Good morning. My situation is the following:
My son is a Junior at the [name]. He recently received a $36,000 loan from the Academy at less than 1% interest. He wants to eventually become a billionaire, and he mentioned investing this loan money in bitcoin. I advised against bitcoin, and suggested that we each invest $36k in foreign currency trading as I used to trade FX and understand those markets better than bitcoin. Our mindset is to double our $72k account each year, and perhaps start a fund after we have a proven 10-year track record. We opened a Forex.com demo account several months ago, and we are planning on going live this week.
I came across the name Richard Dennis while reading the Market Wizards a few months ago. In searching for more information on the Turtle Traders, I came across your book The Complete TurtleTrader. I gifted a copy of your book to my son and a copy to myself for Christmas, and we are both excited about having found a system with a track record of producing the exact type of results we are looking to achieve: doubling our money each year.
So, to your question below about the greatest challenge I am facing tied to my trading, I have three questions:
1) Do you think that it is still realistic to shoot for 100% annual returns using this trend following system in today’s marketplace? A lot of what I read on line states that the turtle method would not work so well anymore. If that’s true, I wonder if that is because it has become a crowded trade with too many people employing the same strategy, or because the markets have been choppier and not as trendy as in the 1980s.
2) Do you think one could find enough diversification needed for this trend-following method by only trading 10 currency pairs on the spot market (as opposed to also trading stocks, bonds and commodities)?
3) What are your thoughts on the best time frame for price breakouts to use in today’s environment, specifically in the FX spot market? You cite the 20-day and 55-day time frames on page 72 of your book, and I wonder if a more optimal time frame has been discovered since or tied to today’s environment. One study I read online last night cited a 200-day price breakout as having achieved far superior results when back testing for a diversified portfolio, as opposed to the 20-day or 55-day. I realize that you might not want to reveal any trade secrets if you have discovered a better time frame, though your willingness to share comes through in your book and so I wanted to pose the question. Any thoughts would be much appreciated.
I thank you for your book The Complete TurtleTrader. It came at the perfect time for my son and me. Chapter 5 is a treasure trove and the ideal resource as we put together our system to trade the 10 currency pairs.
1. High risk trend following can of course have over 100% returns in a year. Every year? No.
2. FX pairs alone is not enough.
3. Trying to chase one magic entry is not where your energy should be. What about exits? Portfolio selection? Money management? There are many issues. Start here and here.
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