Book Review: Way of the Turtle

I finished reading Curtis Faith's book, The Way of the Turtle. He was the most successful of the original turtles. If you don't know the story of the turtles, read this.

While he describes some of his time as a turtle, Faith spends a lot of time talking about trading systems and how to measure them. The only system that he actually talks about is the Turtle system, but he also talks about many aspects of a system.

Some of what he talks about flies in the face of other things I have read (and believe) - such as Van Tharp - who says that the exit is more important than the entry. However, Curtis shows a few excercises where he shows that it's the entry that is more important. One of the more successful systems he talks about is time based - in other words, you exit your position after a set amount of time; so the entry becomes very important in this case.

He does believe in money management as probably the most important aspect of trading. If you don't have money, you can't trade. I truly believe money management is as close to the holy grail as you can get.

Faith gets fairly sophisticated in some of his measurements of systems, and I was quite impressed with the original thinking expressed in his book. Probably the biggest thing I got out of the book was the idea of trend filters. If you have a trend following system (such as a channel breakout) - you can make it more successful by using a trend filter. This would be something as simple as only taking long breakouts when the 50ema is above the 200ema, and only takes shorts when the 50ema is below the 200ema. I have a system I developed that is profitable (in back testing, and current forward testing) based on this idea, which I will share later.

I highly recommend this book. If you want an interesting and original view on systems and their measurements, this book is for you.