The origin of the Turtle Soup trading strategy comes from a trading group who dubbed themselves “The Turtles”. As a group of like-minded strategists, they found that they used almost the same techniques to make profits, so it was natural for them to form a collective and call their strategy the Turtle strategy. In fact, they do have something in common with the animal in the sense that there could be problems if it is turned upside down onto its shell – and this equates to loss in trading. This obvious flaw gave rise to a new strategy.
A soup has several ingredients blended together, so that’s not all there is to the strategy. Linda Bradford Raschke, a very talented futures and commodities trader, took the Turtle trading techniques and combined it with her own successful ones to form a new strategy. She called it Turtle Soup.
How does the Turtle Soup strategy help?
Turtle Soup helps you spot false breakouts. A false breakout is when the price breaks through a certain barrier or support or resistance level but then quickly retreats to where it was before that, without being able to move and break out again. When the price quickly reverses like this, it is known as a false breakout. If you’ve acted on a false breakout, it could be disastrous. Of course, reversals on their own aren’t necessarily bad for you – it’s how you’ve acted on the information that counts. Whether it’s in CFD trading or commodities, traders rightly despise market anomalies such as false breakouts.
Turtle Soup trading strategy doesn’t teach you to actually avoid false breakout at all costs. Instead, it shows you how to spot them and then profit from them.
What you need and how to execute Turtle Soup strategy
For this soup, your two main ingredients are:
Here’s the recipe:
Although this strategy appears to be easy, it can be challenging in practice. The level of complexity is slightly deceptive compared to some more routine, broadly used, bread-and-butter strategies. However, Turtle Soup can be delicious and lead to tasty profits – it all depends on how well you cook it.
The main issue that might be stopping you from enjoying this strategy is that if you’re quite new to trading, it may be difficult to spot false breakouts. That should not be a deterrent, however. After all, you didn’t know everything when you started to learn CFDs. Similarly, you can take the time to get better at spotting these potentially nasty false breakouts, and then make a delicious meal of it.