|
In the early 1980’s a trader and a psychiatrist were having an ongoing dispute as to whether great traders were born or created. In order to resolve their positions the pair suggested that they recruit and train several individuals, provide them with accounts and see how they fared. The two having the argument were Richard Dennis and Bill Eckhardt and the subsequent experiment became the very famous ‘Turtle Traders’.
Of the two systems taught to the Turtles, one was a longer period system and the second had a far more short term focus. It is the short term system that HUBB has partly incorporated into improving the success of ProfitSource’s Elliott Wave functionality and one that graduates of the TradingKey course (www.hubb.com/tradingkey) will no doubt be aware! Please note that, as with all good trading systems, there are rules for entries, stops, position sizing and exits which are beyond the scope of this article. Regardless of whether you are a SITM, Optionetics or HUBB client, it is important that you look to capitalize on the full potential of your ProfitSource, rather than leaving half the lucrative indictaors unused.
For the Turtles, the first entry signal relies on a break out. It is acknowledged that not all break outs result in the start of trends, but it is known that all trends must start with a breakout. Within the hi-lites feature in ProfitSource select the highest high function (HH) and change the properties to 20 days. Entry is based upon the market moving above the highest high of the last 20 days. Effectively you enter as price breaks the highest high of the last 20 days.
click to enlarge
Exits are based upon what seems to be a rather expensive strategy of waiting to pull out on a new 10 day low. Remember that this is a profit taking exit NOT a stop loss (which is based upon a maximum drawdown volatility stop). Select the New Low tool and set the parameters to 10 days.
click to enlarge
As can be seen in the chart, whenever the share crosses below the purple line, profits are taken.
You can imagine this system of trading follows trends particularly well and can be combined with EW4 or EW5 trades. In essence the rules taught in the TradingKey are somewhat more aggressive and allow more frequent position taking. As with the Turtles, the whole idea is to remain in the market for the longest possible time frames and capture as large an amount as possible of every move.
When combined with fundamental analysis, this particular approach proves to be very successful over sustained periods of growth. The same principals can equally be applied for short positions when a fundamentally expensive share has been identified. If you throw in a measured way of analysing sectors, then you have a robust and repeatable trading plan.
Stay Sharp,
John Jeffery
|