'N', the 20 day exponential moving average of the ATR, is used by turtles. It is used under the name'Volatility normalisation'. It is nothing but stating an hypotheses that smaller the trade, every instrument will carry the same monetary risk in times of volatility.

Turtles had 'notional' sized accounts - although an account might notionally start the year at $1,000,000, in the case of a loss of 10%, the size of this account would be reduced by 20%. In other words the trader would have to trade as if he only had $800K, not $900, until such time as the account had got back to the starting figure.

Trading of Turtles are done under 20 day break out system as well as 55 day breakout system. One unit is bought or sold to start the system in 20 day break out system if the market is high or low through the 20 th day. If successful trade is manifested in the previous signals in the market, by passing the signal is best option to avoid whipsawing

The Turtles trading system would add a single Unit for every 1/2'N' advance once in position. This would be incremented up to the maximum permitted number of units. That is; 4 in a single instrument, 6 in 'Closely Correlated' markets (such as oil and crude), 10 units in 'Loosely Correlated markets and 12 units overall in one direction - CONSISTENCY being the prime directive in all of this. Since most of the trades failed, it was very important to be in ALL of them, otherwise you would miss those few winners which made a huge profit!

The Turtles trading system does work in your favour provided you follow the rules of such trading religiously and don't fancy bending the mechanics of this strategy. Most people are elated at the huge profits they get on some day, but they are invariably ill-equipped to stay calm and accept frequent losses.

Richard Dennis and his friend trained thirteen traders to use a method of trading called the turtles trading system. This system is based on normalizing the risks involved in trading. For example, ten dollars invested in an expensive stock and ten dollars invested in a cheap stock carry the same risk. Under the 20 day breakout method, if the price of a stock is at its highest or lowest point within the past 20 days, then trading should occur. A single unit would be bought or sold. The prime directive of this system is consistency.