
What is Turtle Trading? A Trend-Following Strategy for Crypto Investors
1. Introduction to Turtle Trading
Turtle Trading is a trend-following strategy developed by Richard Dennis in the 1980s. He believed that anyone could become a successful trader by following a specific set of rules. To prove this, he trained a group of novices, called "the turtles," who went on to earn $175 million in five years.
2. How Turtle Trading Works
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Following market trends: Utilizing technical indicators like Moving Averages (MA) and Donchian Channels to identify entry and exit points.
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Strict risk management: Limiting risk to no more than 1% of capital per trade to protect against significant losses.
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Diversifying investments: Spreading investments across various sectors and ecosystems to minimize risk.
3. Application in the Crypto Market
In the cryptocurrency market, Turtle Trading helps investors identify trends using the 50-day MA. For instance, if Bitcoin's price rises above the 50-day MA, it may signal a buying opportunity; conversely, if it falls below, it may indicate a selling point.
4. Pros and Cons of Turtle Trading
Pros:
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Eliminates emotional decision-making.
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Easy to implement for beginners.
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Applicable across various markets.
Cons:
Requires high discipline and patience
May miss short-term trading opportunities.