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Come Out Of Your Shell (Part 1)

InvestorEducation / Trader Psychology Oct 01, 2009 - 07:29 AM GMT

By: Charles_Maley

InvestorEducation

We don't see things as they are, we see things as we are - ANAIS NIN US (French-born) author

I was having a conversation with one of my clients yesterday on the subject of whether good traders are born or whether they can be taught. I brought to his attention that this was the identical argument between Richard Dennis and Bill Eckhardt back in the early 1980’s.


Dennis felt that you could teach committed people to trade by instilling good trading rules, money management and discipline. Eckhardt on the other hand felt that it was more innate, where aptitude played the key role. They decided to put the argument to test. They interviewed a group of qualified individuals for the purpose of forming a group to teach how to trade. Eighty applicants were interviewed out of one thousand, and 13 were chosen (three of which were friends).

Dennis named the group the “turtles” after returning from a trip to Singapore where he said to a friend, “we are going to grow traders just like they grow turtles in Singapore.”

They were taught a mechanical trading system, which covered all the aspects of successful trading, while simultaneously removing most of the emotional struggles. After a period of time, Dennis felt comfortable enough to invest in accounts ranging from $500,000 to $2,000,000 and let the Turtles trade.  

Well, it turned out to be quite an experiment. It is estimated that as a group, they averaged an 80% annual rate of return over the next four years.  So, I guess Dennis proved that good trading can be taught….. or did he?

Even though the conventional wisdom is that Dennis won the bet, why is it then that some Turtles did not make it where others went on to be very successful? After all, they had been taught the very same approach.  

Stay tuned for part two…….where we explore the possibility that Dennis and Eckhardt were both right.  

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Charles Maley
www.viewpointsofacommoditytrader.com
Charles has been in the financial arena since 1980. Charles is a Partner of Angus Jackson Partners, Inc. where he is currently building a track record trading the concepts that has taken thirty years to learn. He uses multiple trading systems to trade over 65 markets with multiple risk management strategies. More importantly he manages the programs in the “Real World”, adjusting for the surprises of inevitable change and random events. Charles keeps a Blog on the concepts, observations, and intuitions that can help all traders become better traders.


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