Ever since buy and sell signals started showing up on my Trading View charts people have asked about my super secret trading strategy.
They’ve offered money, trips, favors, food and wine to get their grubby little hands on it.
“Sorry,” I said. “Can’t do it. I’ve worked too hard to uncover the mind blowing mysteries of the market wizards. They’re like the Philosopher’s Stone or White Eyebrow Kung Fu and the Five Finger Lotus Palm of Death. I couldn’t possibly sell them because in the wrong hands they’d prove fatal.”
On the other end of the chat channel I’m usually laughing my ass off.
I find it funny that people are always looking for secrets.
They imagine some mystical knowledge from the dawn of time, painted in flowing calligraphy on a crumbling scroll, locked in the golden safe of an ancient temple on a mountain cloaked in diaphanous mist.
If only they could get their hands on it, everything would change! They’d become the master of the universe.
I have the poweeeeeeeeeeeeer!
Well there is one secret. Are you ready?
There are no secrets. Everything is hidden in plain sight.
But I’m not just going to say it. I’m going to prove it to you. I’m going to give you my entire strategy for free, right in this article.
I’m even going to give you the Pine script for Trading View that got me started.
That’s right. After telling everyone I wouldn’t take their money I’m just going to give it away.
The Master Key to Crypto Riches
Why the hell would I do that?
Because it doesn’t matter in the least whether someone has my system.
The reason is simple. They won’t know what to do with it and they almost certainly won’t follow it anyway.
A trading system is about discipline. And most people won’t put in the effort to make it work for them. They won’t go through all the steps necessary to become a master.
People imagine that if they just get the secret master’s scroll they can do killer Kung Fu. But it doesn’t work like that at all. No matter what knowledge you get in life you have to put in the work to understand it and to make it yours.
That’s why I can give it away.
So what is my strategy?
It’s based on the breakout system of the Turtle Traders, a famous trading experiment from the 1980’s where famed commodities trader Richard Dennis wanted to see if trading was nature or nurture. In other words, could someone learn to trade or was it some innate gift?
He put out an ad saying he’d train people with no experience and then give them a million dollars of his money to trade for him. He hired bar tenders, games designers, a former drug dealer and more, aka a rag tag band of misfits and outcasts, with only a handful of grad school and MBA types mixed in for good measure.
The yellow book goes into a huge level of detail about the strategy and how it worked. And if you want all the rules in one simple PDF, here you go. One of the original Turtles gave them away free. I’m going to go further than that though.
Like I said, I’m going to give you the Pine script you can plug into Trading View right here in this article.
But first you need to know that you can’t just take the rules and drop them into crypto with no thinking on your part whatsoever. For example, the system uses a dollar volatility calculation which doesn’t make the least bit of sense for crypto. That means you’ll have to use your own insights and experience to figure out which rules are still useful and which ones need changing.
Like anything in life it requires critical thinking.
Maybe the best definition of critical thinking is the old X-Files slogan:
If you’re emailing me or messaging me on Facebook or Twitter and asking me to feed you signals I got news for you, you haven’t learned a damn thing and you won’t learn if you keep looking for someone else to think for you. I can’t do it and I won’t do it.
If you want to learn to fish I’m you’re guy. If you want me to fish for you, keep right on moving because I have my own fish to catch.
You’ve got to take the original rules and modify them for yourself.
That means you have to use the scientific method, aka trial and error, to figure out what works and what doesn’t work.
That takes time. It takes effort. It takes losing money and making it again.
And it’s the most important part of the process.
The two weeks of training didn’t make the Turtles. Their hard work over many years made them.
If you won’t put in the effort and you want a signals group that encourages you to blindly buy whatever they tell you, you might as well take your money and light it on fire right now because it’s faster. As soon as that group is gone you’re in serious trouble. But if you put in the hard work to learn this yourself, you’ll come out ahead.
That’s why some of the Turtles, like Jerry Parker, went on to start mega-successful firms like Chesapeake Capital and some of the other Turtles flamed out after Dennis cut them loose in the late 80s. They were on their own with only the skills they’d learned to make them successful.
Monty Python and the Holy Crypto Grail
All right, enough talk. Are you ready?
There you go. The Holy Grail you wanted from me. Now you have it.
Yeah I modified it and mine is different but you have the script I started with now.
That’s right I didn’t even write the original script. Someone else wrote it in 2015. I just downloaded it and tweaked it and experimented with it.
And the ideas aren’t his either. They’re just the most basic part of the Turtle Trading strategy taken right from the Complete Turtle Trader or the original rules PDF.
There are no position sizing elements or anything else.
So what is it? Basically, the system buys, shorts and sells on breakouts above a 20 day or a 55 day moving average. That’s about it. That’s the entire core of the system. A simple, uncomplicated heuristic.
It doesn’t take into account China, whales, aliens, the SEC, Spoofy, Twitter sentiment, John McAfee eating his dick, the Illuminati, dream catchers, prayer beads or moon cycles. You know why? Because all of that is bullshit. The sooner you learn that the better off you’ll be.
It takes into account the only thing that we can know for sure, the price. Everything else is impossible to take action on.
The system also makes thirty to fifty percent of its money from shorting, unlike perma-bull systems that only bet long and get destroyed in bear markets.
So now you have it but this is where the hard part starts. You’ve got work to do.
What’s the work?
You’ve have to make the script useful for crypto. I won’t do it for you but I will give you some hints about what you need to look for to give you a leg up on the competition and help you focus.
Flipping the Script
First you have to figure out what time line works best. Out of the box the system won’t test very well. Your first step is to figure out why. You can start by asking yourself a series of questions. Use the Socratic method.
For example, does Trading View have the right settings to test it effectively? (Hint: They sure don’t. Their default settings are terrible and backtest horribly.)
You’ll also start running into all of the limitations of Trading View like they won’t let you backtest more than 2000 trades. The Turtle system can easily generate more than that on shorter timelines. So you’ll have to find a work around for that. (Hint: Limit the dates.)
How much equity should you allocate to the trade for it to test well? All of it? Half of it? One percent? Ten? Why?
You’ll also have to figure out whether the longer time lines are giving you wrong numbers. (Hint: They are because many of the trends are still fresh and so the system holds a lot longer and didn’t sell often enough to compound enough equity to really start killing it.)
Eventually you’ll want to have the system signal you via pop up or SMS or email and you’ll find out that Trading View deliberately made it almost impossible to do that so it doesn’t work. That means eventually if you really want to use this you may need to write your own code or hire someone to do it on a different platform. That’s what I’m working on right now.
These are all the things you’ll have to think about if you want to make this thing work for you.
I gave you the script but like I said I’m not going to do all the work for you. That’s part of the process. It’s how you learn. It’s how you get better.
And if you ping me on social media and ask me for my settings I won’t even respond so don’t do it.
However, if you do some amazing tweaks and you want to share some value with me, or you manage to code this thing into a sweet Python script that sends you signals feel free to share and I’ll open the Kimono a little more too. Share and find that the world is willing to share with you.
Contribute value to get value.
That’s how everything works in life.
The Crypto Turtle
Now after you’ve figured out all the initial problems with the script, you’ll start running into all kinds of other problems that you have to learn to deal with too.
The biggest ones are emotional.
This system is hard to follow. Really hard.
You will eat some gut wrenching drawn downs and face some horrifying swings. You will face your own inner turmoil again and again and again. And you will make mistakes.
Because it’s a trend following system it’s looking to catch big, irrational movements in the markets. This is not slow and steady returns. This is big booming returns with lots of little losses in between that are painful to endure. When the markets get totally crazy trend following roars. When the markets go flat so does the system.
In other words Crypto Turtle produces a bunch of false positives.
Michael Covel, author of the Complete Turtle Trader, describes it in terms of batting averages. Only in baseball can you hit a mere 30% of the time and be considered the best of the best. That’s a 300 batting average. 30 freaking percent. In almost everything else in life if you strike out or screw up 70% of the time you won’t last very long.
Trend following is a Babe Ruth, knock it out of the park home run system. But to hit home runs you have to strike out. A lot.
Babe Ruth was the home run king but he also holds the record for whiffing.
Here’s what’s likely to happen to you after you try the system out:
You’re going to load up the script. It will take you a month of trial and error to tweak it and figure out how to make it awesome. After that you’ll be chomping at the bit to pour money into the market and start winning.
Then it will hit you with a nasty drop on the first trade. Oh and you forgot to set a stop so you just lost 15%.
Or it will slam you with twenty horrible trades in a row and you’ll start losing money.
Pretty soon you’ll throw it down and swear this crap doesn’t work. You’ll walk away and start looking for the next ancient Dragon scroll.
It’s just that the twenty-first hit was the home run and you missed it. And that home run would have made up for all your losses and then some.
That’s why trend following systems are out of vogue. Over the last decade they’ve declined. People don’t want 150% one month and -65% the next month. Most people can’t deal with that kind of whipsaw. They’re not wired for it.
Even worse the powers that be looked to engineer risk out of the traditional markets at all costs. When Joe the idiot loses $5000 on his credit card and he can’t make it back regulators and regular folks freak out.
But risk is where the money is and unfortunately they managed to engineer the profits out with the risk.
Few people can get rich in the regular stock markets these days. Circuit breakers, ridiculously high levels of regulation and a thousand other tweaks killed the good old days of gun slinging commodities traders. Go ahead and put your money in the market and make a measly 2% every year and be happy about it, citizen, all while inflation erodes that 2% and leaves you treading water.
Regulators can’t imagine that grandma or some moron who took out a loan on his house to trade can lose their shirt. They don’t want winners and losers. They want everyone to get a trophy.
For a long time, it seemed there was no hope of ever returning to the glory days of big risk, big return.
And then came Bitcoin.
“We missed out on the peak of finance,” says Hayes. “Instead we got the decline. There’s not as much money, not as much risk, not as much flow. It’s boring. Bitcoin reminds us of what it must have been like trading an asset class in the late ’80s and ’90s.”
I’m here to tell you that the wild swings in the crypto market are a dream if you want the chance to become a millionaire. Without them you’ve got absolutely no shot.
Take a look at this performance chart of classical market trend followers. Click “select a manager.” Go through each one. Look back over their history. Many of them date back to the 80’s.
What do you see?
Huge returns in the early and late 80s and smaller returns in the 90’s and beyond. They’re still beating the market but the glory days of insane profits are over in the established markets.
In fact, back in the day, the largely unregulated commodities markets were looked at just like regulators look at crypto today. When Paul Volker, former chairman of the Fed, met Richard Dennis the first words out of his mouth were “I hate those casinos you have out there.”
Central powers hate volatility.
As a trader you’ve got to love it.
Richard Dennis said “one man’s volatility is another man’s profit.”
Crypto is a return to the glory days, a chance to get really, really rich. Like quit your job, fuck you money rich.
It’s also a chance to get totally and completely REKT. I mean broke and owning money you don’t have in the bank and may never pay back.
High risk. High reward.
We’ve never had a market quite as wild as crypto. It makes the old commodities markets look like a kiddie ride by comparison.
And that makes trend following systems and crypto a marriage made in heaven.
While the old school traders from the 80’s were raking in 50% or 60% a year, that would make them laughable noobs alongside the kings of the crypto when Bitcoin is really booming.
Now you have the master key to unlock those kind of profits if you manage to survive the roller coaster.
The Only Lesson You Need to Learn
Look, I know a lot of bloggers out there will happily tell you there’s some secret techniques that only pros know or that if you do five simple things before breakfast everything will suddenly become strikingly easy.
On one level that’s true. There are more effective ways to paint a face or write a book. But the only way to learn them is through trial and error over many years.
The hard part isn’t finding the right knowledge or the right system, it’s executing on that system. It’s testing and modifying that system.
Consistency is king.
It’s like when people ask me where I get the time to write. I don’t “get” any time. The question implies that someone gave it to me or that my packed schedule somehow magically shifted to let me write for hours a day.
Nobody gave me shit. I make time.
I sacrifice things. I don’t get to watch much TV. I can’t remember the last time I went to an unscheduled event. The last three video games I bought are still in the shrink wrap.
Over the next few weeks I’m moving. I’m getting interrupted constantly as I write this but I keep going even if this article ends up taking me a week to write instead of a few days.
That’s the discipline.
You have to make time for the things you love and do the work over time to get them. For ten years nobody gave a shit what I had to say. I’ve been writing fiction and blogging for a decade. Then all of a sudden everyone was reading my work.
It only took me ten years to become an overnight sensation.
After thousands of frustrating hours of putting in the effort yourself you can understand the best way to run a marathon or the intricacies of carving fingers out of wet clay or how to trade like a rock star. It really doesn’t matter that you watched a YouTube video of a master sculptor whittling delicate fingers with ease. As soon as you sit down to try it, it’ll look like slabs of stumpy sausage until you practice, practice, practice.
No matter what knowledge you have when you’re first starting out you can’t really understand what you’re seeing. There’s just too much information coming at you and you don’t yet have the experience to process it.
Imagine that you started playing football a few months ago or even a few years ago. Then let’s say I got my hands on the Patriots Super Bowl game plans and dropped them in your lap. Would you know what to do with that? Would it make any sense?
Not in the least.
You won’t find the basics of throwing a deep spiral in there or even the advanced basics of how a defensive back subtly interferes with a runner without getting flagged. The plan presupposes that you have the knowledge and experience already baked in to understand it.
Every man on the Patriots learned through pain and suffering, struggle and hard work over a long, long time. They persisted while everyone else quit. They sacrificed friends and social life and family time and their physical bodies to become the best at something. The same is true of anything in life.
The sad truth is that most people simply can’t or won’t finish the journey.
Don’t be that person.
I gave you my super “secret” system. I started you off on the road to riches with a big head start and I did it for no reason at all other than I like giving away knowledge and paying it forward.
But I could give away every single secret of the Universe and it wouldn’t matter in the least.
Knowledge must be earned. There are no shortcuts, no backdoors, no way to skip steps. The price of true knowledge is everything.
Just remember this young grasshopper:
What’s the meaning of Kung Fu?
Slow and steady wins the race.
DISCLAIMER: Be a big boy or girl and make your own decisions about where to put your hard earned money. I am not a financial adviser and this is not financial advice and if I really need to tell you this then it’s best to keep your money under a mattress anyway because when you lose it you’ll only blame other people for your mistakes rather than yourself.
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A bit about me: I’m an author, engineer and serial entrepreneur. During the last two decades, I’ve covered a broad range of tech from Linux to virtualization and containers.
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