Setups › Turtle soup

Turtle soup

From Linda Raschke. In one line: fell under the 20-day low but closed back above it.

About the names. The famous names are credit for publicly described ideas. Every test here uses our own simplified, fully coded version of the idea, so the numbers show how our code behaved on past prices, not how the named person trades or traded. No affiliation with, or endorsement by, any named person.

5,193

trades tested

40%

win rate

-0.09R

average result

-0.76%

vs Nifty per trade

What it looks like

Linda Raschke named this setup after the Turtle traders, because it trades against their breakouts. A stock falls below its 20-day low, triggering stop-losses and short sellers, and then closes back above that low the same day. The breakdown failed.

Why traders use it

Many traders place stops just under obvious lows. When those stops are taken out and the price still recovers, the sellers are exhausted and the trapped short sellers may have to buy back.

The exact rule we tested

Price above the 200-day average (we only trade it in up-trends).
Today's low is below the lowest low of the previous 20 days.
Today's close is back above that 20-day low.

Raschke's original needed the broken low to be at least 4 days old. That stricter version is recorded separately; on NSE it did not do better in the November 2026 backtest.

Mistakes to avoid

Trading it on news. A breakdown on a real problem (bad results, fraud) is not a false breakdown.
Holding too long. It is a short-term reversal trade: 1-2 days is typical.

How we tested it

Every day from 05 Nov 2024 to 05 Nov 2026, every main-board NSE stock (price ≥ ₹50, turnover ≥ ₹5 crore a day) that showed this setup was bought the next day above its last high, with a stop 1.5 ATR below and a target 2.5 ATR above, and sold after 10 trading days if neither was hit; 0.1% costs per trade. Traders usually hold this setup 1-2 days.

The maths behind the result

Average winner +1.08R, average loser −0.86R, win rate 40%. Expectancy = 40% × 1.08 − 60% × 0.86 = -0.09R per trade. To break even with this payoff you need to win at least 44% of trades. How expectancy works.

A historical simulation, not live trading and not a recommendation.