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olikea
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UNITED KINGDOM
Joined: May 6, 2006
Posts: 692
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Book recommendation - Way of the Turtle

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I have just spent the weekend reading the book "Way of The Turtle", written by Curtis M. Faith, one of the original "turtles" trained by Richard Dennis to be a commodities trader.

I have to say, it is a truely exceptional book. I read many books on investing/trading, probably several hundred in total, and this book has shot right up to the top of my list. From picking it up I almost couldn't put it down until the end.

Just to give you an idea of some of the ideas in the book here are some quotes:

"There are many traders, including quite a few successful ones, who do not believe in historical testing.......... To those who do not believing in historical testing, my question is: What is the alternative?"

He talks a lot about the issues of optimisation, curve fitting, and overfitting, something everyone here on p123 should be concerned about.

"The optimisation paradox states that the parameter optimization results in a system that is more likely to perform well in the future but less likely to perform as well as the simulation indicates"

He then goes on to use a series of graphs to show why this is the case. Its remarkable stuff. He shows that optimisation is worthwhile, just understand that future results won't be as good as the maximally optimised simulation, though a de-optimised simulation may more accurately correlate to future results. Confused? Read the book! Its worth it.

He also makes some mention of the issues of pyschology:

One memeber of the first Turtle class, who was fired from the program before the end of the first year, suspected early on that information had been witheld intentionally from the group and eventually became convinced that there were hidden secrets that Rich would reveal. That trader could not face up to the simple facts that his poor performance was due to his own doubts and insecurities, which resulted in his inability to follow the rules.

A theme he touches on quite a lot is just how simple the Turtle trading system was, (he fully discloses it), and how people cannot believe such a symple system could have made Richard Dennis and others multi-millionaires.

He also touches on a subject we have noted recently - that if too many people enter the same trading space, then there will be a squeeze, but that will drive out a lot of players:

Every few years trend following traders experience a period of losses, and inevitably some expert will announce the end of trend following. This usually conincides with a large withdrawal of money from trend-following funds. As more and more money flees from trend-following strategies, those strategies start to become proftiable again

He said early in the book that Richard Dennis was looking for smart people. Curtis is definately very smart, and the book is well thought out with lots of issues discussed.

He finishes with a comment I think we can all take heart with:

It is important to build the level of confidence you will need to follow a trading system's rules. Whether it is the Turtle system, something similar, or a completely different system, it is imperative that you personally conduct research by using histrocial trading data. It is not enough to hear from others that a system works; it is not enough to read the summary results from research conducted by others. You must do it yourself. Get your hands dirty...

Really, even if the book cost a thousand dollars I would say its good value!

If anyone has their own recommendations for other books please let me know!
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[Edit 1 times, last edit by olikea at Oct 28, 2007 6:49:26 PM]

[Oct 28, 2007 6:44:53 PM]

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rws737
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UNITED STATES
Joined: Apr 4, 2007
Posts: 73
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Re: Book recommendation - Way of the Turtle

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I second the motion. I read this book a couple of weeks ago and I would have to put it my top five best books on trading. Two thumbs up.

Two other must reads are Trade Your Way to Financial Freedom by Van Tharp and all three Market Wizards books by Jack Schwager.
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"It is not the mountain we conquer, but ourselves."

-Sir Edmund Hillary

[Oct 28, 2007 7:03:48 PM]

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visankar
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UNITED STATES
Joined: Aug 17, 2005
Posts: 69
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Re: Book recommendation - Way of the Turtle

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Two great currency trading books I read recently:

-Bird Watching in Lion Country - one of the best books in currency trading.
Beat the Odds in Forex Trading: How to Identify and Profit from High Percentage Market Patterns - I. R. Toshchakov ; the Russian Currency Whiz.

[Oct 28, 2007 7:49:09 PM]

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