In the history of trading, few stories are as fascinating as the tale of Richard Dennis and the Turtle Traders. In the 1980s, Dennis, a legendary commodities trader, set out to prove that trading success was not about natural talent, but about following rules and discipline.
To test his theory, he recruited a group of novices, taught them his trading system, and gave them real money to manage. This group became known as the Turtle Traders—and they went on to earn millions, forever changing how people think about trading.
This article explores Dennis’s career, the origins of the Turtle experiment, their methods, results, and lasting influence.
Richard Dennis: The Prince of the Pit
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Born in 1949 in Chicago.
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Started trading as a teenager at the Chicago Mercantile Exchange.
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Famously borrowed $400 to begin trading; turned it into $200,000 by age 23, and later into $200 million.
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Became known as the “Prince of the Pit” for his dominance in futures markets, especially commodities like soybeans and currencies.
Dennis believed that markets were driven by trends—and that disciplined strategies could capture those trends profitably.
The Great Debate: Nature vs. Nurture
By the early 1980s, Dennis was in a debate with his friend and partner, William Eckhardt.
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Dennis’s View: Anyone could be taught to trade successfully if given clear rules and discipline.
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Eckhardt’s View: Trading required special intuition and innate skill.
To settle the debate, Dennis proposed an experiment.
The Turtle Trader Experiment
Recruitment
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In 1983, Dennis placed ads in newspapers like The Wall Street Journal and Barron’s.
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The ad invited people from all backgrounds to apply, with no trading experience required.
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Hundreds applied; a few dozen were interviewed.
The Chosen Group
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About 14 people in the first group and 13 in the second were selected.
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They came from diverse backgrounds: a security guard, a blackjack player, an accountant, and others.
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Dennis called them his “Turtles,” after a turtle farm he had seen in Singapore—because he believed he could “grow traders just like raising turtles in a farm.”
Training
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Dennis and Eckhardt trained them for just two weeks.
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They taught a rules-based trend-following system.
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After training, each Turtle received trading accounts of $500,000 to $2 million to manage.
The Turtle Trading System
The rules were mechanical, designed to remove emotion:
1. Trend Following
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Buy when markets break out to new highs, sell short when markets break down to new lows.
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Ride the trend until it ends.
2. Diversification
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Trade across commodities, currencies, bonds, and stock index futures.
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This reduced risk and captured global opportunities.
3. Position Sizing
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Use a formula based on volatility (the “N” value) to determine how many contracts to trade.
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Risk only a small percentage of capital on each trade.
4. Stop Losses
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Predefined exit rules to limit losses.
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No moving stops or second-guessing.
5. Pyramiding
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Add to winning positions gradually as trends strengthened.
6. Strict Discipline
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Follow the rules mechanically, without letting emotions or opinions interfere.
Results of the Turtles
The experiment was a stunning success.
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Over the next four years, the Turtles reportedly made profits of more than $100 million.
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Many became wealthy and went on to run their own funds.
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Dennis proved his point: trading could be taught.
Not every Turtle thrived equally—discipline and psychology still mattered—but as a group, they validated the power of systematic trading.
Why the System Worked
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Markets Trend More Than Expected
Prices often move in sustained directions due to fear, greed, and herd behavior. -
Risk Management
By cutting losses quickly and letting winners run, the Turtles stayed profitable. -
Rules Over Emotions
The system removed guesswork, preventing fear or greed from dominating decisions. -
Diversification
Spreading bets across markets smoothed returns and reduced catastrophic losses.
The Downfall of Dennis
Despite his brilliance, Richard Dennis himself faced struggles.
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In the late 1980s, he suffered heavy losses during market turbulence.
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Some say he failed to follow his own rules, letting judgment override discipline.
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He retired from trading for a period but later returned as a fund manager.
His legacy, however, lives on through the Turtles.
Famous Turtle Traders
Many Turtles went on to become highly successful money managers:
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Jerry Parker: Founded Chesapeake Capital, managing billions.
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Paul Rabar, Tom Shanks, Liz Cheval: Established respected trading firms.
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Curtis Faith: Youngest Turtle, later wrote Way of the Turtle, revealing details of the system.
Some Turtles thrived for decades; others struggled once they left the structured environment.
Criticism and Limitations
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The rules eventually became public, reducing their edge.
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Trend following can suffer during sideways or choppy markets.
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Strict discipline is psychologically hard—many traders struggle to stick with rules after losses.
Still, trend following remains a cornerstone of many hedge funds today.
Lessons from the Turtle Traders
1. Discipline Beats Emotion
A rules-based system prevents panic and greed from ruining decisions.
2. Risk Management Is Key
Limiting losses while letting winners grow is central to long-term survival.
3. Trading Can Be Taught
With structure and training, even novices can succeed.
4. Markets Have Patterns
Trends are real, and systematic approaches can exploit them.
5. Success Still Requires Psychology
Even with rules, traders must endure long losing streaks without breaking discipline.
Influence on Modern Finance
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Systematic Trading: The Turtles foreshadowed the rise of quant funds and algorithmic trading.
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Managed Futures Industry: Many funds today follow trend-based strategies pioneered by Dennis.
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Educational Impact: Their story inspires traders worldwide to believe that success is not just for Wall Street elites.
Books like Way of the Turtle and The Complete TurtleTrader by Michael Covel have spread their legacy to new generations.
Comparison with Other Trading Legends
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George Soros: Famous for discretionary macro bets, opposite of Dennis’s rule-based style.
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Jesse Livermore: Relied on intuition and experience; Dennis showed systems could replace instinct.
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Jim Simons (Renaissance Technologies): Like Dennis, proved that systematic trading can outperform, though Simons used advanced math and computing.
Conclusion
Richard Dennis and the Turtle Traders remain one of the most compelling experiments in financial history. A group of ordinary people, trained for just two weeks, went on to generate extraordinary profits using a mechanical system of trend following and risk management.
The story proves that trading success is not about genius intuition—it’s about discipline, rules, and patience.
Decades later, the Turtles’ legacy lives on in the strategies of hedge funds, quant models, and individual traders who seek to capture market trends.
Richard Dennis may have struggled personally with his own discipline, but his bold experiment forever changed the way the world views trading.
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