Turtle Soup: Trading Failed 20-Day Breakouts
Summary
Turtle Soup is described as a short-term reversal approach that seeks to exploit failed breakouts associated with trend-following systems. The article contrasts it with the classic Turtle method, which enters in the direction of a 20-day high or low and may endure extended drawdowns while waiting for trends to develop. Turtle Soup instead looks for a breakout to reverse, using a recent 20-day extreme as the setup and a stop entry after price returns across the breakout area.
The rules call for the relevant 20-day high or low to have occurred at least four trading days earlier. The example places a buy entry near a prior low after price breaks below it and then recovers; an initial stop is set just beyond that day's low, with a trailing stop used if the trade gains. Positions may last hours to days, and another attempt after a stop is left to judgment. The article gives no performance data. Trailing-stop distance is discretionary and should reflect share price and volatility, so implementation and results may vary.
Key ideas
- Turtle Soup attempts to trade failed 20-day breakouts against the initial breakout direction.
- The setup requires the prior 20-day extreme to be at least four trading days old.
- After price moves beyond the extreme and then reverses, a stop entry is placed near the breakout level.
- An initial protective stop and a discretionary trailing stop manage the trade.
- The article provides no test results, and stop distances depend on price and volatility.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.