After decades of testing in the market, the three trading systems have become global traders ' wealth codes。
In volatile financial markets, systemic transactions have been the key to robust profitability. Historical data show that more than 90 per cent of the dispersed households end up in loss, while the probability of long-term profitability for investors following systematic transactions has increased more than threefold。
Today, we will go into the three most famous trading systems in the world: the turtle trading system, the jump-off trading system and the 123-law trading system, and reveal the triumph of the legendary traders。
Sea turtle trading systems: ordinary people can be masters of trading
In 1983, the famous commodity dealer richard dennis made a famous bet with his friend william eckhardt. - is a great trader born or raised? To this end, 23 ordinary investors were recruited and trained to teach a complete trading system, later known as sea turtles。
At the heart of the turtle trading method is the tracking of trends, capturing medium- and long-term trends in the market, entering at key points at prices and holding positions as the trend continues until the trend reverses。
Specific transaction rules include two aspects:
Entering signal:
Short-term systems: more when prices have exceeded the peak of the last 20 trading days; more when the lowest points of the last 20 days have been missed
Long-term systems: more when prices have exceeded the peak of the past 55 trading days; more when the lowest points of the past 55 days have been missed
Risk control:
Risk control per transaction at 1-2% of net account value internal
Measurement of market volatility using average real wave bands and calculation of size of position
The most significant advantage of the system is that it is fully systematic and eliminates emotional interference with transactions. Historical data show that the best sea turtle traders achieved an annual return of over 80 per cent between 1984 and 1988。
However, turtle systems also have limitations: they perform poorly in the shock market and are prone to continuous losses due to frequent false breakthroughs. It is therefore better suited to highly volatile and trending markets, such as commodity futures and foreign exchange。
02 jumping out of the trading system: the windfall legend of larry williams
Created by larry williams, the leapfrogging trading system has shaken the entire investment community with its record of turning $10,000 into $1 million within 12 months。
Vacation refers to significant price differences between stock prices on the previous day and the same day, i. E. Opening prices were higher or lower than the closing prices of the previous day. Vacation is often a manifestation of dramatic changes in market sentiment and is therefore more likely to generate large price differentials。
The core logic of the jump trading system is price-based rebound and regression:
Do empty signals (for example, fall):
The closing price is 4% below the five-day average
The opening price is less than 1% of the minimum price yesterday
Do multiple signals:
When stock prices jump up, consider buying stocks, and seize the chance of a rebound
The advantage of the system lies in its ability to capture short-term swings in stock prices and achieve rapid responsiveness and profitability to market dynamics. It applies particularly to highly volatile market environments。
Jump-out trading systems also carry high risks. Strong fluctuations in market sentiment can lead to large losses on transactions, and investors need to have a wealth of experience and greater risk-control capabilities, as well as scientific financial management strategies。
03 123 law trading system: victor sporandi's inverted intelligence
The system of law transactions was systematized by a prominent trader, victor sporandi, in his book the principles of professional speculation, and was based on the dow theory, which was used to identify trends in reverse and identify trading points。
The system judged the reversal of trends through three clear conditions:
The upward trend has turned downward:
Trend line breakthrough: price drops the upward trend line, indicating a possible weakening of the previous trend
High-point test failed: price rebounded but failed to break the pre-high point, indicating that buyer was not strong enough
Falling lower: falling lower lower, confirming that the trend has turned downward
The downward trend is reversed to the upward trend:
Prices breaking the downward trend line
Prices receded without breaking the earlier lows
Prices breaking the pre-high point, confirming upward trend
The glamour of the 123rd code lies in its concise logic, which enables traders to clearly judge trends in reverse points and adjust positions in a timely manner. It applies particularly to highly volatile markets, such as the bitcoin market。
In actual operations, traders often enter when the third condition is met and place loss points near the high (for emptys) or low (for multiples) point of condition 2, thus achieving a potentially high return on risk control。
04 horizontal comparison: applicable scenarios and risk-benefit characteristics of the three trading systems
In terms of risk-revenue characteristics, jump-off trading systems are more aggressive, with high potential returns but the greatest risks; turtle trading systems are suitable for a well-trended market, with stable returns but poorly performing shock markets; and law 123 balances risk with returns and applies to multiple market environments。
Comparison of the market environment applicable to different trading systems:
The trading system best applies the highly volatile trend market (commodities, foreign exchange) operation of the central market advantage, eliminating emotional disruption to shock market performance, capturing short-term leapfrogging (one stock, equity finger) of the continuous loss-to-trading system, responding rapidly to rapid changes in market sentiment, and making clear that multiple markets with significant losses (especially for bitcoin) will require some experience to judge effective signals at the reverse point of the trend
It is noteworthy that successful traders do not adhere to a single system, but adapt or combine systems flexibly to the market environment. For example, when a sea turtle system sends a trend signal, a rule 123 is used to identify the trend reverse point and then optimize the timing of entry through an ejection system。
05 common building blocks for system transactions: risk management and psychological discipline
Whether sea turtles, divers or 123 laws, successful systemic transactions are based on two cornerstones: strict risk management and firm psychological discipline。
Sea turtle trading systems manage risk by controlling each transaction risk at a net account value of 1-2 per cent; leapfrog trading systems emphasize the establishment of clear stop points; and law 123 controls risk through trend reverse recognition and stop-loss settings。
With regard to psychological discipline, the three main systems require traders to avoid emotional disruption and adhere to system signals. Richard dennis has stressed: “i have always believed that wealth comes from adherence to the system, not from a momentary wisdom.”
In volatile financial markets, no trading system can guarantee 100 per cent success. But the classic systems of sea turtles, jumping and the 123 laws provide us with time-tested frameworks and methods。
The truly successful traders are not those who seek the grail system, but those who are able to find systems that are suited to their personality and risk preferences and who insist on implementation over time. As victor sporandi said: “the market will never change, because humanity will never change.”
Risk tips: these are only personal views and knowledge sharing and do not constitute any investment proposal. Financial markets are highly risky, and any trading system has limitations, and investors should make prudent decisions based on their own circumstances。
