Cryptocurrency with Turtle Strategy

Many are prone to FOMO which is called as ‘Fear Of Missing Out’ as people always wants to be updated with all the trends that come along and so is the case with cryptocurrency. Turtle strategy was laid out in the 1980s by a famous trader named Richard Dennis. It is a trend that is a well-known breakout system of a strategical approach to buy assets on a 20 day high and sell on a 20 day low, though there is much more detail informative aspect to it.

Richard Dennis, the father of the Turtle Trading has said, “I always say that you could publish my trading rules in the newspaper and no one would follow them. The key is consistency and discipline. Almost anybody can make up a list of rules that are 80% as good as what we taught our people. What they couldn’t do is give them the confidence to stick to those rules even when things are going bad.”

A turtle strategy system consists of distinctive features such as it is a trading system that is comprehensive but it covers all the trading’s aspects. The trader only has to follow the instructions, by following it in a consistent disciplined manner and its results are said to be profitable, traders rarely are dicey on its authenticity.

But before we discuss the strategy, we will try to understand the several important terms:

  • Turtle 20/10: It is stated to be the position of buying when the amount of the asset is greater than the highest close of the last 20 days and closes the position when the amount is lesser than the lowest close of the last 10 days.
  • Turtle 20/20: It is stated to be the position of buying when the amount of the asset is greater than the highest close of the last 20 days and closes the position when the amount is lesser than the lowest close of the last 20 days.
  • Backtesting: It can be defined as a process that applies the strategy of trading or the method that is analytical to the historical data to conclude the accuracy of the strategy or method to foresee the actual results.
  • Maximum drawdown (MDD): It can be defined as a state wherein trough of a portfolio at a peak gives maximum loss before the attainment of the new peak. MDD is an indicator for a given period of time for downside risk.

Also Read, 5 things you should know before crypto trading

The turtles trading mostly occurs in a liquid market as the market is on a favoured condition during liquidity that is higher and potential losses can be avoided that means with cryptocurrency, traders should favour the cryptocurrency assets that are on the mainstream or highlights.

Here,

ATR is to signify the 20 day exponential moving average of the True Range.

And the formula for the computation needs Previous Day’s ATR unit so you should initiate with a 20 day simple average for the starting calculation of the True Range.

Computation of daily True Range:

Computation of ATR:

The turtles create pieces of the positions that are known as the units. Units are defined to be a size that is made on the volatility so that every ATR signifies account equity of 1%. The unit states the risk of the position and also lays out the entire portfolio.

The unit of the stated market can be calculated as:

Hence, Turtle consists of various systematic methods on its correlation with the market, price as it follows the rule of “Buying Strength and Selling Weakness” and their places a stop at the position risk wherein the trader can not incur any trade more than 2% of risk.

The impact of the downfall is featured by backtesting and its major reasons are high correlation in price of the cryptocurrency, Bull to Bear cycle’s discrepancies within the cryptocurrency and the various traditional asset and the system’s trading signal that are known amongst the traders reduces the effectiveness of the strategy.

Crypto Turtle Strategy is a very complex and a comprehensive subject of trends and thus needs consistent and constant in-detailed performance.

Curtis Faith, the author of ‘Original Turtle Trading Rules’, said “Most successful traders use a mechanical trading system. This is no coincidence. A good mechanical trading system automates the entire process of trading and provides specific instructions for traders. The system consistently makes it easier for a trader to trade because of the set of rules that specifically outlines what should be done in every situation. As such, the mechanics of trading are not left up to the judgment of the trader.”

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