The turtle trading strategys profitability in the current market Literature review

The turtle trading strategys profitability in the current market - Literature review Example It is a complete trading system that is based on mechanical trading hinged on market price signals. The following aspects of the trades were all accounted for and covered by the rules: what to buy and what to sell, or the markets; how much of a particular market to sell or to buy, or the size of the position; the timing of the buying and the selling; the stops, or the timing of bailing out of positions where the trader is in a losing proposition; the exits, or the timing of the bailing out of positions where the trader is winning; and the selling and buying hows, which comprise the tactics for the trading exercises. Moreover, the turtles trading system focused on a number of trading instruments, all of them markets that are considered liquid. In the Chicago Board of Trade, the turtles traded in 30 year and 10 year Treasury bonds and notes. In the New York Exchange for Sugar and Cocoa, the turtles traded in cotton, coffee, sugar and cocoa. In the Chicago Mercantile Exchange, the turtl es focused on a select group of currencies, which included the Japanese Yen, the Canadian Dollar, the British Pound, and the Swiss Franc. The list also included the S&P 500 Index of Stocks, as well as the 90 day US treasuries. In the Comex, the focus were gold, copper and silver. Finally, in the New York Mercantile Exchange, the focus were on unleaded gas, heating oil, and crude oil (Faith 2003, pp. 7-11; Carr 2009; Lauer 2007; Adamu and Phelps 2010; Anderson n.d.; FinanceManila 2007; Stockopedia Features 2011; Carr 2009; Business Insider 2013; Kasera n.d.; Au.Tra.Sy 2010; Faith 2003; TradingBlox.com n.d.; Powerstocks Research n.d.; Palantir Technologies 2012; Kowalski 2013; Power 2012; Trading Blox n.d.). The turtles trading system takes its cue from the highs in the prices for 22 days and for 55 days. There are two parts to the trading rules. In system 1, the trader assumes a long position on a market whenever the price goes beyond the high for the preceding 20 days. Conversely, t he trader takes a short position whenever the price goes down below the low for the past 20 days. In the case of the last breakout resulting in a trade that is a win, the breakout signals are ignored. That said, the trader would record an entry on day 55, in order not to miss out on major moves in the markets. The exit for system 1 is when the price is a low for 10 days when the position is long, and the high for 10 days when the position is short. In system 2, the benchmark is 55 days, taking a buy position when the market price goes up beyond the high for the past 55 days, and a sell position when the market price goes below the low for the past 55 days. The exit signal for this system 2 mode is when the price is the low for the past 20 days for the long position, and the high for the past 20 days for the short position (Stockopedia 2013; Business Insider 2013; Kowalski 2013; Kasera n.d.; Au.Tra.Sy 2010; Carr 2009). An example makes the trading rules for the turtle trading system clear. In an instance where the price of a stock, say Nokia, goes up to a level that exceeds a hypothetical 20-day range of 3.40 US dollars on the high side, then that is a signal to buy. When the time comes, on the other hand, that the stock price dips below the low for a ten-day period, then that is the time to sell the Nokia stock. It is easy to see