Turtle Traders?

Rearden Metal · Apr 14, 2006

Quote from inflector:

There seems to be some misunderstanding.

100% returns for four years looks like:

2 goes to 4
4 goes to 8
8 goes to 16
16 goes to 32

Total return is 32 / 2 which is 16 times or 1,600%.

- Curtis

Curtis Faith?
I heard recently that you were bored with trading, and currently trying your hand at something else down in the USVI. Any truth to the rumors?

Thunderdog · Apr 14, 2006

Quote from trend_guy:

If you start with $100... trade trade trade and then get to $400, then trade trade trade down to $140, that is a 65% drawdown... it doesn't necessarily mean you lost 65% from starting capital. With hardcore trendfollowing, open profits tend to be very volatile, especially when pyramiding.

I know.

inflector · Apr 15, 2006

Thunderdog,

The expected drawdown was a potential of 100% of open position profits. The 65% drawdown was on profits and something close to what trend_guy showed. We still had some profits left in the position so from my perspective it was still a winning trade.

I never viewed open position profits as locked in until my trailing stop reached profitable levels.

Rearden Metal,

I'm always up to more than just trading. Currently my main focus is the trading software company, TradingBlox.

I get bored if I'm not trying something new and challenging.

- Curtis

murray t turtle · Apr 15, 2006

Quote from loza:

I saw RD in the CBOT bar long time ago. When he came in people started murmuring - "Look there goes RD" - I looked up and I saw a whale of a guy, at least 350lbs. I wonder how that he is still alive with that weight. Further how can a guy be that disciplined in trading a system and completely ignore human health and looks in consideration for a love of cheeseburgers and cheetos.

=============

RE; Look there goes RD

Loza;
Dont know for sure but will speculate on it;
discipline/skill in trading doesnt mean 100% perfection in all areas.

Your assumption, with all due respect, may or may not be correct on a cheeseburger chetos trend;
& you may have noticed some people can eat huge amounts of food & not gain much, like my skinny brother. Others differ

murray ,nickname t turtle

Thunderdog · Apr 16, 2006

Quote from inflector:

Thunderdog,

The expected drawdown was a potential of 100% of open position profits. The 65% drawdown was on profits and something close to what trend_guy showed. We still had some profits left in the position so from my perspective it was still a winning trade.

I never viewed open position profits as locked in until my trailing stop reached profitable levels.

I don't think we're talking about the same thing, exactly, but I understand what you are saying. I appreciate the response.

Cutten · Apr 21, 2006

Quote from inflector:

My largest drawdown was about 65%.

We looked at open trade profits differently than closed trade profits, so you could give up a lot if the market went straight up and then straight down.

The largest drawdown from the start of the year was around 12%.

- Curtis

Is this justified do you think? I mean if you are worth 1 million and wanna risk 20% of your net worth, why would you suddenly want to risk 60% of your net worth just because you had a good year and got to 2 million? Why does your risk tolerance chance from 20% of net worth to 60% of net worth?

IMO treating open trade profits as "the market's money" simply means that your risk tolerance fluctuates massively according to the distribution of open vs closed positions in your portfolio. From an economic & utility point of view, open profits are identical to closed profits.

It's basically an excuse to, fairly arbitrarily, massively increase your risk tolerance in the market. Someone who is risking 60-70% of their portfolio on drawdowns is clearly going to make much more during good times than someone who risks 20%. But they are going to be exponentially more likely to blow up (e.g. during an Oct 87 style gap move), lose investors etc. Gap moves happen, and during crashes or market shocks, market correlation increases massively.

The only consistent approach is to treat open profits the same as closed profits. There is no such thing as "playing with the markets money", it is a psychological fallacy. If you want to be a high roller, then be one based on *market conditions*, not whether your profits are "open" or "closed" (they are still the same in dollars and %).

jerryz · Apr 21, 2006

about a year or two ago, Richard Dennis was interviewed in either Stocks & Commodities or another trader magazine. didn't he say himself that the turtle rules don't work anymore? i also remember that he didn't seem to approve of the fact that a couple of his former turtles are disclosing his strategy to the public. he didn't actually say "i do not approve", but he certainly wasn't giving an endorsement.

Vol · Apr 22, 2006

Quote from Cutten:

Is this justified do you think? I mean if you are worth 1 million and wanna risk 20% of your net worth, why would you suddenly want to risk 60% of your net worth just because you had a good year and got to 2 million? Why does your risk tolerance chance from 20% of net worth to 60% of net worth?

IMO treating open trade profits as "the market's money" simply means that your risk tolerance fluctuates massively according to the distribution of open vs closed positions in your portfolio. From an economic & utility point of view, open profits are identical to closed profits.

It's basically an excuse to, fairly arbitrarily, massively increase your risk tolerance in the market. Someone who is risking 60-70% of their portfolio on drawdowns is clearly going to make much more during good times than someone who risks 20%. But they are going to be exponentially more likely to blow up (e.g. during an Oct 87 style gap move), lose investors etc. Gap moves happen, and during crashes or market shocks, market correlation increases massively.

The only consistent approach is to treat open profits the same as closed profits. There is no such thing as "playing with the markets money", it is a psychological fallacy. If you want to be a high roller, then be one based on *market conditions*, not whether your profits are "open" or "closed" (they are still the same in dollars and %).

If I understand correctly, and I think I do, Curtis is talking about open profit. The above quote uses "open profit" and "open positions" interchangeably. Not the same. All open positions are not profitable (obviously). When profits accrue on open positions, stops are widened and pyramiding kicks in order to allow one to take maximum advantage of a big move. Thus the upside volatility and potentially large drawdowns on <i>profitable</i> open positions.

SethArb · Apr 22, 2006

is this the same art collins who sometimes write here on ET ?

http://store.traders.com/stcov234inri.html

http://www.turtletrader.com/turtle-trading-interview.html

Cutten · Apr 22, 2006

Quote from Vol:

If I understand correctly, and I think I do, Curtis is talking about open profit. The above quote uses "open profit" and "open positions" interchangeably. Not the same. All open positions are not profitable (obviously). When profits accrue on open positions, stops are widened and pyramiding kicks in order to allow one to take maximum advantage of a big move. Thus the upside volatility and potentially large drawdowns on <i>profitable</i> open positions.

Just to clarify, I was talking about open profit. The fact remains that one's position size & risk exposure is economically identical regardless of entry price. Therefore it seems irrational to use entry price as a criteria for one's risk tolerance.