Famous Traders: Richard Dennis – “The Prince Of The Pit”

The Prince of the Pit

In the world of financial markets trading, Richard Dennis is a legendary figure. Not only did he achieve huge success as a commodities trader, earning the moniker “Prince of the Pit”, he also went on to launch the famous “Turtle Traders Group”.

Dennis’ story is the type of inspirational tale that can still fire the engines of aspiring traders today. He started out as an order runner on the floor of the CME aged just 17. A short while after this, Dennis began trading his own account where he traded “mini-contracts”. After borrowing $1,600 from family members he quickly traded the cash up to $3000 in 1970. By 1973 he had turned $3000 into $100,000. A year later Dennis made $500,000 trading soybeans and by the end of the year became a millionaire.

Breaking the Mould

Dennis’ trading style was at odds with the typical floor trader approach. Instead of scalping for quick profits inside the trading day, he held longer term positions and was known to pyramid his positions to amplify his gains.

The Turtle Traders

His humble beginnings and his wild success on the trading floor led Dennis to truly believe that anyone could be taught to trade successfully. In a strange turn of events, to settle a dispute on the matter with a friend and fellow “Famous Trader” William Eckhardt, Dennis launched a mentoring program. He hand-selected 21 men and two women, arranged them into two groups, and trained each group for just two weeks by showing them a simple trend-following system to be applied in the commodity, currency and bond markets. The system was extremely basic, premised on buying as prices broke out of their range and selling when they moved below their range.

Focus on Risk Management

Along with the basic system, Dennis also coached them about risk and trade management, teaching the “turtles”, as they would be known, how to cut position sizes on losing trades and how to pyramid aggressively during winning trades.