 Lessons From An Original Turtle |
| Review Date: March 31, 2007 |
| Reviewer: Brett Steenbarger, Naperville, IL USA |
Curtis Faith's Way of the Turtle is a significant contribution to the trading literature. As other reviewers have noted, it works on several levels: It is an engagingly written first-person narrative of one of the most interesting experiments in trading, but it is also a thoughtful presentation of the various ingredients of trading success.
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. |
Best Trading Book Overall!
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| Review Date: April 2, 2007 |
| Reviewer: Biz Reader, OK, USA |
This is one of the best overall trading books that I have read. The book covers the story of the Turtles, which for those who don't know was a group of people from different walks of life assembled out of a newspaper add to trade a system from two of the most successful traders in the world. This was done on a bet that these two guys could raise traders like people raise turtles, thus the Turtles. Curtis Faith, the youngest and most successful of the Turtles working for Richard Dennis at the time, starts out by telling his story from the selection process to trading as a Turtle in a brief history.
One of the more interesting aspects of the book was the focus on the psychology of trading. As a trader I can agree that psychology plays a large role in a person's success as a trader. Most books want to focus on the system and nothing else. The system is only one part of trading. The reason Curtis talks about one's psychology is that he said during the first month of trading as a Turtle he was the only one who stuck to the rules of the system! He said some of them just couldn't trade the system for one reason or another and eventually didn't make it. It was really interesting. Trading is a business that at times your mind will work against you.
There are 15 chapters in this 274 page book and here is a partial list of some chapter titles. Risk Junkies, Taming the Turtle Mind, Think Like a Turtle, Risk and Money Management, Turtle-Style Building Blocks, Turtle-Style Trading: Step by Step, Bulletproof Systems and Mastering Your Demons. In these chapters you will not only find what was originally taught to the Turtles but also some wisdom on different types of systems and what it takes to be a successful trader. There is a different look at position sizing and risk management from what most others teach along with all the original rules to trend following the way that Richard Dennis and Bill Eckhardt taught the Turtles. It is well written in a simple manner that gets to the point. Included are also some personal notes about Curtis' life and some business ventures that have not been as successful as his trading was.
All of that said this is not like some other books that are full of hype and don't reveal anything about actual trend following rules. This book lays out how to trend follow along with the realities that trend following ain't as easy as it sounds. Curtis mentions in the book how at one time he had a 70% drawdown and still kept trading the system!
Just a personal note here. A few years ago I had bought a package from Russell Sands, another one of the Turtles, on the Turtle method of trading and spent if I remember correctly around $200. This book is a bargain compared to that and it also includes some aspects that were not covered by Mr. Sands. I believe this book will be of benefit to anyone who is serious about learning more about trading and they will learn some stuff about themselves in the process. I highly recommend it.
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Being A Turtle Doesn't Mean You Are Slow
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| Review Date: September 20, 2008 |
| Reviewer: Ameen Kamadia, Houston, Texas |
Take a group of intelligent people, teach them a classic trend following trading system, give them some money to trade, and what do you have? One of the most fascinating trading stories ever told.
This book is an eyewitness account of the story of the Turtles, told by the most successful of the bunch. And while the book does not go into details about the story it does something better- it explains how they made money and how anyone can use their strategies to make money as well as or better than they did.
The author not only details the systems used by the turtles but also describes how systems work, why they work, the problems with system testing, and how to effectively create your own trading system.
The story of the turtles begins in chapter 2 and is continued throughout the book. Part story, part trading text book, the author has done a great job explaining how to trade well using simple systems. If the reports are correct, the author made $31 million while trading as a turtle and several turtles are still make millions managing large hedge funds using the same strategies explained in the book.
The four main points of the Turtle Class:
1. Trade With An Edge: have a positive expectation.
2. Manage Risk: control risk so you can continue to trade
3. Be Consistent: execute your plan
4. Keep it Simple: catch every trend
Think Like a Turtle
1. Trade in the present
2. Think in terms of probabilities not prediction
3. Take responsibility for your own trades.
This book belongs in every trader's library even if you do not trade using a system. But after reading the arguments for systems, I cannot imagine why anyone would do so without one, or several. This book, along with Trade Your Way to Financial Freedom
has helped me create the 3 systems that I trade. Not only has trading with systems made me more money, it has lowered my risk and helped me sleep better at night. If you want to read more of my reviews of stock trading and investment books, you can get them[...] |
A Very Good Book - Depending on What You're After
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| Review Date: February 17, 2008 |
| Reviewer: John Forman, Boston, MA USA |
If the term 'Turtles' has you scratching your head, then I will start by saying that they were a group of students brought together by legendary trader Richard Dennis (featured in Market Wizards) in the mid-1980s as part of an experiment to see if successful trading could be taught. Dennis and his partner William Eckhardt (featured in The New Market Wizards) selected two classes and taught them their trend following methodology, then provided each with trading capital and set them loose on the markets.
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. |
Masterwork
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| Review Date: April 11, 2007 |
| Reviewer: Kris Carlson, Fenton, MI United States |
This is the best book on systems trading I have ever read; and one of the best on trading in general. Written by Curtis Faith, who was named by The Wall Street Journal as the most successful turtle in the experiment, it has incredible insights into market behavior and the reasoning behind the breakout trend following system used during the experiment. Every part of this book is an important work, right down to the Acknowledgements, Forward, Preface and Introduction. Question after 25 year old question is answered directly from the horses mouth. It couldn't have been written better if Richard Dennis had written it himself. I sincerely hope Mr. Dennis writes a book before he cannot. Hey Rich, dictate it and let someone else write it. Curtis has some intersting things to say about his feelings on the outcome of the turtle experiment. After narrowing down the field considerably, some could still not follow the rules. Proving that not everyone can trade successfully even after they have been taught a winning system. There is more to trading successfully than just a winning system. Consistency and Discipline are the keys.
This book is not like any other trading book I have read. I can think of only one other book that I have read that discusses systems trading with such insight. The main problem with the other book is that a lot of curve fitting, or over optimization, takes place in the discussions of systems development. I'm leaving the name of the other book out because it was written by a guy that did something rather outrageous to show what is possible when trading futures. Even he admits it was possibly the worst thing he did because he gave people the impression that what he did could be repeated often.
Back to Way of the Turtle. The chapters on systems developement are going to become legendary. Curtis introduces a couple of "robust" measures that I'm sure will come to be the standard; and possibly open the door for even more robust measures. What he calls R-cubed (a more robust measure of Risk/Reward than the MAR ratio) and RAR% which gives a more Robust Sharpe Ratio. He discusses the merits of system testing, strengths, and most importantly, their limitations. To those who poo-poo backtesting on historical data he poses the question, "what is the alternative?" Know the strengths and weaknesses of backtesting and understand the role of robust statistics and you will be able to develop systems that will perform well in the here-and-now.
The sections on cognitive biases are worth the price of the book; and so is the bonus chapter with the Original Turtle Trading Rules. How Curtis connects certain market ideas like support and resistence to the cognitive biases is masterful. Being someone who appreciates mathematics and behavioral finance, I view this book as the first of it's kind. It is not just a book by a former turtle. It is much more than that. The insights are nothing short of genius.
Thank You Curtis! |
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