Reversals and mean reversion · Intermediate
Turtle Soup (false breakout fade)
When price makes a new 20-day low and immediately fails to follow through, the breakout traders are trapped: trade back into the range.
Turtle Soup was named by Linda Raschke and Laurence Connors as a play on the Turtle Traders, whose 20-day breakout system it fades. It exploits a simple fact: many breakouts fail, and the stops of the breakout traders become fuel for a move in the other direction.
Why it works
Obvious levels like the 20-day low collect stop losses and breakout orders. When price pierces the level, triggers those orders and then has no further follow-through, the late sellers must buy back, pushing price back into the range.
Today the same idea is known as a liquidity grab or stop hunt.
The rules
Setup
- Price makes a new 20-day low (or high).
- The previous 20-day low must be at least four days old: an old level gathers more stops.
Entry
- Long: place a buy stop 5–10 ticks above the old 20-day low, once price has traded below it.
- Short: the mirror image above a 20-day high.
Stop loss
- A tick below the low of the day that made the new low.
Exit and management
- Take partial profits within the first two or three candles; trail the rest.
- Exit if price fails to get back into the range quickly.
Filters that improve it
- Works best against a range or a mature trend, not against a fresh, strong breakout with momentum.
Worked example
Illustrative daily EUR/USD example: the 20-day low of 1.0750 is eight days old. Today price trades down to 1.0728, sweeping the level, then rallies. A buy stop at 1.0756 triggers; the stop is at 1.0727 (29 pips). Two days later price reaches 1.0820 and half is closed; the rest is trailed.
Illustrative numbers, not a recommendation.
Common mistakes
- Buying while price is still falling, before it trades back above the level.
- Fading a breakout driven by major news: genuine breakouts after news rarely fail.
How to practise it
In Candlemind, the Market Lens marks liquidity levels such as previous highs and lows. Watch for a sweep of one of them and then a close back above it before entering.
Pre-trade checklist
- New 20-period high/low made
- Previous extreme at least 4 periods old
- Price trades back through the old level
- Stop beyond the sweep extreme
Frequently asked questions
Why is it called Turtle Soup?
Because it trades against the 20-day breakouts used by the famous Turtle Traders.
Is Turtle Soup the same as a liquidity sweep?
They describe the same behaviour: price runs the stops beyond an obvious level and reverses.