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<<Another aspect of Turtle money management is to take trades only after losing trades. Some traders believe there is a higher probability of a winning trade after a losing trade has occurred. Those who hold to the school of thought that a trade is an independent event and has no relation to the previous trade believe that this concept is without merit. We lean toward the idea of the independent event, but at the same time feel there is some merit to the concept of only trading after a losing trade. We feel the validity of this concept is related to the frequency of trading; the more a system trades, the less valid the concept.

We can see skipping a trade after a long drawn-out profit has occurred because markets usually enter into a congestion phase after a long-term trend has come to an end. But the idea holds less water when trading a swing-type system. How does the success of a trade that has only a few days of life have any impact on the subsequent trade? Rather than debate this issue forever, why not just put the idea to the test?

It appears that taking all trades decreased total profit and increased maximum drawdown. According to this test, it may be worthwhile to skip the next trade after a winner. The results weren't eye-poppingly better on the reward side, but the drawdown increased significantly to 22.7 percent.

But is this trade filtering worthwhile all of the time? Because our focus is limited to just the Turtle system, we think the answer to this question should be left up to the individual trader and his research.>>

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