I use the Turtles' concept of N for position sizing and risk and combine it with Van Tharp's ideas on expectancy. I think the proper application of these two ideas are more important than any individual entry or exit technique.
i thought the genius was in the systems position sizing and money management rules. the rules in a way seem to say to me that random entries in the middle of the range may suck. entries on the outside of the range could turn into big winners and if they do we want to we get as much as we safely can on that emerging trend with out betting it all on the first trade. If you traded enough size you could see how it could jam the people on the wrong side of the trade and cause a sort of a feedback loop reinforcing your entry. Because of where you start your trade You should know quickly if you are wrong. Also a nice feature.
HI to all!!!! I am very much new to the term that is "Richard Dennis trading techniques" but when i gone through it through the Wikipedia i find it very interesting and surely would implement to improve my trading skills.. Thanks
The most important lesson is the fact that you need to find a system you can follow, then FOLLOW it. Also, the use of N for position sizing and pyramiding are great for risk management, if you have a large amount of capital. Other than that, is is pretty much a trend following system, based on the 20 day and 55 day moving averages. I would add some other technical indicators. The fundamental idea is following the trend, trading on every break out, cutting your losses at 1/2N, and letting profits run. Read The Way of The Turtle, it explains everything.
Well, yes. I've been a systematic trader for about 15 years, so I'm familiar with the philosophical concepts, and how a lot of the volatility of returns boils down to tradeoffs between position sizing and diversity/pyramiding. What I was after was the original (pre-Turtle) methods which Dennis used in his earlier days. All that can be gleaned from the Covel book ("Complete TurtleTrader" - a book with much more historical detail on traders and their performance, although the Curtis Faith book has the merit that he does have some practical experience of trading and building systems) is that Dennis traded a lot of spreads (seasonal and inter-market) in commodities and made his first real killing (500k or so) in the soybean rally of early 1974, when it was limit-up every day for several months according to the chart on my Bloomberg. Most trade-selection/entry criteria are going to become obsolete and need tweaking over time - it is well-known that Donchian Channels no longer work as well as they did back in the day - but it would be interesting to learn more about what Dennis was doing between 1970 and 1983. Anybody know?
This link provides the rules in PDF format, and in much more detail than either Michael's or Curtis's Book.. http://www.getfreeebooks.com/wp-content/uploads/turtlerules.pdf
This implies that at any given time there are possibly many technical analysis methods which work and can make you rich, but which may not work as well N years in the future. Hogwash! If Donchian channels worked back then, they will work today. The caveat is that they may not work the same on the same markets over time. But if it worked back then on market X, it will work today on market Y. The other possibility is that it never worked for any market in and of itself. Money management and disipline are the key to make any indicator work.
BTW, looks like the great man has another book out now: http://blog.traderslibrary.com/traders-library/2010/01/trading-from-your-gut-by-curtis-faith.html
Do you think that if one just slows down the Donchian channel that they will regain the original value of the indicator. I don't think that chartist and technicians are any more able today to change the fundamental direction of the trading vehicles than they were 20-30 years back. The value of the Donchian is that it really is a fast moving indicator because it's primarily operating on price. What other indicators would one want to add which are faster or more confirming - I would think that they would be of more value to determine and exit than an entry.