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efficient Forex strategy

June 3, 2020

June 3, 2020

Turtle soup: Good old thingsDmitri Demidenko

Counter-trend trading using price-action, VSA and Pivot points

The main investment rule says: Higher risk, higher return. Many are afraid of it and aren’t ready to assume substantial risks. Even more so when everyone else says “Trend is your friend” and doesn’t recommend catching falling knives. But once you’ve learnt to control risks and understood that losses are an inherent part of  success, the trading world starts shining bright like a diamond.  A narrow stop order and an attempt to catch a reversal at extremums became the calling card of experimental trading strategies. Turtle soup is one of them.

The author of the strategy is Linda Raschke, who described it in her best-seller “Street Smarts: High Probability Short-Term Trading Strategies”. The famous trader refers to the 70ies of the 20th century when it was popular to buy 20- and 4-day maximums. The adherents of this trading system called themselves “turtles”. It was a trend-following strategy but it would produce lots of false signals. It was the reason for developing the Turtle Soup strategy. This strategy is based on the following principles:

- the market has to form a new 20-day maximum. The system is efficient intraday too, so the term “new 20-bar maximum” can be used as well.

- the previous 20-day maximum must have formed at least 4 bars earlier.

If these conditions are met, a trader can place a selling pending order 5-10 points below the previous 20-day maximum. A stop order should be placed 5-10 points above an existing peak. Linda Raschke recommends using Trailing stop to fix profits and not sticking to the “sell and hold” principle because an existing descending movement can be a mere correction of a bullish trend.

Turtle soup strategy in the daily chart of  EUR/GBP

![LiteForex: Turtle soup: efficient Forex strategy][1]

Using the Turtle Soup strategy, we need to understand that one or several stop orders may be triggered before the market starts moving in the necessary direction. And then one good trade may fully cover previous losses. Such a trading approach doesn’t suit everyone. So, conservative traders may want to use additional filters which confirm that opening a trade is reasonable.

In the case of [EUR/GBP][2], a new 20-day maximum is nothing more than a pin bar in Price Action and an upthrust in VSA. It formed at an important Pivot level while MACD showed a divergence with the price chart. It says that a bullish trend may reverse.

Filters of the Turtle soup strategy in the chart of EUR/GBP

![LiteForex: Turtle soup: efficient Forex strategy][3]

The system of conditions necessary to open long positions is similar:

- the market has to form a new 20-bar minimum;

- the previous 20-bar minimum must be located at least 4 bars earlier;

- a pending order to buy is placed at the level of the previous 20-bar minimum plus 5-10 points;

- a protective stop order is placed at the level of a new 20-bar minimum minus 5-10 points;

- Trailing stop is used for profit fixing;

- if a stop order works, another long position may be opened on the same or the following trading day.

Turtle soup strategy in the H4 chart of GBP/USD

![LiteForex: Turtle soup: efficient Forex strategy][4]

A system of filters helps complement the strategy. In the case of [GBP/USD][5], a trader was sure that a long position was worth opening for a few reasons:

- RSI left the oversold zone

- An important pivot level was broken in the presence of high volumes, which pointed to powerful buyers.

Filters of the Turtle soup strategy in the chart of  GBP/USD

![LiteForex: Turtle soup: efficient Forex strategy][6]

Despite being old, the Turtle soup strategy is efficient and profit- yielding. You can taste this trading dish using [LiteForex services][7].

P.S. Did you like my article? Share it in social networks: it will be the best “thank you” :)

Ask me questions and comment below. I’ll be glad to answer your questions and give necessary explanations.

Useful links:

  • I recommend trying to trade with a reliable broker [here][8]. The system allows you to trade by yourself or copy successful traders from all across the globe.
  • Use my promo-code BLOG for getting deposit bonus 50% on LiteForex platform. Just enter this code in the appropriate field while [depositing][9] your trading account.
  • Telegram channel with high-quality analytics, Forex reviews, training articles, and other useful things for traders

Price chart of GBPUSD in real time mode

![Turtle soup: Good old things][10]

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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  1. cdn.liteforex.com/cache/uploads/blog_post/strategies-forex/eurgbp1-03-06-20.jpg?w=30&s=f1d9a7552d88d26f65b527a626b1373a
  2. my.liteforex.com/trading/chart?symbol=EURGBP&returnUrl=true
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  5. my.liteforex.com/trading/chart?symbol=GBPUSD&returnUrl=true
  6. cdn.liteforex.com/cache/uploads/blog_post/strategies-forex/gbpusd2-03-06-20.jpg?w=30&s=210f8d1745a2a11f0837ca13ed5231f9
  7. my.liteforex.com/trading?type=currency
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  10. cdn.liteforex.com/cache/uploads/blog_post/strategies-forex/liteforex-blog-turtle-03-06-20.jpg?q=75&w=1000&s=483a3075c5fe556ffd8917ace2b71d17