The Trading Turtle Experiment

Richard Dennis and William Eckhardt are not names you will immediately recognize. But if you are interested in becoming a successful Forex trader, it is worth reading up on them as it might change your life.

In the early 1980’s, the two commodity traders had turned $5000 into $100million. Of course, they were ecstatic and often discussed the reason for their success. Eckhart believed that it required a special ‘gift’ or trading instinct that had resulted in the profitable trades. Richard, on the other hand, firmly insisted that had nothing to do with an inherent nature but that he had taught himself how to trade by using specific moves that resulted in the right choices of when to enter or exit the market and at what price to make the move. He concluded that anyone could be taught to trade.

He decided to run an experiment. He placed an ad in The Wall Street Journal and thousands applied to learn trading at his feet. He chose a group of people of 14 applicants each with different backgrounds, ages and financial knowhow and over a period of 14 days he taught them all about Forex. He called them the ‘Trading Turtles’  after recalling turtle farms he had visited in Singapore and deciding that he could grow traders as quickly and efficiently as farm-grown turtles.

Among the most important concepts he taught them was how to implement a trend-following strategy. The idea is that the “trend is your friend”, so you should buy futures breaking out to the upside of trading ranges and sell short downside breakouts. In practice, this means, for example, buying new four-week highs as an entry signal.

At the end of the two weeks, he opened an account for each member of the group and deposited $250,000 in each account.  As a group, the Turtles personally trained by Dennis earned more than $175 million in only five years. Richard Dennis had proved beyond a doubt that beginners can learn to trade successfully.

The idea that anyone can be taught to trade Forex continues today. There are many online tutorials available today, that provide the trader with information that will guide him into successful trading. There aren’t many millionaires out there that are willing to foot the original deposit, but with the proper instruction, making money in Forex is still possible.

Forex Tips for Beginners

Top 15 Forex Terms

Forex TermsIf you are new to forex trading, check out this forex glossary of terms. Here you will find all the definitions you will hear/see while trading in the forex market. You might also check out Investopedia’s Top 300 Forex Terms [PDF]. If these are too much for you all at once, focus on learning these top 15 Forex terms:

Ask Price - the price using of which trader can purchase the base currency.

Base Currency - the first currency which is listed in any currency pair used for trading in the forex (FX) market.

Bear Market – a market with pessimistic diagnoses and declining prices.

Bull Market – a market with rising prices and more optimistic trends.

Bid Price - usually displayed as the ‘left quote’ stands for the price traders may use in order to sell any base currency

Counter Currency – the second currency in a pair and usually its value is predetermined by the opposite base currency’s value

Cross Rate – a price quote composed of any currency which is quoted against any other currency which can’t be related to USD. This quote is the combination of the individual rates for exchange 2 currencies against USD.

Day Trading – intra-day trades based on opening and closing his trading positions during one trading day and to the end of this day a trader has no any position open.

Fed – short for Federal Reserve which in its turn denotes the central banking system effecting significantly on the trends of the Forex market.

Leverage – the loan a trader takes for the FX broker which allows trading only having a small capital. In such way one can increase his profits but the risks get higher as well.

Margin – another term every trader should understand and it denotes the minimal amount of cash deposit a trader can put up for a certain transaction.

Pip – the smallest price which can be found in the last number of the currency pair rate. Commonly it is the 4th digit located after the decimal point.

Price Trend – a stable movement of the currency prices with a certain direction. Spotting trends can capitalize the potential.

Spreads - the differences between the ask and the bid prices.

Stop Loss – the trade order which closes an open trading position in automatic way for preventing losses if the FX market fluctuates against this chosen position.

Practice on a Demo Account

For every new forex beginner, besides learning forex basic knowledge, practice on demo account is very important. They can gain real trading experiences from this process. Most forex brokers offer a practice account or demo account these days. Try trading on a few different ones and see which platform you prefer. The modern day demo account is akin to what is referred to as “paper trading”. It is always wise to gain some familiarity with the investments you want to trade, and nowadays, with with the trading platforms available. All the platforms function differently so if you have chosen one, stick with it, you will only confuse yourself if you keep changing.

If you are considering moving on to the real thing, choose a platform that offers good support. If you are in doubt you could always research the reviews on a company but typing the ‘name of company’ followed by ‘review’. It is very important to choose a demo account provided by forex broker that is very similar to the real account. When you practice on demo account a while, it will be easier for you to switch to trade on real account. PROFIFOREX is a good broker which provides good demo account for beginners. Demo account is exactly the same as real one and they provide good services.

Read a Good Forex Trading Book

I have mentioned several forex trading books on this site, but one of the best is The 10 Essentials of Forex Trading: The Rules for Turning Trading Patterns Into Profit by Jared Martinez who is known as the “FX-Chief”. He is the founder of the Market Traders Institute, the worldwide leader in Forex education and frequently blogs on JaredMartinez.com. According to the book description, “No matter your level of trading experience, you can develop the skills you need to become a consistently successful foreign currency trader-from using the right trading tools and balancing equity management to trading in buy and sell zones and identifying trends and trendlines. You’ll discover what drives the Forex market and how to navigate the three stages of Forex trading: acquiring new trading rules, controlling disciplined thought, and implementing disciplined action.” One reviewer said, “This book encourages you to have a trading plan; using a selected number of indicators looking for a convergence between them. It also focuses very heavily on your mindset which is paramount for success. Irrespective of your level of knowledge and trading experience in Forex…this book is great value for all traders.”

Top 5 Common Mistakes Forex Traders Make

If you’ve ever heard the quote, “Smart people learn from their mistakes, geniuses learn from the mistakes of others,” you’ll pay attention to the mistakes forex traders have made before you so you don’t have to make them yourself. Here is a list of the top 5 most common mistakes forex traders make:

  • Inconsistent Trade Strategy
  • Lack of Knowledge
  • Lack of Discipline
  • Not Using a Demo Account First
  • Analysis Paralysis

In other words, educate yourself as much as possible. Read everything you can get your hands on and practice with demo account. The more knowledge you have, the more confident you will become in making trade decisions. Education is the best investment you can make before leaping in at the deep end. You might also want to check out forex forums like Forex Tips.

The Harvest: A Simple, Step by Step Strategy for Making $300 Per Week Trading the Foreign Exchange

A simple, step by step strategy for making $300 per week trading the Forex.

Most people believe that it is our natural right as human beings to benefit from our hard work. In days past, farmers would till the soil, sew the seed, wait for rain, weed and tend their crops and then late in the fall when the time was just right, harvest what was hopefully a bountiful crop.

Believe it or not the Foreign Exchange, as with any market, can operate the same way. If we prepare correctly, sew properly, tend our crops and then harvest in a timely fashion, every week we can enjoy a small bounty of what has become an almost four trillion dollar a day currency market.

Here’s what one reviewer had to say, “I am new to the Forex market and read eleven books on the subject over the past two months. This book is great!!! The advice, the content and the step by step instructions are clear and to the point. I did not apply the techniques to a live account yet but in my demo account I am 11-4 with a total profit 320 pips(10 trading days).
As great as the book is the real value for me was the author. Cecil responded to my every email (3 or 4) within two hours.
I cannot believe the book is only $0.99. Talk about an undervalued commodity!”

Here’s what another reviewer had to say, “I am very pleased I bought this book. There is so much phoney material in Forex and you never know what you are going to get. This book is short but has real substance. The trading method Cecil Selkirk describes is easy to understand and truly helped me. His strategy is simple and straight forward, I was able to make exactly $300 the first week, just as promised. I recommend this book to anyone who is tired of all the hyperbole out there in the Forex world. Its true he does offer an indicator package for sale at the end of the book, but its only $3.00! And it includes three great indicators and an excel calculator for position sizing. When I wrote him a question about his strategy he wrote me back within 24 hours AND he sent me the indicator package for free. No up selling, he really is just an intelligent guy trying to help others. Really a great strategy and a great, easy to read book.”

Trading in the Zone: Master the Market with Confidence, Discipline and a Winning Attitude

Mark Douglas uncovers the underlying reasons for lack of consistency and helps traders overcome the ingrained mental habits that cost them money. He takes on the myths of the market and exposes them one by one teaching traders to look beyond random outcomes, to understand the true realities of risk, and to be comfortable with the “probabilities” of market movement that governs all market speculation.

Mark began coaching traders in 1982, and has continued to develop seminar and training programs on trading psychology for the investment industry, as well as individual traders. He has been a frequent speaker at seminars across the world, as well as in the U.S., teaching traders how to become consistently successful.

If you are like most people, after your first few losing trades you set about to learn better market analysis. After your next string of losers you learned about risk management. But there’s still one more challenge to conquer&emdash;yourself.

That is the major premise of this book. If it sounds like wishy-washy psycho-babble to you, I’ll only say that I would have agreed — four months ago, before I quit my 20-year technology career, obtained a Series/7 license and joined a professional day-trading firm. I now believe most people would lose money if you gave them 50/50 odds on whether or not it was going to rain tomorrow.

In other words, successfully forecasting the market is not enough. Why not? Well, this book explains why not. It has to do with one’s sense of self-worth, one’s moral judgment of money, one’s work-ethic, one’s tendency to focus on good news while ignoring bad, and other things.

“Zone” was recommended to a friend of mine by a professional floor trader who told him, “I wish I had read it before starting two years ago. Don’t place another trade until you do.” Well said. Does this apply to investors as well as traders? Oh, absolutely! If you have ever said to yourself, “I’m not selling that stock while it’s down, I’ll wait until I have a profit in it,” then for the love of money, read this book.

Finally, read “Zone” before Douglas’ earlier work. If you still want more then read “Disciplined Trader” for a general review plus a deeper exploration into the author’s philosophical and meta-physical theories.

Trading for a Living: Psychology, Trading Tactics, Money Management

Trading for a Living Successful trading is based on three M’s: Mind, Method, and Money.

An eminent futures trader explores crucial factors in the markets that most experts overlook–time, volume and open interest–and describes little-known indicators to profitably track them. Covers all the popular technical approaches to futures, options and stock markets including Elliott Wave, oscillators, moving averages, Market Logic, point-and-figure charting. Explains why most traders sabotage themselves and how to avoid doing the same.

Alexander Elder, M.D., is a professional trader, based in New York. He is the author of several best-selling books: Trading for a Living, Come into My Trading Room, Entries & Exits, and Sell and Sell Short (all with Study Guides). He also wrote Straying from the Flock: Travels in New Zealand. Dr. Elder taught psychiatry at Columbia University. His experience provides him with unique insight into psychology of trading.

Here’s what one reviewer had to say, “Despite the over-promise of the book title and the second half of it discussing mostly technical tools, the book is quite well written. There are plenty of bright ideas, some with originality that can be attributed to the author’s M.D. and psychiatrist background.”

Elder begins with a chapter on psychology. Mind as he refers to it. In my experience, success in trading has less to do with understanding “the madness of crowds” and more to do with developing discipline. Read Mark Douglas instead.
Next, Elder spends a lot of pages giving the reader a rundown of the most common price patterns and technical indicators. Which is fine if you don’t know them, but has all but the most neophyte readers skipping over great gobs of the book.

Next, Elder trots out his two pet indicators and tells you about them. I have used them and they’re about as good as any others that you probably already know about and have already used. In other words, I wouldn’t buy the book just to get a peek at them.

Lastly, he goes into money management. Elder has said himself that he wishes he had devoted more time to this section. Once again, unless you are a complete beginner, you won’t find much meat here either.

Elder likes trading off moving averages and looking for divergences in certain indicators. Well, I have been trading a fair number of years and am here to tell you, you can do better than that. Much better.

If you’re a beginner, try reading Nison and DiNapoli/Boroden. Their material is far more effective and will have a much greater impact on your bottom line.

Technical Analysis: The Complete Resource for Financial Market Technicians, Second Edition

Already the field’s most comprehensive, reliable, and objective guidebook, Technical Analysis, Second Edition has been thoroughly updated to reflect the field’s latest advances. Selected by the Market Technicians Association as the official companion to its prestigious Chartered Market Technician (CMT) program, this book systematically explains the theory of technical analysis, presenting academic evidence both for and against it.

Using hundreds of fully updated illustrations, the authors explain the analysis of both markets and individual issues, and present complete investment systems and portfolio management plans. They present authoritative, up-to-date coverage of tested sentiment, momentum indicators, seasonal affects, flow of funds, testing systems, risk mitigation strategies, and many other topics. This edition thoroughly covers the latest advances in pattern recognition, market analysis, and systems management.

The authors (Charles D. Kirkpatrick II and Julie R. Dahlquist) introduce new confidence tests; cover increasingly popular methods such as Kagi, Renko, Kase, Ichimoku, Clouds, and DeMark indicators; present innovations in exit stops, portfolio selection, and testing; and discuss the implications of behavioral bias for technical analysis. They also reassess old formulas and methods, such as intermarket relationships, identifying pitfalls that emerged during the recent market decline. For traders, researchers, and serious investors alike, this is the definitive book on technical analysis.

About the Authors

Mr. Kirkpatrick has been a hedge fund manager, investment advisor, advisor to floor and desk traders and portfolio managers, institutional stock broker, options trader, desk and large-block trader, lecturer and speaker on aspects of technical analysis to professional and academic groups, expert legal witness on the stock market, owner of several small businesses, owner of an institutional brokerage firm, and part owner of a CBOE options trading firm. His research has been published in Barron’s and elsewhere. In 1993 and 2001, he won the Charles H. Dow Award for excellence in technical research, and in 2009, he won the MTA award for his contributions to technical analysis. Educated at Phillips Exeter Academy, Harvard College (A.B.) and the Wharton School of the University of Pennsylvania (M.B.A.), he was also a decorated combat officer with the 1st Cavalry Division in Vietnam. He currently resides in Maine with his wife, Ellie, and their various domestic animals.

Julie R. Dahlquist, Ph.D., received her B.B.A. in economics from University of Louisiana at Monroe, her M.A. in Theology from St. Mary’s University, and her Ph.D. in economics from Texas A&M University. Currently, she is a senior lecturer, Department of Finance, at the University of Texas at San Antonio College of Business. Dr. Dahlquist is a frequent presenter at national and international conferences. She is the coauthor (with Richard Bauer) of Technical Market Indicators: Analysis and Performance (John Wiley & Sons). Her research has appeared in Financial Analysts Journal, Journal of Technical Analysis, Managerial Finance, Applied Economics, Working Money, Financial Practices and Education, Active Trader, and in the Journal of Financial Education. She serves on the Board of the Market Technicians Association Educational Foundation, on the editorial board of the Southwestern Business Administration Journal, and as a reviewer for a number of journals, including the Journal of Technical Analysis. She resides in San Antonio with her husband, Richard Bauer, and their two children, Katherine and Sepp.

Reviews of the Book

This is probably the best book on technical analysis in the market. It takes you through all the indicators and oscillators you ever heard, plus some you may not be aware that exists, it talks about every pattern you know about (head and shoulder, rising wedge, symmetrical triangle, double top, and so on), it also talks about candlestick charting. Not even that but it gives you the percentage of being on the winning side if you use one indicator or the other so you can understand what are the most reliable indicators and oscillators. You will find a chapter in Fibonacci sequence and Elliott’s Wave Theory and it will give you an unbiased opinion about their rate of success.

The book it’s extremely comprehensive, I found information here that I didn’t find in any other book in technical analysis. It’s also very long, over 600 pages so it will take you a while to read it and a few good months if not years to experiment with these indicators and apply the information for your day to day trading. I think this book it’s a very good investment and I highly recommend it to anybody interested in technical analysis. If you want a “shortcut”, if you want to see the opinion of a guy who red and “digested” this book and many others over years I recommend a website you can access for free on internet. I don’t think I am allowed to put a link here but you can google “babaro22″ and you will be directed to this guy website that gives you amazing buy and sell signals in real time. He’s not a day trader, no penny stocks, no individual stocks actually, ETFs only, you’ll get a buy or sell signal every 3-8 weeks. I may be biased since I made a killing using his system but I think it’s worth giving a try.

Forex Made Easy: 6 Ways to Trade the Dollar

This Book is a Good Introduction To Forex

It was a nice introduction and isn’t portrayed anywhere in between it’s covers as being anything else. It has information to expose you to the forex market since so many are not familar with it. Much more detail and specifics are learned through forex sites, brokers etc etc but it was a good book for one interested in learning about what it is and it touches on the ways that it can be done.

Anything worth doing is worth doing well and there will always be those that “don’t get it” and those that “don’t want to get it” and those that “don’t want other’s to get it” so don’t let the reviews here keep you from reading this book or taking control of your destiny.

No book, system, software or package of any kind for any subject will meet the expectations or the needs of all the people all the time but if you read, study, practice, listen, and expose yourself with time, patience, persistence and positive thoughts then you will get something out of it. My entire family will be retired within the next 2 or so years as long as the written plan and goals continue on track.

The foreign currency market is the largest financial market in the world, and foreign exchange trading is quickly becoming one of today’s most high-profile, potentially lucrative markets. One problem is that books on the topic are complex, technically dense, and difficult for Forex novices to grasp.

FOREX Made Easy is the first book to approach the topic in a detailed yet accessible style, gradually and deliberately moving from simple to complex in easy and natural language. Author James Dicks–founder of the popular trading software 4X Made Easy–draws upon his trading knowledge to give readers only the information they need, from setting up a workstation to trading electronically.

Forex Trading Software, FAP TURBO

Get The First Self Updating Real Money Trading Robot That Is Proven To Be Profitable In Every Market Condition

FAP TURBO – The Real Money Forex Robot

This FAP TURBO Forex robot can be traded with ANY account size….BIG or SMALL! It was created by guys who tried every single Forex robot in the market…read every single Forex strategy and method available… and read every idea or piece of idea we could find. They read over 20 “strategy design” books between the 3 of them and subscribed to every single Forex publication/service available.

Yes, Automated Forex trading is possible! And YOU could do it too!

Foreign Exchange Rate Economic Indicators for GBP, USD, EUR, AUD, & CAD

Foreign Exchange Rates for the Pound Sterling, US Dollar, Euro, Australian Dollar, and the Canadian Dollar can all be partially predicted if you know what to look for. Want more exchange rate forecasts?

Pound Sterling

Be on the lookout for the the latest edition of the Rightmove house price index, which can give indications for whether or not the Sterling is going to be moving positive or negative in the future. FXwords has a complete list of UK economic indicators.

US Dollar

Michigan Confidence survey seeks to understand US consumer attitudes and expectations about the US economy by gauging how consumers feel the economic environment will change. The survey’s Index of Consumer Expectations is an official component of the US Index of Leading Economic Indicators.

Euro

The OECD Leading Indicator measures the economic outlook for the Euro-zone as a whole. According to FXwords, it is “one of the most respected international economic research institutions, the Organization for Economic Co-operation and Development (OECD) releases the Leading Indicator for early signals of economic expansion or slowdown. It takes a number of indicators known to precede changes in growth to serve as a short term forecast of Euro-zone developments. The OECD Leading Economic Index focuses less on how much economies change, but rather on the direction they are moving.”

The Pound Australian Dollar

Australia’s Westpac Consumer Confidence index, officially called the Consumer Sentiment Index, measures the level of consumer confidence and is an average of five indexes measuring different aspects of consumer fiscal health. According to FXwords, “This is one of the few indicators that are entirely expectation based. Households report their views on current buying conditions for household items and where they feel are the “wisest” places to invest savings. Views on future political policy (taxes, politicians, government) and economic conditions (wages, inflation, unemployment) are also surveyed.”

The Pound Canadian Dollar

Canada’s Ivey Purchasing Managers Index (PMI) is a monthly measure of the change in purchases by corporate executives. A headline value above 50 indicates an increase in purchases from the previous month and a value below 50 indicates a decrease, which can be a good economic indicator. FXwords has a complete list of Canadian economic indicators.

Risk Warning: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Vibration Economics

How managing a bad economy is similar to driving a car through a construction zone.

Yesterday, driving with my family in the car, there were several times when traffic ground to a complete stop due to merging lanes in construction zones. Logically I knew this didn’t have to happen if everyone within the system both had access to all information (e.g. the left lane is closed ahead) and drivers were incentivized to slow down instead of attempting to pass each other and cause clogs up ahead. The fact that it does happen and continues to happen even with full access to information (e.g. signs, cones, traffic patterns, news radio, Internet access, and CB broadcasts) could mean that drivers are incentivized to slow down the entire system in order to make sure they get ahead first.

In Mission Impossible III, Tom Cruise’s character explains his job as a traffic pattern analyst and how the act of one person’s brakes can send ripples through the entire traffic system. This is exactly what is happening in a lane-merging event when drivers are responding to brake lights and eventually stopping instead of everyone simply slowing down, merging, and passing through the lane at a reasonable rate. The less brake lights are used, the faster a group of cars will move through a slow-down event. This is because, again, of a lack of information. The driver doesn’t know whether the car in front of them is going to simply slow down and then re-accelerate or if it is going to come to a complete stop. They only have one metric to go on, the brake light.

These ripples in the traffic system mimic other waves in science and finance. We know that by reducing the speed of the vehicle and braking less, we reduce the rapid stops and starts. By doing this we are not only reducing the amplification of the wave pattern, but also changing the the frequency. The wave goes from a high-pitched baby scream to a low bass wave. Once the frequency has been adjusted (e.g. less braking, more steady movement), over time, the speed of the vehicle can be increased. The most efficient traffic is one without waves at all, with cars constantly moving, all at the same pace, but this will never occur. While I would love to fix traffic slowdowns by implementing car-to-car communication systems or a third metric to the brake lighting system, I am simply using traffic as an metaphor for economics as a whole.

It may sound counter intuitive to say that the fastest way to move through a downturn is to slow down, but that’s because it depends on how you decrease your speed. We know that brake lights cause other drivers to slow down which don’t use the brake lights such as simply letting off the gas or downshifting. Aware drivers or smart cars will also adjust in a more subtle way and while traffic may slow down overall, it may not stop and will certainly be in a better position to begin increasing speed once the bottleneck has been passed. If we could understand what the “break lights” in the economy were and how people respond to them, we may be able to help reduce their use and get the economy moving forward again with less starting and stopping.

Examples of break lights in the economy are stock selloffs, layoffs, and inventory cuts. Speculators will sell a stock before they think it will go down, which then actually causes the stock to go down, which causes other investors to also sell until the price is enticing enough for people to buy back in. Companies will layoff workers in anticipation of a downturn, even if they are not currently experiencing one. And in fear of not being able to sell current inventory, companies will stop buying goods in order to not be ‘caught with the bag.’ These are all drastic measures that cause ripple effects in the economy, slowing it down and helping to cause the very thing they are trying to avoid.

What if instead, companies simply ‘switched gears’ or ‘let off the gas’ during an economic slow down instead of braking? Wouldn’t these companies be best poised for re-accelerating in an economic up turn? Using the prior examples of stock, layoffs, and inventory cuts, here are some examples of what companies could do differently. Shareholders could simply hold stock and stop buying for a period of time in order to coast through a down turn. Companies could use any excess employees as salesman, research analysts, or focus groups for innovation to create new ideas or help find new customers. And instead of cutting inventory, companies could increase the diversity of what they buy in order to market to areas of the market that in a good economy didn’t make sense, but now does.

In fact, most successful companies already do this. Ford Motor Company outlasted hundreds of other car manufacturers not because it was better, but because it was willing to change. Groupon was originally an online collective action and fundraising company called The Point, which pivoted and began offering discounts via email. Google continually innovate and pays it’s engineers to create side projects and yet continues to grow in spite of the economy. Compare this to the pharmaceutical industry that has increased advertising spending over research and is now in crises as their development cycle has run it’s course. Another example is Southwest Airlines, which for most of its history did not layoff it’s workers and remained profitable while it’s peers went through bankruptcy proceedings. Layoff alternatives like early buyouts, early retirements, across-the-board budget cuts, hiring freezes, and eliminating overtime pay only serve to hurt the top performers – the rest of the company is only there for a paycheck anyway. It all comes down to proper management and leadership.

« Older Entries