Turtle Soup-For Swing Trading

In the 1980's a group of traders known as the turtles used a system that basically employed a 20-day breakout of prices. If the prices made a new 20-day high, one would buy; if the prices made a new 20-day low one would sell..

It tends to work in the long run if traded on a large basket of markets because there are high odds that something unusal would occur in the market somewhere. The system is very dependent on capturing an extraordinary event or significant trend. However it also tends to have large drawdowns and a low win ratio due to significant number of false breakouts.

This where TURTLE Soup strategy oppurtunity lies.

This method identifies those times when a breakout is false and tend to trade for a reversal.

Here are the rules:

For Buys (for Sells are reversed)

1. Today must make a new 20-day low, the lower the better.
2. The previous 20-day low must have occurred at least 4 trading session earlier.
3. After the market falls below the prior 20-day low, place an entry buy stop 5-10 ticks above the previous 20-day low. This buy is only for today.
4. If this buy stop gets filled, immediately place a good till cancelled stop-loss sell one tick under today's low.
5. As the position becomes profitable, use a trailing stop to prevent giving back profits.

Some trades will last 2 or 3 hours and some will last a few days. Its basically trading reversals.

Strategy developed and traded by L.A. Connors and L.B. Raschke.