My name is [Name] and I just wanted to say thanks for writing such great books like Trend Following and the Complete TurtleTrader. My trading knowledge basically is consisted of reading books on Jesse Livermore, Nicholas Darvas, Market Wizards. Still I felt they were lacking something, until I came across your books.
I started out trading since 2017 March and to be honest I’ve always understood the cutting loss, ride profit, being discipline. My problem lied in when to determine an exit, and generally asking myself the right questions. I thought I had a system, which was reading daily candles strength comparing to previous candles. For example: if USDJPY was to show huge strength up (without breaking any highs) I’d jump in.
This method worked sometime, but most of the time this method lacked a rigid standard for “breakouts”, that I kept getting whipsawed in side way market. Also I couldn’t determine when to exit, because my method lacked a moving average or break out rule to dictate when to exit. It all changed when I thought ok let’s do this: 4 week break out and 20/40 day moving average as stop. Still I couldn’t help doubting the system, due to fake breakouts and subsequent losses.
After reading your book on TF, I realized the most important piece of advice anyone could give me. It was “no system is perfect, drawdown is OK as long as you obey your tested system”. I think it’s a human fallacy to think that simple methods mustn’t work, it’s just too simple. For example: trading 4 week break out, and using 40 day moving average as exit. Anyone hearing that would go, “No that’s not possible, even a child could do that”.
It’s true anyone could learn to trade quickly, and that’s what happened to the turtles. The problem is that the turtles were given the system directly by Richard Dennis, and his presence must have a huge mental support on the turtles, so that they could stick to the end to see the system works.
Most people without being close to a successful trader, I believe, would doubt their system, try to look for more complicated systems, and second guess that complicated system, and either lose discipline, give up trading or blow up. I think the following statement has been said more than a dozen times by different traders.
“I can always post my entry/exit rules on the newspaper and no one would use it”.
Richard Dennis or Ed Seykota can put their systems online for anyone to use, but even then I believe no one would follow through to the end. Even Ed Seykota said it himself, “I created a system no one wants”.
I think following a system is somewhat contrary to human nature. We think that we could outsmart a set of rules, however Daniel Kahneman proved that we can’t. I know that my email lacks any structure or main theme.
But I just wanted to let you know that your books had a huge impression on me, similar to the impression that Richard Dennis had on his turtle students in 1984. Hence I do feel I need to express my gratitude to you. I know there’s a lot of critics on Amazon hating on your book saying that it doesn’t provide the specific rules. The problem I see in that is, the rules can be found for free online already.
For example Richard Donchian, Ed Seykota or just simply testing out a combination of breakout and MA themselves. I think only losing traders try to seek specific rules on trading. It’s almost like trying to study basketball, becoming good at it, by asking Michael Jordan to provide his secret practice routine.
The truth is, he can tell you what he does, but most likely you won’t be able to do it. The amount of experience and self confidence that goes into executing a trade is just as important as the specific rules. Those traders have gone through very nasty markets, and they’ve earned their experiences. Those critics are missing the point. They can’t see that your book, really, serves to provide the mental support for novice traders who need that pat on the back “it is OK to lose, the great traders had small losses so will you” type of encouragement. A lot of other mentality can be found in your books too.
Thanks for the great feedback. I really respect all of those books you mention. Some classics!