Hi all, There is a system of trading which appears to be guaranteed to make money - so long as you follow the rules. It has been around for a long while and came from a bet between two professionals - as to whether you coud take a slack handful of people off the street and turn them into profitable traders.
That system is known as “Turtle trading” - yet it is hardly ever adopted by anyone. WHY ?
Well it is a trend following system and one of it’s properties is that hardly any bets are successful !
I believe a figure of 9 losers out of ten bets is the generally accepted proportion !
Yet the money management rules make it profitable in the long run !
A variant is traded successfully by one of our members, I believe.
Money management relies on pyramiding in to the trade and moving stop-losses forward at specific intervals, to lock in profits, although eventually the position is closed for what may be regarded as a “huge loss”, although in overall terms, the bigger the final “Loser” the bigger the profits previously “locked in”.
The mental trick lies, it would seem in refusal to “Take ownership” of unrealised profits. “The money is not yours until it is cashed” being the principle.
Our own protagonist (who will reveal himself if he so wishes) states that the only time he voluntarily closes a bet, is if he has ne more “Margin” left in his account and needs some to pyramid in again !
Now clearly, this is in striict contravention of the oft hackneyed “1%-2% rule”, yet it is both incredibly profitabl on thise few winners and at the same time “completely safe” - (Provided those odd " Winners" continue to turn up ! )
The fact is that the system is a kind of “Martingale in reverse” type system !
SO all morning, I have been wondering whether those same money management priciples can be applied to “ordinary trading”, where winners are more frequent, or whether it is inherent in the “Trend following” part of the system that some property exists which could not be transferred to other methods of entry and exit.
What say we ?