In 1983 a successful Chicago trader, Richard Dennis, made a bet with his partner, William Eckhardt. Dennis believed that anyone could be a successful trader, all they needed was the proper training to follow a system and the discipline to stick to it. Eckhardt disagreed, he believed trading was an innate skill and couldn’t be taught. The bet was on.

Dennis took out ads in the New York Times and the Wall Street Journal to get applicants for his experiment. After interviews, he selected 13 “turtles” — named after efficient turtle farms he saw on a trip to Singapore — to be trained to run his commodity trading system. Thus, the experiment began!

Training the Turtles

The turtles were given a trend following system with just a few rules to follow on market entry, position sizing, and exiting trades. Trades were sized according to the amount the price moved per day, and securities would be bought based on either a 20-day or a 55-day breakout — the price exceeded the highest high from the past 20 or 55 days. To exit a trade, the turtles used stops in case the breakout reversed and the trade moved against them for a small loss. If it went in their favor, they moved the stops upward to catch the end of the trend.

Dennis provided his turtles with about $1,000,000 each of his funds to trade according to his system. Every day they went in with a plan based on the strict rules above, knowing exactly what to do if corn, oil, lean hogs, or whatever they were trading, were to meet one of the conditions to exit or enter a trade.

The system was simple and effective. Over 4 years, the traders returned $175 million, making the experiment a smashing success: trading can be taught!

Can anyone really be a trader?

Dennis bet that anyone could learn to trade. But there is one catch: discipline.

He famously claimed that he could print the rules of his system on the front page of the New York Times and still, nobody would master it. The reason is because most people lack the patience and discipline to stick to a set of rules and implement them in good times and bad (emphasis on the latter).

The trouble with most people is that they’ll get their hands on a successful process — a system that really works — but they can’t dedicate themselves to the consistency that it requires to get the results they want and that the process will provide. Moreover, things will get difficult at some point. Human nature is such that people tend to abandon the process when it gets hard. Even the best trading system in the world is going to have some bad trades; Dennis concluded that will cause most aspiring traders to abandon the system or overreact to some bad luck and begin tinkering with it, degrading the performance.

In one sense, anyone can become a successful trader. In another sense, however, most people don’t have the discipline to follow through with the system.

People Struggle with Systems, Computers Don’t

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