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Turtle Trading Indicators for Forex

Master the legendary Turtle Trading system with the essential indicators that turned novices into millionaire traders. Learn the complete technical setup used by Richard Dennis and William Eckhardt's famous trading experiment.

Core Indicators Complete System
4
Core Indicators
80%
Win Rate (Original)
20/55 Days
Key Timeframes
Trend
Following System

The Legendary Turtle Trading System

In 1983, commodity traders Richard Dennis and William Eckhardt conducted one of the most famous trading experiments in history. They recruited 23 novices, taught them a simple trend-following system, and turned them into the legendary "Turtle Traders" who generated over $175 million in profits.

The beauty of the Turtle system lies in its simplicity - it uses only four core indicators that can be easily applied to forex trading. Unlike complex systems with dozens of parameters, Turtle Trading focuses on capturing big trends with mechanical precision and strict risk management.

Turtle Philosophy:

"Give me a simple system that I can follow mechanically, and I'll make more money than someone trying to be clever with complex indicators."

Turtle System in Action Upper Channel Lower Channel Entry 1 Entry 2

The 4 Essential Turtle Trading Indicators

1

Donchian Channels

The Heart of Turtle Trading

  • • 20-Day Channel: For breakout entries
  • • 55-Day Channel: For major trend signals
  • • 10-Day Channel: For stop loss exits
  • • Upper band = Highest high of N periods
  • • Lower band = Lowest low of N periods

Settings for Forex:

20-period (entry), 55-period (trend), 10-period (exit)

2

Average True Range (ATR)

Position Size Calculator

  • • Period: 20 days (N-value)
  • • Measures market volatility
  • • Determines position size per trade
  • • Risk = 1% of capital per N
  • • Higher ATR = smaller position size

Turtle Formula:

Position Size = (Account × 1%) ÷ (N × Dollar per Point)

3

Simple Moving Average

Trend Filter & Direction

  • • Period: 25 or 50 days
  • • Confirms overall trend direction
  • • Price above SMA = uptrend bias
  • • Price below SMA = downtrend bias
  • • Prevents counter-trend trades

Turtle Rule:

Only take long breakouts when price > 25 SMA

4

RSI (Optional Filter)

Momentum Confirmation

  • • Period: 14 days
  • • Confirms breakout strength
  • • RSI > 50 for long entries
  • • RSI < 50 for short entries
  • • Filters false breakouts

Modern Addition:

Not in original system, but improves win rate

Complete Indicator Setup

Primary Indicators

  • 📈 Donchian Channel (20, 55, 10)
  • 📊 ATR (20) - Position sizing
  • 📉 SMA (25) - Trend filter
  • ⚡ RSI (14) - Optional momentum

Timeframes

  • 🕐 Daily charts (primary)
  • 🕑 4-hour charts (intraday)
  • 🕒 Weekly charts (long-term)
  • ⏰ H1 minimum for scalping

Complete Turtle Trading System for Forex

Entry Rules

System 1 (Faster Entry)

Enter long when price breaks above 20-day Donchian high

Enter short when price breaks below 20-day Donchian low

System 2 (Safer Entry)

Enter long when price breaks above 55-day Donchian high

Enter short when price breaks below 55-day Donchian low

Additional Filters

• Price must be above 25 SMA for long entries

• Price must be below 25 SMA for short entries

• RSI confirms momentum direction (optional)

Turtle Secret:

Skip System 1 entry if last System 1 signal was profitable. This prevents overtrading in choppy markets.

Exit Rules

Stop Loss Exit

Exit when price breaks 10-day Donchian Channel

This acts as a trailing stop loss mechanism

Whipsaw Protection

Alternative: 2N ATR stop loss from entry

Protects against volatile market conditions

Trend Reversal Exit

Exit longs when price breaks 20-day low

Exit shorts when price breaks 20-day high

Critical Rule:

Never risk more than 2% of capital on any single trade. Cut losses quickly and let profits run.

Turtle Position Sizing Formula

Step 1: Calculate N

N = 20-period ATR

ATR represents the average daily range of the currency pair over 20 periods

Step 2: Dollar Volatility

DV = N × $ per pip

Convert the ATR into dollar terms based on your account currency

Step 3: Position Size

Units = (1% × Account) ÷ DV

This ensures you risk exactly 1% of capital per N-value movement

Example Calculation (EUR/USD)

Account Size: $10,000

Risk per trade: 1% = $100

EUR/USD ATR(20): 0.0080 (80 pips)

Dollar per pip: $1 (mini lot)

Dollar Volatility: 80 × $1 = $80

Position Size: $100 ÷ $80 = 1.25 mini lots

Setting Up Indicators on Popular Platforms

📊 MetaTrader 4/5 Setup

Donchian Channels:

Insert → Indicators → Custom → Donchian Channel

Settings: Period 20, 55, 10 (separate indicators)

ATR:

Insert → Indicators → Oscillators → ATR

Period: 20

Moving Average:

Insert → Indicators → Trend → Moving Average

Period: 25, Method: Simple

📈 TradingView Setup

Donchian Channels:

Search "Donchian Channels" in indicators

Add three instances: 20, 55, 10 periods

ATR:

Search "Average True Range"

Length: 20

SMA & RSI:

SMA: Length 25

RSI: Length 14

🎯 Recommended Chart Template

Colors:

  • • 20-Day Channel: Blue
  • • 55-Day Channel: Red
  • • 10-Day Channel: Orange
  • • SMA: Green

Line Styles:

  • • Entry channels: Solid lines
  • • Exit channel: Dashed lines
  • • SMA: Thick solid line
  • • ATR: Histogram in separate panel

Best Practices:

  • • Keep charts clean and simple
  • • Use daily timeframe primarily
  • • Save as template for consistency
  • • Test on demo first