Trading breakouts of 20-day high or low prices is one of the most popular trend-following methods used by commodity trading advisors. This technique was created by Richard Donchian but made famous by a successful trading group led by Richard Dennis known as the "Turtles". Over long time periods, the 20-day breakout strategy tends to be profitable, but it also is subject to large drawdowns and repeated false breakouts.

The Turtle Soup Plus One method is designed specifically to take advantage of these false moves. For a buy set-up, a market must close at a new 20-day low and its previous 20-day low must have been more than four days ago. If the next day the market trades above the previous day's low, it is considered a false breakout and a buy signal is triggered. For sells, reverse the rules. For more information about how to use this indicator, click here.

In-depth knowledge about how to trade this strategy can be found in "Street Smarts" by Larry Connors and Linda Raschke.

Reminder: We are in no way recommending the purchase or short sale of these futures markets. Trading should be based on your own understanding of market conditions, price patterns and risk; our information is designed to contribute to your understanding. Controlling risk through the use of protective stops is critical.