Michael Covel
TurtleTrader has been operated by Michael Covel since 1996. This is the original Turtle trading site. Michael is also the author of the bestseller TurtleTrader.
The United States and Systematic Trading
The United States is where systematic trend following was born and where its most significant practitioners built their careers. The Chicago Board of Trade, the Chicago Mercantile Exchange, and the Mid-America Exchange are the physical institutions where Richard Dennis traded his way from a $1,600 stake to tens of millions in the early 1970s, and where the Turtle experiment was conceived and executed. The CME Group today, which encompasses the CBOT, CME, NYMEX, and COMEX, is the largest futures exchange complex in the world and the primary market where the instruments that define systematic trend following, Treasury futures, equity index futures, agricultural commodity futures, and energy futures, are traded with the deepest liquidity globally.
The US dollar’s role as the global reserve currency means that virtually every significant global futures market has a dollar-denominated component. Crude oil futures are priced in dollars. Gold is priced in dollars. Major equity indices have dollar-denominated futures. US Treasury futures are among the most globally significant interest rate instruments. For a systematic trend following approach trading a diversified global portfolio, US-listed instruments provide the broadest access to global market dynamics of any single exchange system.
The Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) are the regulatory bodies that govern US futures trading and CTA registration. These regulations require audited performance disclosure, hypothetical disclaimer requirements, and systematic oversight of registered trading advisors. This regulatory infrastructure is what makes US-domiciled systematic trading operations among the most credible globally: the disclosure requirements provide the documented performance records that allow investors to evaluate actual versus hypothetical results.
The US is also home to the deepest talent pool in systematic trading research. The University of Chicago, where Eckhardt spent years pursuing his PhD in mathematical logic, has contributed foundational thinking to both the efficient market hypothesis and its most rigorous critics. The quantitative finance programs at MIT, Carnegie Mellon, and Princeton have produced generations of systematic trading practitioners. The US academic and professional infrastructure is the source of the intellectual capital that the managed futures industry draws on.
For US-based traders, systematic trend following provides genuine diversification from the domestic equity and bond market concentration that characterizes most American retail and institutional portfolios. The S&P 500 correlation with systematic trend following is structurally low. The diversification benefit is real, not theoretical. It is most visible during the equity market crises, 1987, 1998, 2000-2002, 2008, when systematic trend following historically produced its strongest returns.
Frequently Asked Questions
Why is the United States the center of systematic trend following history?
Because the Chicago futures exchanges where Richard Dennis traded in the early 1970s were the environment that produced the specific combination of deep liquidity, diverse instrument classes, and accessible market infrastructure that systematic trend following requires. The Turtle experiment was conceived, executed, and documented in Chicago. The most significant early practitioners, Dennis, Eckhardt, Parker, Rabar, Cheval, operated from Chicago and its environs. The US regulatory framework provided the disclosure requirements that made their audited performance records publicly available.
What US markets are most relevant to global systematic trend following?
US Treasury futures (2-year, 5-year, 10-year, 30-year) for interest rate trends. S&P 500, NASDAQ, Russell 2000, and Dow Jones equity index futures for US equity trends. CME agricultural futures (corn, wheat, soybeans, cotton) for agricultural commodity trends. NYMEX crude oil and natural gas futures for energy trends. CME currency futures for major currency pairs. Together these instruments provide the core of the diversified global futures portfolio that systematic trend following manages.
How does CFTC regulation benefit systematic trading investors?
By requiring registered CTAs to provide audited performance disclosure, clearly label hypothetical versus actual results, and maintain NFA membership with ongoing regulatory oversight. This framework produces the documented multi-decade performance records that allow investors to evaluate systematic approaches on the basis of actual trading results rather than backtested simulations. The NFA enforcement actions against practitioners who violated these disclosure requirements, documented on TurtleTrader, demonstrate that the regulatory framework has teeth.
Want to learn more and start trading trend following systems?
Start here