Way of the turtle

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Trend Following
Trends are sustained changes in price that occur over a period of
weeks or months. The basic idea of trend following is to buy just
as a trend toward higher prices starts and exit just after that trend
ends. Markets have the inclination to move, or trend, in one of
three directions: up, down or sideways. The Turtles were taught to
buy just as the market moved from trending sideways to trending
up and also to sell short just as a trend down would begin, exiting
each trend after it ended, i.e. when the trend went from moving
up or down to moving sideways again.
It is funny how over the years the secret rules of the Turtles have
been discussed and some individuals have charged thousands of
dollars to teach them. The reality is that the particular rules we
used were a fairly unimportant component of our success. There
are many other widely known trend-following methods that work
equally well, and many that are arguably better. In fact, even the
method we traded with was well known at the time we used it.
The secret of trading and of the Turtles’ success is that you can
trade successfully by using ideas and concepts that are well known
and have been around for years. But you have to follow those rules
consistently.
The specific method we used was known as the breakout, some-
times referred to as Donchian channels after Richard Donchian,
who popularized the breakout method of trading. The basic idea
was to buy if a market exceeded the highest price for a particular
number of preceding days, that is, broke out of its prior price lev-
els. We had an intermediate-length system that Rich and Bill called
System 1 that considered 20 days (or 4 trading weeks) of prices to
determine the highs and lows and a longer-term system, System 2,