said:-

“We are going to grow traders just like they grow turtles in Singapore”.

Soon after their firm C & D Commodities placed this advert into the Wall St Journal, Barron’s and the International Herald.

The point of ‘experience not being necessary’ is the key takeaway from the advert. We will learn shortly that the group were far from experienced traders.

In total there were more than 1000 applications to take part in the experiment. The experiment would provide 2 weeks training, and each would be provided with a 1-million-dollar account to trade with.

The successful applicants had varying backgrounds, including a Blackjack player, a computer game designer, a pianist, and an air force pilot.

This group went on to earn over 150 million dollars, which suggested that Dennis’s theory was right, you could teach anyone to trade provided they were given the appropriate training. Or put another way, trading is learnable and not an inborn talent.

In January 1984, during the two weeks of training, Dennis and Eckhardt focused on teaching the foundation of their trading style. The theory and concept of their style was hugely important, it was never about numbers moving up and down on a screen, there had to be a theory behind the method.

Dennis went on to say;

“You need the conceptual apparatus to be the first thing you start with and the last thing you look at.”

The turtles were taught to think of themselves as scientists first and traders second, the trading outcome was simply a result of the laws of reasoning.

This thinking put Dennis ahead of his time, and years later the academic Daniel Kahneman (author of Thinking Fast & Slow) won the Nobel Prize for ‘prospect theory’ also known as ‘behavioural finance’, which encapsulated Dennis’s prior teaching.

Fortunately, after a 10 year contractual secrecy pact ended in 1993, we have been able to gain access to the rules of the system, Let’s take a look.