Turtle Trading in the Crypto Market: A Viable Strategy?

Turtle Trading, a trading system that originated in the eighties has become a popular trading system now; because of the disciplined approach adopted and high success ratio in conventional financial markets. As the cryptocurrency market continues to grow and attract investors worldwide, the question arises: Does it still hold that Turtle Trading principles can easily be adopted since the cryptocurrency market is so easy to manage? To do this, first of all, we discuss the theoretical provisions of Turtle Trading, give insight into the strategy’s past performance, then try to evaluate its relevance for the modern world, especially concerning cryptocurrencies.

What is a Turtle Trading Strategy?

Turtle Trading is an implementation strategy that provides optimal direction for a trading account just as any professional trader would. This approach was named after ‘Turtles’ and came into use during the 1980s, and it’s characterized by specific rules about trading entries as well as exits. 

In a systematic manner, as a trader, you do not make decisions based on the emotional feelings, but rather follow these rules at all times. It simply means that one has been provided with a set of blue prints featuring the most proper routes to take while investing.

It is the Turtle Trading strategy that provides a disciplined way to carry out the decision-making in the market. Then, when strictly adhering to the provided rules, the likelihood of success would be higher for the trader.

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How Does Turtle Trading Work? 

Turtle Trading is a mechanical trend-based trading methodology to enable the trader to reap big rewards from long swings in the markets of varied securities. It involves a defined set of rules and guidelines to help a trader understand when to open trades, how to operate in the market, and when to close the trades, respectively. 

As for the Turtle Trading strategy, it teaches a specific trend following method, responding to the phrase ‘the trend is your friend.’ For this purpose, Turtles expects to buy futures with a move to higher trading ranges and, conversely, expects to short sell those that show a move to the lower trading ranges. For example, Turtles could use a four-week high as an entry signal that meets the criteria because it is new information and meets the criteria.

How Can Turtles Optimize Their Trading Strategy for Maximum Profit and Risk Management?

• In the strategy aspect, it notes that trading decisions based on price data are more preferable than depending on outside media commentators on TV or newspapers.
• We recommend that turtles adjust the input settings for buy and sell signals as needed, as the authors have found that different markets may require different settings based on personal preferences of the turtle trader.
• Just like entry strategies, the traders need to have an exit plan.
• One uses the value of volatility based on the average true range (ATR) to scale positions appropriately. One can assume increased exposure in more significant positions in less volatile segments, while minimizing exposure in more fluctuating ones.
• Turtles in Turtle Investing also see that risk management holds paramount importance, with them observing that they should never risk more than 2% of their account on a single trade.
• While pursuing fairly robust returns, someone warned the Turtles that they might experience fairly steep losses at some times. This flexibility is necessary for potentially attaining higher returns, but the key is to remain comfortable with such swings.

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Are Turtle Trading Rules Worth Trying? 

The Turtle Trading rules successfully balanced a trend-following system, bringing remarkable success in the early years, particularly when applied to traditional trade and commerce avenues. Therefore, traders who are searching for a plan to implement in trading can consider them as a starting point.

• Systematic Approach: Specific sections of the rules are sequential and rational including reducing emotion inputs for trading decisions and ensuring the continuity of trading activities.
• Trend Following: Turtle Trading does not seek to exploit even small reaches but aims at big reach as a result of long trends.
• Risk Management: This approach focuses on risk control by adjusting the amount of capital invested in a specific trade by using trailing-stop loss orders to manage risk.
• Diversification: Diversification is another way to grow in size through expansion, as companies use this strategy to spread risks and avoid depending on a specific position.

How To Make Turtle Trading Applicable For Crypto Trading?

When applying Turtle Trading to cryptocurrency, adapting it to the crypto market’s unique challenges can be difficult due to digital currencies’ volatile nature and prices. Here are some steps you can take to make Turtle Trading more suitable for trading cryptocurrencies:

• Adjust Position Sizing and Volatility: Since the Cryptos are highly volatile in trading, the initial position sizing as applied in the traditional markets seems to need some modifications. Reduction of the expectant profit for position sizing by accessing a smaller percentage of the account equity or the N-Unit because of the higher volatility.
• 24/7 Market: The early introduction of cryptocurrencies also eliminates the bar that dictates that trading typically happens between 9:30 and 4 pm. 
• Consider Alternative Timeframes: While the Turtle Trading rules were created long ago, the strategies were meant for daily and weekly charts.
• Evaluate Liquidity: They are rather skeptical about some cryptocurrencies, particularly due to low liquidity that cannot cover large positions. 
• Backtest and Optimize: Utilize historical cryptocurrency data to backtest the new Turtle Trading pattern for stop-loss strategies. Update entry/exit indicators, investment amounts, and stop-loss levels based on past data for crypto trading.