Richard J. Dennis: Prince of the Pit
Dennis was born in January 1949, in Chicago. There was no privileged childhood with wealthy parents and well-placed friends. He did not have a silver spoon or the right connections.
When he became 17 years old, he worked as an order runner on the trading floor of Chicago Mercantile Exchange ($1.60 an hour). Before becoming 21 years old, he worked as his own runner, and hired his father, who traded in his stead in the pit.
Dennis earned a bachelor’s degree in philosophy from DePaul University, then accepted a scholarship for graduate study in philosophy at Tulane University, but then changed his mind, and returned to trading.
In the early 1970s, he borrowed $1,600 from his family and started trading for his own account at the Mid-America Commodities Exchange.
Dennis spent $1,200 on a seat at the Mid-American Exchange left him $400 in trading capital. However, the capital increased to $3,000, which he described as “compared to $400 … a real grubstake”, and in 1973, his capital was over $100,000.
One of the best years in his trading life as he said was 1974, when he succeeded in making a profit of $500,000 from soybeans and by the end of that year was a millionaire.
Dennis recruited and trained 21 men and 2 women in 2 groups, one from December 1983, and the other from December 1984. He trained this group, known as Turtles, for only two weeks about a simple trend-following system, trading a range of commodities, currencies, and bond markets, buying when prices increased above their recent range, and selling when they fell below their recent range.
In 1984, after the two-week training period was ended, Dennis gave each of the Turtles a trading account and had them trade the systems they had been taught . During this one-month trading period, they were allowed to trade a maximum of 12 contracts per market. After the trial-period ended, he gave the few of them who had successfully traded the system during the one-month trial, accounts ranging from $250,000 to $2 million of his own money to manage.
Under his management, some futures trading fund had made a huge loss in the Black Monday of stock market crash of 1987. He was down $10 million in that single; consequently, he retired from trading for several years and later, he succeeded in compensating the money he lost.
“Dennis the gambler” was the only label that offended him, because he never considered himself a gambler.
Dennis is the president of the Dennis Trading Group Inc. and the vice-chairman of C&D Commodities, a former chairman of the advisory board of the Drug Policy Alliance, a member of the Board of Directors of the Cato Institute, and on the Board of Trustees of the Reason Foundation.
No one knows the exact criteria Dennis used, but you can read below some of his beliefs to recognize his methods of thinking.
The big money in trading is made when one can get long at lows after a big downtrend.
It is not helpful to watch every quote in the markets one trades.
Others’ opinions of the market are good to follow.
If one has $10,000 to risk, one ought to risk $2,500 on every trade.
On initiation, one should know precisely where to liquidate if a loss occurs.