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We first traded without a plan and had some big gains but even bigger losses as we were inexperienced. After looking to learn from our mistakes we found Trend Following and it sounded good however we didn't have an example to implement and test. The first example we saw was the Turtle story from both the Complete Turtle Trader and Way of the Turtle books. From there, we put together a simple backtest in Excel and marked up some charts to see it with some historical data. We were able to dig into the numbers and position size calculations to trade with a systematic plan instead of repeating our previous mistakes. Our Products page has these backtests available. If you want a jumpstart on learning Trend Following, use our spreadsheets and get familiar with a system and testing it. You can then develop and test your own system rules that fit your risk tolerance. You'll be closer to profitable long term trading.

We look for new ideas and put complete ones on Use them for yourself or read the books that we found them in to look for more ideas. As we are doing, we recommend continual learning to make your trading work.

We used the Turtle Rules in our spreadsheets:

Market - While the Turtles traded Futures, the main criteria for any market is liquidity and consistency. Other criteria included limitation of positions due to correlated markets and the use of available leverage.

Entry - The Turtles had the option of 2 systems or a mixture. System 1 entered long at a 20 day high and entered short at a 20 day low. System 2 entered long at a 55 day high and entered short at a 55 day low. Each time the price hit a trigger, they opened a position even if recently stopped out of a similar position.

Position - The Turtles used volatility and risk based position sizing. They used a 20 day moving average of the True Range or 20 day ATR to measure volatility. This is the average daily price movement of the market and was called N. Position sizing was determined by not losing more than the set risk percentage (1% or 2%) if the trade stopped out at 2 times N. Basically, the number of shares, contracts, or lots were purchased so that a single trade would not lose more than the 1% or 2%.

Tactics - Positions were added through pyramiding. If the price moved to the next N, they added an additional position and moved the stop so the risk remained the same. This helped protect profits and allowed gains to multiply. The number of positions were also limited across a single market or correlated markets.

Stops - Stops were set at 2 times N of the entry price. Stops are critical to keeping losses to a minimum although the majority of trades may be losing trades. The many small losses are countered by the fewer yet much larger gains.

Exit - System 1 exited the long position at a 10 day low and exited the short position at a 10 day high. System 2 exited the long position at a 20 day low and exited the short position at a 20 day high.

For a detailed look at the Turtle Rules and more variables involved, see our Trend Following books and movies page.

Use our spreadsheets to understand the principles behind Trend Following. Once you gain a foundation of how Trend Following works, work to find your own strategy and backtest it, or you can purchase a system with coaching, or even find a Trend Following firm. The spreadsheets are based on individual stocks, forex pairs, and currency contracts so they do not show the profitability of a full portfolio. Start making money in the market with better returns by trading with an edge, managing risk, being consistent, and keeping it simple.

Trend Following Expert Advisors for MetaTrader 4

Trend Following Expert Advisors for MetaTrader 5

Example Trend Following systems and their rules