# Turtle Soup Also known as: ICT turtle soup. A Market Structure concept (Structure events) in the LuxAlgo Library, with 1 indicator implementation. ## What is Turtle Soup? Turtle Soup is a failed-breakout reversal setup published by Laurence Connors and Linda Raschke in Street Smarts (1995), named at the expense of the Turtles, the trend-following group trained by Richard Dennis whose rules bought 20-day channel breakouts. The setup fades exactly that entry. In the original buy rules, today prints a new 20-day low while the previous 20-day low is at least four sessions old; the trade enters on a buy stop back above that prior low, so it only triggers if the breakout is already failing, with the initial stop below the new extreme. The sell side mirrors this at fresh 20-day highs, and a next-day variant (Turtle Soup Plus One) allows the reclaim to happen one session later. Smart Money Concepts traders later borrowed the name for the same event told in liquidity language: price runs an obvious prior high or low, the [liquidity sweep](https://www.luxalgo.com/library/concept/liquidity-sweep/) consumes resting stops and breakout entries, and the failure to hold beyond the level becomes the reversal trade. The chart event is identical; the difference is that the original is a rule-defined, countertrend fade of fresh 20-day extremes, while the ICT version is discretionary and usually demands structure confirmation before entry. Either way, the edge claimed is positioning against trapped breakout traders, and it fails whenever the breakout turns out to be real. The mechanics matter because they define who is trapped. A fresh 20-day extreme is exactly where channel-breakout systems enter and where stops beyond the old extreme concentrate, so a failed break leaves two crowds on the wrong side at once: breakout entrants under water immediately, and stopped-out holders watching price return without them. Requiring the prior extreme to be at least four sessions old keeps the level obvious enough to have attracted that positioning. Entering on a stop back inside the range, rather than at the new extreme itself, is the discipline in the design: the market must already be repairing the break before the trade can exist, which filters the cleanest failures from breaks that simply keep going. It is still a countertrend trade, and the honest accounting starts there. When the breakout is real, the setup sells the launch point of a new trend, and the loss is taken just as the move accelerates; expectancy depends on cutting those quickly while letting successful fades rotate across the [trading range](https://www.luxalgo.com/library/concept/trading-range/). The exact parameters have been public since 1995, and edges that specific decay. The durable part is the structural logic of trapped traders, which is why modern liquidity-based variants re-derive the same trade from positioning reasoning rather than fixed lookbacks. ## How to identify a Turtle Soup setup on charts Both the classic and the liquidity-flavored versions reduce to the same sequence: an obvious extreme, a break that fails, and a reclaim that can be traded with defined risk. 1. Mark the reference extreme: the lowest low or highest high of the last 20 sessions in the original rules, or any [swing high or low](https://www.luxalgo.com/library/concept/swing-high-low/) with visible stop concentration in the discretionary version. 2. Check the age of the prior extreme: Connors and Raschke required it to be at least four sessions old, long enough for positioning to have built around it. 3. Wait for the break: a new extreme prints beyond the reference level, the event breakout systems trade in the other direction. 4. Arm the entry where failure is proven: a stop order back inside the violated level, so the position only exists if price reclaims the range; discretionary traders often also require a [break of structure](https://www.luxalgo.com/library/concept/break-of-structure/) in the fade direction before arming it. 5. Define the exit rails before entry: initial stop beyond the sweep's furthest point, first target toward the opposite side of the range, and abandon the idea if price closes back beyond the reclaimed level. ## How traders use it - As a rule-based fade of fresh extremes: the classic form buys a failed break below a 20-day low (or sells a failed break above a 20-day high), entering on a stop back inside the old range so the market must already be reclaiming the level before any position exists. - As an entry model inside Smart Money Concepts: a raid through an old high or low that immediately rejects is traded back toward the opposite liquidity, typically only after a [change of character](https://www.luxalgo.com/library/concept/change-of-character/) or an impulsive leg away from the swept level confirms the reversal. - As a risk template: the violated extreme supplies the invalidation. Stops sit beyond the sweep's furthest point, and the idea is abandoned if price closes back outside the reclaimed level instead of rotating away from it. - As a rotation entry at range extremes: a failed poke beyond a rotational bracket, the [deviation above/below range](https://www.luxalgo.com/library/concept/deviation-above-below-range/) event, is turtle soup in range clothing, entered on re-entry into the bracket and targeted at the opposite extreme. - As a higher-timeframe filtered fade: [multi-timeframe structure alignment](https://www.luxalgo.com/library/concept/multi-timeframe-structure-alignment/) narrows the take to sweeps against minor extremes in the direction of the larger trend, so the countertrend entry on the trading timeframe is a with-trend entry one degree up. ## Turtle Soup vs similar setups - **Liquidity Sweep** (https://www.luxalgo.com/library/concept/liquidity-sweep/): A sweep names the raid itself: the run through resting stops beyond a level. Turtle Soup is a tradeable setup built on that event, with a defined entry back inside the range and a stop beyond the raid's extreme. Every turtle soup starts with a sweep; most sweeps are never traded. - **Swing Failure Pattern** (https://www.luxalgo.com/library/concept/swing-failure-pattern/): The SFP applies the same failure logic to any swing high or low and usually requires a close back inside the level. Original Turtle Soup is narrower: it fades specifically a fresh 20-day extreme whose prior extreme is at least several sessions old. - **False Breakout** (https://www.luxalgo.com/library/concept/false-breakout/): The umbrella term for any break that fails to hold, with no entry mechanics attached. Turtle Soup is one codified way to trade a false breakout, aimed at the stops and late entries stranded when a channel breakout fails. ## FAQ ### Is Turtle Soup the same thing as a liquidity sweep? The underlying event is the same: price trades through a prior extreme, fails to hold, and reverses. Turtle Soup is the older, rule-defined way to trade it, with specific lookback and entry-stop mechanics, while sweep vocabulary comes from Smart Money Concepts and is applied discretionarily to any resting-liquidity level. Many modern strategies use the two names interchangeably. ### Where does the name Turtle Soup come from? From the Turtles, the trend followers trained by Richard Dennis, whose published system bought 20-day breakouts. Connors and Raschke built a setup to profit precisely when those breakouts fail, so turning failed Turtle entries into profits became 'turtle soup'. ICT later adopted the name for stop-run reversals at prior highs and lows. ### Does the original Turtle Soup setup still work? The exact 1995 parameters have been public for decades, and any edge that specific erodes as it gets traded and as market structure changes. Results are regime-dependent: better in rotational markets, poor in persistent trends. The reusable core is the trap logic rather than the 20-day lookback, which is why practitioners revalidate the mechanics on their own market before sizing it. ### What timeframes does Turtle Soup work on? Connors and Raschke defined it on daily bars. The liquidity-based restatement gets applied from weekly swings down to intraday session extremes, with the usual trade-off: lower timeframes offer more occurrences and more noise, where a stop run can be a few ticks of randomness rather than meaningful positioning. Whatever the timeframe, the reference level needs to be obvious enough to have gathered orders. ### What is Turtle Soup Plus One? The next-day variant from the same book. When the failure does not complete on the day of the new extreme, the entry stop is carried one session further, catching breaks that fail on the following day instead. It trades a later, sometimes worse entry price for one more session of confirmation; the stop and invalidation logic stay the same. ### How should stops be set on a Turtle Soup trade? The setup supplies its own invalidation: beyond the extreme of the failed break. If price trades back through the sweep's furthest point, the failure thesis is wrong and the breakout is live, so there is no reason to hold. Many traders also exit on a close back outside the reclaimed level even before the hard stop is hit, accepting a smaller loss when the reclaim itself was the false move. ## Implementations in the Library - CRT Sweep & Setup Highlighter (LuxAlgo): https://www.luxalgo.com/library/indicator/crt-sweep-setup-highlighter/ ## Related concepts - Break of Structure: https://www.luxalgo.com/library/concept/break-of-structure/ - Change of Character: https://www.luxalgo.com/library/concept/change-of-character/ - Swing Failure Pattern: https://www.luxalgo.com/library/concept/swing-failure-pattern/ - Internal vs External Structure: https://www.luxalgo.com/library/concept/internal-vs-external-structure/ - Strong vs Weak Swings: https://www.luxalgo.com/library/concept/strong-vs-weak-swings/ - Structure Invalidation: https://www.luxalgo.com/library/concept/structure-invalidation/ - Impulse Leg: https://www.luxalgo.com/library/concept/impulse-leg/ - Corrective Leg: https://www.luxalgo.com/library/concept/corrective-leg/ - Expansion → Retracement → Consolidation Cycle: https://www.luxalgo.com/library/concept/expansion-retracement-consolidation-cycle/ - Measured Move: https://www.luxalgo.com/library/concept/measured-move/ --- Source: https://www.luxalgo.com/library/concept/turtle-soup/ (LuxAlgo Library, the encyclopedia of trading & technical analysis). Free to use with attribution: https://www.luxalgo.com/library/license/