Interview with Jerry Parker - Better System Trader podcast

I’m sure we’ve all heard the story of the Turtle Traders, the legendary trading experiment conducted by Richard Dennis and William Eckhardt to see whether great traders were born or made, producing over $100 million in profits.

Jerry Parker started his trading career in 1983 as one of the original turtle traders, and has been the most successful.

Jerry is now the Chairman and CEO of Chesapeake Capital, a global investment manager that provides investment and portfolio management services to both private and institutional investors worldwide.

He’s been trading a similar style for 30+ years now so has loads of knowledge and experience to share with us.

In this weeks episode Jerry talks about trend following, how to approach wins and losses, dealing with drawdowns, managing correlations in asset classes and how changing market dynamics have impacted trend following and the solution. He also gives us some tips on systematic trading including how he trades without relying on optimal values of the past.

‘The most important thing is to follow the rules’ – Jerry Parker

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Topics discussed

What types of characteristics Dennis and Eckardt were looking for in the Turtle traders program
How the Turtles were taught to approach losses
Common traits amongst the most successful Turtles
The hardest part of trading as a Turtle
How Jerry overcame the fear of taking trades
The biggest lesson being a Turtle
What Jerry did with the Turtles approach after the program ended
The impact managing other peoples money can have on trading
The key factors that make trend following work
Managing correlations between asset classes
Long-term vs short-term trend following
Dealing with drawdowns
How changes market dynamics have impacted trend following and solutions
How to diversify to lessen the impact of any one parameter
How to trade without relying on optimal values of the past

PLUS questions submitted by listeners:

The difficulties in knowing when to adjust strategy parameters
Adjusting your system for whipsaws
Tips to avoid data mining
Do the Turtles systems still work in the todays markets?
Are there any markets where the strategies no longer work?
Short versus Long trades
Overcoming emotions in trading
Biggest mistakes and the lessons learnt
What todays Turtle program would look like

Resources & Links mentioned in this episode

Jerry can be contacted through his website chesapeakecapital.com or follow @rjparkerjr09 on Twitter
Books:

Quotes

If you’re losing money but doing the right thing that’s fine

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What works in the markets is often not going to feel good

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If you follow the system, that’s the right or wrong, not giving the money back or taking a loss

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To the degree you follow your system, that is how you earn your grade

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Trade lots of entries and exits to remove the desire to find the best

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Top tips from this episode

Loads of great advice from Jerry this episode, here are some of my favourites:

Focus on trend following – Jerry has one particular style he trades and his focus is on being the best at that. He’s resisted the urge to diversify into different styles, his diversification is across markets and entry and exit conditions instead and he’s done very well out of specialising in one particular style,
Solution to optimisation/data mining – Jerry said “I don’t want to rely on what’s been optimal in the past” and the way he gets around that is to trade lots of entries and exits to remove the desire to find the best. He’s chasing trends and has shorter and longer term methods to getting in and out to ensure he doesn’t miss a trend.
The final point which comes up all the time, is Discipline – ‘follow the system’, ‘if it says to enter or exit a trade just do it’. Jerry summed it up nicely in the statement ‘You weren’t wrong if you took a loss, you weren’t right if you made money, you just followed the system’.