What Is Turtle Trading & Does It Work for Crypto?

Question

Investors have been cooking up trading strategies for centuries. New approaches pop up. People flock to them, hoping to find that magical edge in the market.

"Turtle trading" is one such strategy. Born in the early 1980s, it's caught the eye of both newbies and veterans. But does it actually work for crypto? Let's dive in.

What Is Turtle Trading?

It's a momentum-based strategy. Follow the rules, not your feelings. Simple as that.

Traders use it across many markets. The goal? Spot breakouts. Up or down - doesn't matter.

Richard Dennis created this thing. He grabbed 14 people - the "turtles" - and taught them to follow strict rules instead of hunches. The results? Kind of impressive, honestly.

The Turtle Trading Experiment

This whole turtle business started in the early 80s. Two commodity traders were looking for something better. Here's how it went down.

Where It All Started

Richard Dennis was crushing it in commodities. Started with just $1,600 borrowed cash. Made $350 million in six years. Not too shabby.

Dennis had this idea. Anyone could be taught to trade well. His partner Eckhardt disagreed. Thought Dennis was special. So they made a bet.

The Actual Experiment

Dennis called his students "turtles." Weird name. Two weeks of training. Then gave them his money to trade with. Bold move.

The rules were meant to kill emotion. Make decisions by the book. Nothing else.

Dennis could've just published the rules somewhere. He didn't. He knew people wouldn't follow them anyway. Most traders like to "improvise." That's where they mess up.

The name "turtles"? Came after Dennis saw turtle farms in Singapore. Thought traders could be grown the same way. Fast. Efficient.

How'd It Go?

No official results published. But one turtle, Russell Sands, claimed they made over $175 million in five years. Not bad for beginners.

Some students got kicked out. Those who stuck to the system did well. Jerry Parker, one of the turtles, started Chesapeake Capital. Still runs it today, following those same principles.

The strategy isn't perfect though. Lots of drawdowns. Many breakouts end up being fake-outs. Losses happen. Frequently.

How Does Turtle Trading Work?

Rules. Lots of them. The core idea stays the same - catch breakouts. But the details have changed over time.

Original rule: Buy when price breaks the 20-day high. Modern version: Maybe use the 200-day high instead. Works similar for crypto or traditional assets.

Turtles only play in liquid markets. Safer that way. Less chance of getting stuck. For crypto, stick to the big names with high volume.

Here's the breakdown:

Markets Traded

Liquidity matters. The turtles traded futures. Lots of different kinds. Commodities. Metals. Bonds. S&P 500. Currency. Energy. Whatever had depth.

Position-Sizing

They used math to normalize volatility. Different markets, same relative position size. Smart.

More liquid markets? Fewer contracts. Less liquid? More contracts. They looked at 20-day moving averages of true range to gauge volatility.

Entries

Two systems. First used 20-day breakouts. Second used 55-day breakouts. Winners got additional positions. Four entries max.

Dennis was strict: Take every signal. Skip one and you might miss the big winner. That ruins everything.

Stop Losses

Always use them. Know your exit before you enter. Define risk first. Crypto markets need wider stops. They're wild.

Exits

Don't bail early. Rookie mistake. They had two systems for exits.

First used 10-day lows for longs, 20-day highs for shorts. Second used standard 20-day signals for both. They watched prices in real-time. No automated exit orders.

Tactics

Use limit orders in fast markets. Don't chase prices. Wait for calm. Buy strength, sell weakness. Follow momentum.

Key Lessons From Turtle Trading

The rules have evolved. The principles remain solid.

Understand Your Strategy

Know why it works. Get the concept, not just the rules. This lets you adapt when needed.

Without understanding, you'll bail at the first sign of trouble. Bad idea.

Manage Risks

A strategy without risk management is suicide. Example: Modified turtle trading might return 32% with a 41.50% drawdown. Keep risk at 1% per trade? Manageable.

Bump risk to 4%? Returns could hit 76%. But drawdowns might reach 97%. You'd never recover. Risk management matters. A lot.

Adapt or Die

Markets change. Crypto markets change fast. Strategies stop working.

When that happens, figure out if the concept failed or just the implementation. If just the strategy, tweak it. If the concept, find a new one.

Plan Both Sides

Your exit matters as much as your entry. Maybe more. Know when to take profits. Know when to cut losses.

Does It Work for Crypto?

Mixed results. The original 1980s rules? Not great for crypto. Modified versions? Better.

Historical data shows shorting crypto with turtle rules is asking for trouble. Too many stop-losses hit during bull runs.

The original system was designed for uncorrelated markets. Crypto assets often move together. If you want to try turtle trading with crypto, consider:

Use moving averages for entries/exits
Try different timeframes (30min, 4hr, 6hr data)
Test various stop placements
Play with position sizing methods

Worth Trying?

Everyone wants the perfect strategy. Turtle trading isn't perfect, but it's usable. Beginners and pros can implement it.

Results vary. Your mileage may vary. Many original turtles did well with it.

Even Dennis himself lost big in the 1987 crash though. No strategy is bulletproof. Whatever system you choose, make sure you understand why you're making each trade.

The Bottom Line

Turtle trading removes emotion from trading decisions. That's valuable. The rules have evolved since the 80s, and they should. Especially for crypto markets, which behave differently than traditional assets.

Recent backtesting from 2025 suggests modified turtle strategies perform better than the original system across various assets - higher Sharpe ratios, lower maximum drawdowns. It seems the turtle approach still has legs, provided you adapt it properly to modern markets.