SCOTT WELSH TRADING BLOG

An Oldie But Goodie

An Oldie But Goodie

Dec. 1, 2021

Time for a pop quiz.

What’s the best way to find a profitable strategy?

Answer: Find an old strategy.

If it’s worked for many months (or preferably, many years), then it will probably work into the future.

Here’s what’s interesting: nobody likes old strategies.

Old strategies are obtuse and ridiculous and useless in today’s fast-moving markets. People love to say that new strategies are the best strategies and love to call old strategies outdated.

For example, even though the Turtles reportedly made multiple millions of dollars averaging 100% per year for four years, most traders tell us that the Turtle strategies don’t work any more. In fact, I’ve never heard anyone saying they do still work.

The old Turtle strategy is quaint but is definitely a dinosaur.

So, a number of years ago, I decided to see if that was true. I developed a Forex strategy built on exactly the same principles as what the Turtles used. (Trade breakouts, use volatility stops, trail the stop when in profit, big winners, small losers.) The only thing I added was a profit target and a timed exit. Otherwise, it was the Turtle strategy with slightly different inputs.

And then I left it alone for a long time.

Back in May, we briefly discussed this strategy. The question on my mind is: how has this antiquated strategy done in 2021? This year has been hard for many traders. The trends have been very twitchy and breakouts in particular have failed with great frequency on all instruments.

An old strategy could never handle the unique, unprecedented conditions of markets propped up by the Fed and bullied by emotional meme traders, right? We’ve never seen markets like this.

Here, once again, are the settings for this Turtle-based strategy on the GBPJPY: https://www.screencast.com/t/ILKFshmt81

And here is how that strategy has done through 11 months of 2021:

On a hypothetical $12k account, this old, decrepit strategy would be up 31.7%.

Interesting. Maybe fundamentals can survive over the long-term, even in conditions that have never been seen before.

That said, actually getting that 31.7% would not have been easy. Not by a long shot.

And we’ll talk about that in our next Newsletter.

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.