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Way of the Turtle: The Secret Methods that Turned Ordinary People into Legendary Traders (Business Books) Hardcover – March 9, 2007
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From the Back Cover
After nearly 25 years, the turtles come out of their shells.
Way of the Turtle takes a never-before-seen look at the legendary Turtle Traders and the famous experiment that made them millions. Curtis Faith, the most successful member of this elite group, breaks the silence to reveal the rules, timing, risks, rewards, and secrets to his biggest trades and 100 percent annual returns. Sharing behind-the-scenes insights and step-by-step techniques, Faith shows how you can use the Turtle Way to achieve enormous profits-whatever your skill level.
“The most successful turtle was apparently Curtis Faith. Trading records show that Mr. Faith, who was only 19 when he started the program, made about $31.5 million in profits for Mr. Dennis.”-Stanley W. Angrist, The Wall Street Journal
About the Author
Curtis M. Faith was the most successful of the Turtles, earning more than $30 million for Richard Dennis while trading as a Turtle. He is one of the industry's leading pioneers of mechanical trading systems and software. Faith is currently head of research and development for Trading Blox, LLC, a company that specializes in software for trading system analysis and development. He also runs an Internet forum for mechanical system traders at tradingblox.com/forum.
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Top Customer Reviews
Faith spells out the Turtle trading method in detail, providing a template for a more general approach known as trend following. Most helpful is the way he breaks down the method into components: entry criteria, criteria for adding to positions, position sizing, stops, and exits. A particularly interesting chapter draws upon his Trading Blox software to update trend following research and illustrate the results of several systems in recent markets.
If I had to identify a single theme for the book, it might be this: Relatively simple trading systems can provide a tradable edge, but it is psychologically difficult for traders to follow these systems and exploit that edge. Faith illustrates this with the variability in the results among the Turtle trainees (despite the fact that all of them were given the same system rules). He also provides a detailed accounting of the psychological biases that make it difficult to follow systems that ride relatively few big winning trades for an overall positive expectancy.
Among the gems provided by Way of the Trader is a discussion of stop loss criteria and surprising research about what works and doesn't; a concluding chapter that lays out the Turtle rules in manual form, along with execution tactics; and an insightful presentation of the reasons most traders do not succeed in trading. Faith questions both discretionary trading--trading without systematically testing one's trading ideas--and the notion that trading systems eliminate emotions from trading. He makes it very clear that traders need an objective edge in the marketplace *and* the psychological fortitude to ride out inevitable drawdowns on route to exploiting that edge.
I don't think it's necessary that one be a dedicated trend follower to greatly benefit from this book. Besides being a fun and interesting read, it is an excellent introduction to the various components of trading methods and how they impact outcomes. It is also a first-rate integration of the psychology and techniques of trading. Perhaps most important of all, Way of the Turtle is an illuminating presentation of risk management and consistency, two major contributors to market success.
There are no glaring weaknesses to the book that I can detect. Personally, I would have enjoyed a discussion of the pros and cons of trend following at shorter time frames. I also would have liked a discussion of the capital required to properly implement the Turtle approach, given that success derives from holding a diversified portfolio. Those, however, are small quibbles when compared to the book's strengths. The author's chapter elaborating the Turtle method as a life philosophy is, by itself, worth the price of the text.
In short, Curtis Faith has written the definitive book on the Turtle experience and way of trading. It's hard to imagine anyone reading this book and not coming away from the experience impressed with the blend of research and psychological strength that goes into trading success.
Way of the Turtle is less a history lesson about the Turtles (for that you can read The Complete Turtle Trader), and more a deeper discussion of the philosophy behind the trend following methodology Dennis and Eckhardt taught them and the implementation of that system. The Turtle system has been published in other formats and other places before now, but Faith does more than that in Way of the Turtle. He talks considerably about the requirements for successfully implementing the system and how easy it is to fail with it.
To my mind, Way of the Turtle is a book of three primary parts. One is a really interesting discussion of the psychology of traders and the markets. Another is a very thorough exploration of system development, testing, and performance measurement. The final part is specific discussions of the Turtles and their methods.
The issue some readers might have is the manner of presentation of the parts.
I personally found the chapters on system design, testing, and evalutation to be the most unified and consistently coherent of the book. They progress well and present some things that I have not previously seen in comparable discussions. I found Faith's coverage of the material to be an excellent advancement into somewhat more complex approaches for one who has a decent basic grounding. His discussion of the subject is, to my mind, a virtual must read for anyone look to develop and/or evaluate trading systems.
In terms of trader and market psychology, the early chapters of the book are an outstanding exposition on the different biases and mental states that we all go through as market participants in one fashion or another. It was this material, so plainly laid out, which got me very excited to be reading the book. It really is a fantastic look at the things we have in our heads which can create so much havoc in our trading, and Faith frequently cites examples of these things through the remainder of the book in talking about his and other Turtles' successes and failures trading their system.
It's in the third subject of the book where many readers may find it lacking. Way of the Turtle, as I noted at the outset, is not a history. While Faith does clearly deliniate the full Turtle system he spends relatively little time talking about the grand experiment which the Turtles were meant to be. Rather he provides views and opinions from his own perspective. Necessarily, that makes for a narrow scope. This isn't necessarily a bad thing. One just needs to realize that going in and be prepared to find it in little bits scattered throughout the text.
Here's the biggest rub - at least for someone expecting to come away with an immediately useful trading system. Even though the book does tell you exactly how the Turtle system worked, don't expect it to be something you can use yourself. It was specifically designed for use across an array of markets by traders with a large capital base. By that I mean hundreds of thousands of dollars, minimum. As such, the vast majority of readers will not be in a position to make use of it.
So it's a question of expectations. Are you looking to become a new Turtle and trade just like them? If so, you're probably going to be disappointed. If, however, you are looking to learn from the experience and education of someone who was there, who learned a great many lessons under the tutelage of a pair of legendary traders, then you will probably come away from reading Way of the Turtle quite satisfied.