The Turtle Trading Rules: What They Were, and Do They Still Work?
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The full rules from 1983, worked through on one trade, and an honest look at what has changed since
Published: 17 October 2026 · Last updated: 17 October 2026 · By Spencer Li, CFTe
In 1983, commodities trader Richard Dennis made a bet with his partner William Eckhardt. Dennis believed trading could be taught, and Eckhardt was not so sure. So Dennis hired a group of beginners, trained them for about two weeks, gave them real money, and called them his Turtles.
The rules they were taught are simple enough to fit on a few pages. The Turtles bought when a market broke above its highest price of the past 20 or 55 days, and sold short when it broke below the lowest. They sized every position by how much that market normally moved, so that one day’s typical move cost about 1% of the account. They cut losers at a fixed distance, added to winners in small steps, and exited only when price broke back through a 10 or 20-day low.
Do the rules still work? The slower version has held up far better than the fast one, and the original 20-day signal faded within a few years. Almost every writer who studied the system agrees its real strength was the position sizing. Here is the whole system in four parts: how they sized, entered, added and exited.
Where do the turtle trading rules come from?
The rules most people quote come from a document called The Original Turtle Trading Rules, published in 2003 by Curtis Faith, one of the original Turtles. It is still free online, and it is the closest thing we have to a primary source.
The story itself has some fog around it. Eckhardt, asked about the bet in a 2011 interview, said: “Various eyewitnesses to this episode disagree.” He added a detail most retellings skip. More than half the course, he said, “revolved around developing the right attitude, guarding against debilitating emotions, how to think about risk.” And then: “Teaching the turtle system itself doesn’t take very long.”
Keep that in mind as you read the rules below, because by his account they took the least time to teach. If you want the man behind the experiment, our post with Richard Dennis’s trading tips covers his story and his best-known quotes.
Size: how did the Turtles size a position?
Everything starts with a number they called N. N is the average daily range of a market over the last 20 days, which most traders today know as the average true range, or ATR. Faith’s rules smooth it a little each day, but the idea is the same.
Then comes the unit. In Faith’s words: “Units were sized so that 1 N represented 1% of the account equity.” In plain terms, a unit is however many shares or contracts it takes for one normal day’s move to cost you 1% of your account. A calm market gets a bigger unit, and a wild one gets a smaller unit, so every position carries roughly the same risk.
There were limits on how much the Turtles could hold at once:
- 4 units in any single market
- 6 units in closely correlated markets
- 10 units in loosely correlated markets
- 12 units in one direction, long or short
And there was a rule for bad runs. Each time the account fell 10%, the Turtles traded as if the account were 20% smaller. That rule shrinks your bets exactly when you are most likely to be wrong about your system. Our post on risk of ruin shows what that does over a long run.
Enter: what were the System 1 and System 2 entry rules?
The Turtles traded two systems, and the table below sets them side by side.
| System 1 (shorter term) | System 2 (longer term) | |
| Entry | Price exceeds the 20-day high (long) or 20-day low (short) | Price exceeds the 55-day high or 55-day low |
| Skip rule | Skip the signal if the last 20-day breakout would have been a winner, but take the 55-day breakout as a failsafe | Take every breakout |
| Initial stop | 2 N from entry | 2 N from entry |
| Adding | One more unit every ½ N in your favour, up to 4 units | Same |
| Exit | Price breaks the 10-day low (long) or 10-day high (short) | Price breaks the 20-day low or 20-day high |
The skip rule in System 1 confuses most people. Faith’s rules counted the last breakout as a loser if price “moved 2N against the position before a profitable 10-day exit occurred.” The idea was that a breakout right after a winning one was more likely to fail. But skipping risked missing a huge trend, which is why the 55-day breakout stayed as a backstop.
The Turtles entered the moment price traded through the level, without waiting for the close.
If you want a daily routine that keeps your own entries planned instead of rushed, our free 15-Minute Swing Trader’s Checklist walks through it. Get the free checklist →
Add: how did the Turtles add to winning trades?
They added one unit at a time as price moved their way, every half N, and moved the stops on all earlier units up so the whole position sat 2 N below the latest entry.
A trader on an algorithmic trading forum was coding the rules and wrote: “The part I am struggling with in understanding N and risk and position size.” It is the most common confusion, so here is one trade worked in full.
Say a hypothetical USD 100,000 account buys a stock breaking out at USD 100, and N is 2.50.
- One unit: 1% of the account is USD 1,000, and 1,000 divided by 2.50 is 400 shares. That is USD 40,000 of stock, or 40% of the account.
- The stop: 2 N is USD 5.00, so the stop sits at USD 95. If it is hit, 400 shares lose USD 5.00 each, which is 2% of the account.
- The adds: further units go in at 101.25, 102.50 and 103.75, each half an N apart.
- The new stop: with all four units on, every stop moves to 2 N below the last entry, which is 98.75.
Now the part that catches people out. If price falls straight back to 98.75, the four units lose 1.25, 2.50, 3.75 and 5.00 per share. Across 400 shares each, that is 0.5% + 1% + 1.5% + 2% of the account, or 5% in total, rather than 2%. That is the risk of a fully loaded position in one market.
And look at the size. Four units of this stock are worth 160% of the account. The Turtles traded futures, where that kind of exposure takes only a small margin deposit. On ordinary shares bought with cash, you simply cannot follow the rules at full size.
Leave: when did the Turtles exit?
Losers left at the 2 N stop, “each time, every time, without fail,” as Faith put it. Winners left only when price broke back through a 10-day low for System 1, or a 20-day low for System 2.
That exit is the hard part, and Faith says so directly: “Waiting for a 10 or 20 day new low can often mean watching 20%, 40% even 100% of significant profits evaporate.” Most breakouts fail, so most Turtle trades were small losses. The system only worked because the few big trends were held long enough to pay for all of them. Take profits early, and the arithmetic falls apart. Our post on trend following shows why this style feels wrong most of the time, even when it is working.
Do the turtle trading rules still work today?
The slow parts have aged far better than the fast parts.
The fast signal faded first. Van Tharp, writing in 1998, noted that the Turtles started with 20-day breakouts and moved to 40-day ones as the 20-day signal decayed. Perry Kaufman later tested a version of the rules on copper from 1980. The faster system, he found, “shows profits only for the first part of the 1980s, the period in which Dennis would have decided to form the Turtles.” The slower one “shows steady profits for the entire 38 years.”
Costs are the second problem. A trader asked online in late 2025, “Why do breakout strategies collapse after fees?” The honest answer is that a short breakout system trades often and loses often, so every commission and every bit of slippage comes out of a thin margin. That is why a false breakout hurts a 20-day system far more than a slow one.
And the market matters. The Turtles traded a wide basket of futures, from bonds to coffee, which can trend for months. A single stock or a stock index fund does not offer that variety.
What has held up is the sizing. Tharp was blunt. “The success of the Turtles’ trading had much more to do with their position-sizing algorithm, as is usually the case, than it did the fact that they traded a channel breakout system.”
For most traders, that is the lesson worth keeping from the experiment. Sizing every trade by volatility, limiting how much you hold, cutting your size after a losing run and letting winners run are habits that work across almost any system, including a much slower one.
So, if you tried to follow the Turtle rules tomorrow, which part would you break first? Would it be the 2 N stop, the adds, or watching half your profit disappear while you wait for the 20-day low? For more on building a system you can actually follow, see the guide to trading strategies.
FAQ
What are the turtle trading rules?
They are the rules Richard Dennis taught his Turtle traders in 1983. Buy 20 or 55-day breakouts, and size each position so a normal day’s move costs about 1% of the account. Stop out at 2 N, add every ½ N up to 4 units, and exit on a 10 or 20-day reverse breakout.
What is N in turtle trading?
N is the 20-day average true range of a market, a measure of how much it typically moves in a day. It sets both the position size and the stop distance.
Did the turtle traders make money?
Several of the original Turtles went on to long trading careers, and the experiment is widely told as a success. Eckhardt himself noted that eyewitness accounts of the original bet disagree.
Does the turtle trading strategy work on stocks?
The rules can be applied to stocks, but they were built for a broad basket of leveraged futures. On cash stocks, full Turtle size is often more than the account can hold, and a single stock offers less variety of trends.
Where can I read the original turtle trading rules?
Curtis Faith published The Original Turtle Trading Rules free in 2003. His 2007 book Way of the Turtle covers the same rules with more background.
Go deeper
The Turtles proved that rules can be taught, and that following them is the hard part. The free 15-Minute Swing Trader’s Checklist has the daily routine, the questions to ask before every trade, and the five rules that protect your account. Enter your email and we’ll send it over:
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About the author. Spencer Li is the founder of Synapse Trading and a Certified Financial Technician (CFTe) with over 15 years of trading across stocks, forex, crypto, commodities, and bonds. His trade log is public: every trade since April 2024, dated, losses left in. He teaches low-risk swing trading in 15 minutes a day, one system for any market.
Educational content only, not personalised financial advice. Trading carries risk, including loss of capital. Past performance is not indicative of future results. Synapse Trading is not licensed or regulated by MAS.
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Educational content only, not personalised financial advice. Trading carries risk, including loss of capital. Past performance is not indicative of future results. Synapse Trading is not licensed or regulated by MAS.
