What is a Turtle bet? Discover this defensive betting system focused on consistent, methodical wagers. We cover the core rules, setup, and potential profits.

The Turtle Bet A Patient Wagering Method for Sustained Bankroll Growth

Initiate a long position when an asset's price surpasses its 55-day high, while simultaneously placing a stop-loss order that limits potential downside to 2% of your total account equity. This dual-action rule forms the entry point for a historically profitable, mechanical trading system. Do not deviate from these precise parameters; the methodology's success hinges on rigid adherence.

This approach was born from a legendary 1983 experiment conceived by commodities trader Richard Dennis. He provided a group of novices with a complete, mechanical set of instructions for trading futures. The goal was to prove that successful speculation is a skill that can be taught and replicated, not an innate talent. The participants, who had little to no prior market experience, went on to generate massive returns, validating the power of a disciplined, rules-based framework.

The core philosophy is simple: purchase assets demonstrating clear upward momentum and sell assets showing definitive weakness. It is a pure trend-following model. It discards any attempt at forecasting market tops or bottoms. Instead, its strength lies in its capacity to capitalize on sustained price movements, systematically cutting losses on failed trades and letting profitable positions run. Emotion is completely removed from the decision-making process, replaced by cold, hard arithmetic.

Applying the Turtle Bet: A Practical Trading Guide

Execute a long trade when an asset's price surpasses its 20-day high. For a more conservative approach, use a 55-day high breakout. Short speculations are initiated when the price drops below the corresponding 20-day or 55-day low.

Determine your position size for every trade by allocating 1% of your total account equity to the instrument's daily price volatility. Calculate this volatility using the 20-day Average True Range (ATR), also known as N. The formula is: Unit Size = (0.01 * Account Equity) / (ATR * Value per Point).

Systematically increase a winning position. After your initial entry, add one additional unit for each 0.5 N price movement in your favor. Do not exceed a total of four units for any single market trend.

Protect your capital by setting an initial stop-loss order 2 N below your entry price for a long position, or 2 N above for a short. This defines your maximum loss on the initial unit as 2% of your account equity.

When adding a unit to a profitable trade, adjust the stop-loss for the entire position. Raise the stop for all open units by 0.5 N from the previous stop level. This locks in gains and reduces the total risk on the multi-unit speculation.

Liquidate your entire long position if the price falls below the 10-day low. For short speculations, the exit trigger is a price move above the 10-day high. This exit rule is independent of your stop-loss and ensures you capture a portion of the trend's reversal.

Identifying Your Entry Point: The Turtle Breakout System

Initiate a long position when an asset's price exceeds the high of the preceding 20 trading sessions by a single tick. Conversely, establish a short position when the price falls one tick below the low of the same 20-session period. This is the primary, shorter-term entry mechanism.

A signal from the 20-day system is disregarded if the last breakout in the same direction resulted in a profitable exit. For a new long position to be taken after a winning long trade, the price must first retrace to the initial entry point of that prior winning placement, or a 55-day breakout must occur. This filter prevents entering positions during minor, choppy continuations.

A secondary, longer-term system is used concurrently. https://wazamba-app-gr.com dictates entering a long position on a 55-day high breakout and a short position on a 55-day low breakout. All signals from this 55-day system are taken without exception, ensuring participation in major secular trends that the 20-day system's filter might otherwise miss.

The size of each placement is normalized by volatility. Calculate the 20-day Average True Range (ATR), a value designated as 'N'. The monetary size of one unit is calculated so that one 'N' of price movement equals 1% of total account equity. For instance, with a $200,000 account and an 'N' of $2.50 for a commodity, one unit's exposure is set to risk $2,000 per 1N move.

Increase a winning position by adding subsequent units. Each new unit is added at an interval of one-half 'N' from the previous entry. If a long position is initiated at $100 and 'N' is $4.00, the second unit is added at $102, the third at $104, and the fourth at $106. The maximum number of units for any single instrument was capped at four to manage risk concentration.

Calculating Position Size and Setting Stop-Losses Like a Turtle

Determine the size of your stake, referred to as a "Unit," using a volatility-based formula. This normalizes risk across different markets.

Define Account Risk: Select a small fraction of total account equity to risk on a single stake. The original system used 1%.
Calculate Dollar Volatility: For the chosen instrument, find its Dollar Volatility.

Dollar Volatility = N * Dollars per Point
N is the 20-day Average True Range (ATR) of the instrument.
Dollars per Point is the monetary value of a single-point price change.

Calculate Unit Size: Divide the account risk by the instrument's Dollar Volatility.

Unit Size = (1% of Account Equity) / (N * Dollars per Point)
The result is the number of contracts or shares to trade for one Unit. Always round down to the nearest whole number.

Numerical Example:

Account Equity: $200,000
Account Risk (1%): $2,000
Instrument: E-mini S&P 500 Futures (ES)
N (20-day ATR): 35.0 points
Dollars per Point for ES: $50
Dollar Volatility: 35.0 * $50 = $1,750
Unit Size Calculation: $2,000 / $1,750 = 1.14
Action: Initiate a position with 1 ES contract.

Initial Protective Stop Placement

A non-discretionary stop-loss is placed immediately upon entering a position. The distance of this stop is a direct multiple of N, which ensures that the initial risk is capped.

Rule: The initial stop-loss is always 2N away from the entry price.
For a long position: Stop Price = Entry Price - (2 * N)
For a short position: Stop Price = Entry Price + (2 * N)

Since a Unit is sized so that 1N of movement equals 1% of account equity, a 2N stop-loss means the maximum loss on the initial position is 2% of the total account capital.

Adding to Winning Positions (Pyramiding)

Profitable positions are increased in size at pre-defined intervals. This is done by adding subsequent Units.

Entry Interval: Add one new Unit each time the price moves 1/2 N in your favor from the last entry.
Maximum Size: A position was typically limited to a maximum of four Units.
Trailing the Stop: Each time a new Unit is added, the stop-loss for the entire position (all open Units) is moved.

For long positions, the new stop is placed 2N below the newest entry price.
For short positions, the new stop is placed 2N above the newest entry price.

This aggressive stop-adjustment method reduces the risk on earlier entries as new ones are added, systematically protecting paper profits.

Executing Your Exit Strategy: When to Take Profits or Cut Losses

Liquidate a profitable long position when the price creates a new 10-day low. Conversely, close out a profitable short speculation when the price establishes a new 10-day high. Adhering to this mechanical rule prevents premature profit-taking during a strong trend and provides a clear signal to exit when momentum reverses.

Your initial risk on any new commitment is defined by a stop-loss set at two times the Average True Range (ATR) from your entry price. For a long trade, the stop is placed 2 ATR units below the entry. For a short trade, it is 2 ATR units above the entry. A price move against your position to this level signals an immediate exit, limiting the maximum loss on the wager.

As a position moves in your favor, the stop-loss level should be adjusted to protect accrued gains. This is achieved by trailing the stop. For a long position, if the price increases, the stop-loss is raised, maintaining the 2 ATR distance from the current price. The stop only moves up, never down, thereby locking in profits as the trend continues.

A more conservative approach involves scaling out of a winning trade. One could liquidate a portion of the original stake, for instance one-quarter, each time the position moves one ATR unit in the intended direction. The remaining portion is then managed with the standard 10-day high/low exit rule, balancing early profit capture with the potential for larger gains.