A real life experiment was set up by Richard Dennis in the 1980s to show the merits of trend trading. It became known as the “Turtle Traders”.
The purpose of the experiment was to settle an argument that Dennis was having with his long-time friend Bill Eckhardt. The issue was: Are great traders born or made? Eckhardt thought that trading was an ability embedded in your DNA. Dennis was convinced it could be taught.
Richard Dennis was born in Chicago in 1949 and began trading commodities in the early 1970s. He started with a small loan from his family and by 1973 his capital had risen to $100,000.
At the end of the following year he was a millionaire. By the early 1980s he was reportedly worth over $100 million.
To set up the trading experiment, Dennis and Eckhardt advertised for apprentices in Barron's, the Wall Street Journal and the New York Times. The ad stated that after a brief training session, the trainees would be supplied with an account to trade.
Dennis selected 21 men and 2 women and invited them to Chicago for a two week training course. They were then given small trading accounts and asked to trade for one month. After this trial period he then gave the ones who traded successfully $1 million of his own money to invest.
The outcome? In the next five years they are said to have made an aggregate profit of $175 million. Not bad.
Dennis clearly won the argument. The experiment showed that trend trading works, and that it can be successfully taught.
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