When my master passed away, I was not by his side. The news did not reach me until a month later where I received an email informing of this news that would burden me for the rest of my life. I did not do this on purpose. It was a most unfortunate event. But like trading, a loss is a loss and you just cannot blame anything else.

Like a whole airfield of sorties surrounding a lone bomber, I was frequently machine gunned with questions concerning trading and trading psychology. The bullet that hit me most is probably the topic on how I got started in trading. This question is frequently asked by young budding traders who either see me as a learning role example or are just curious on why would someone of my age know 'so much' about the difficult business of trading. In such, I have decided to write this article; which the edited version would be published on a local news paper feature.

Looking back, I was most fortunate to have stopped myself from pulling off a traders' Ultimate Stop Loss - Suicide. There were good times and there were bad times. I used to blame Master for bringing me into this gruelling business. How ungrateful I was to have harbored such thoughts on a man who is so unselfish to create a positive divergence in the chart of my life! I pray to God that master in heaven would be proud to see how far I have progressed in both trading and in life. 

Just as the turtles used breakout systems for entering new positions, they used breakout based exits for profitable positions too. (If you’re not profitable you should have already been stopped out)

In my experience, one of the most difficult things to teach new traders is on when to get out with profits. Over conservative traders tend to cut their profits way too soon, resulting in the need to enter new trades and thus suffers from high commissions. Over greedy traders tend to want to squeeze out maximum profits only to demoralize themselves when they see their profits go into loss.

One Friday Evening I met a very experienced fund manager working for a reputable financial firm. I asked him whether his team used stops. (For the uninitiated, stops are orders meant for cutting loss at certain predefined prices and are even used by certain professionals to enter new orders).

 He frowned, smoked his cigar, and said “Yes and No”. I frowned, smoked my cigar, and laughed. As I cracked the amateur joke: “Oh no! I’m getting stopped out! Stops don’t work!”, we spent the evening discussing on why and how traders should set stop loss in their trading system, even if they decide not to expose it to the market.

When you talk about the term entry (Point of Entry or POE2 as we call it), you will find, surprisingly-unsurprisingly, that many new traders (albeit some master traders believed this and still made a lot of money) believed strongly that the entry timing is an especially crucial factor in determining the profitabilityof a trade.

Every now and then, you’ll hear some people hailing a new way of screening entry signals that provides highly profitable and consistency results – only to realize that they are all vaporware after a year or so. 

But the Turtles did it a different way.

Learn From The Turtles! Part 2 

The Turtles were very advanced in relation to other traders of their era.

Though today we have much more advanced system which is calibrated every single day, the fundamental lesson remains the same - Judge how much money you put in every trade according to market data and/or calculated risks, and not use simple an arbitrary 'just-feel-like-it' figure.

What's interesting is that the Turtles based their calculations upon the volatility of the dollar.