Getting Started The Market Holy Grail: Fact or Fiction

Introduction
The Holy Grail is quite possibly the most famous piece of Christian mythology. Almost every archaeologist, historian, Christian and capitalist would love to find it, and many dedicate their lives towards its pursuit. It is said that those who drink from The Grail will be blessed with eternal life, whether that is spiritual or physical is open for debate (unless you have read "The Da Vinci Code" where the last thing you would do is drink from it!). Perhaps that explains why Indiana Jones may appear in a fourth film despite his increasing age.

When we talk about the Market Holy Grail we don't mean a cup that promises ever lasting life, more a cup that you can dip into the markets and pull out a never ending supply of money. But wait a minute, this sounds too good to be true? Or does it? Warren Buffett and George Soros have made billions from their investments in financial markets, maybe they found The Grail. The Internet is teaming with market "gurus" who offer to teach the secrets of The Grail for a princely sum of around $250 a month. So why do so many traders retire frustrated, mentally exhausted and a few thousand dollars worse off, never having found what looks so readily available to them?

The reason why traders? attempts are often futile is because they spend their time and money looking in the wrong place. By saying they are looking in the wrong place implies that there is a right place and we are not dealing with a myth. So where is it? Fear not intrepid explorer, we will show you where to look. If you concentrate hard enough you might even see the treasure map hidden within our words.

What the Market Holy Grail Is Not
The majority of first time traders will go through a process like this, or something very similar:
  1. Read a little about the market and decide to try you luck.
  2. Discover that the Internet is full of magic indicators and gurus.
  3. Start trading and realise that it is a lot harder than the gurus said it would be.
  4. Come to the conclusion that this strategy doesn't work and try again or...
  5. Give up with a sore head and a sore wallet.

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Confusing isn't it? That is because, as you probably already know, learning to trade is a very confusing business. It often seems like the more you learn the more confused you become. The more confused you become the more you think you should learn and so on. If you are unable to get a combination of indicators to work surely someone has a combination you can buy. Alas, no matter how hard you try, following either of these two paths never seems to work. That is because the Market Holy Grail is not an indicator, strategy, method or charting package.

So What is it?
If it is not something that you will find on your charts then it is not something that you will be able to understand after one night's study. Just as many people dedicate an enormous amount of energy towards researching the Christian myth of the Grail, you will have to do the same when pursuing the market incarnation. That is a very important point; being a successful trader isn't easy, nobody ever said it would be. That is why the rewards for becoming consistently profitable are so high. There is no doubt that most, if not all, combinations of indicators work. However that does not mean that they work all of the time but they do work well in specific conditions. The success of every indicator-based strategy is dependent on your ability to read the conditions of the market and apply what you have learned. It is also down to the internal thought process that occurs every time you come to place a trade. So what is the magic factor? The answer is: you.

What Does This Mean?
Wait a minute; we can't be serious, can we? Well let us think about it for a while. Think back to the last time you tried to trade a "Holy Grail" system or a system you researched and back tested yourself. If it failed how many of the following weaknesses hindered your efforts:

Inexperience: No matter how many times you read that trading manual nothing can prepare you for live trade. As all of your indicators begin to line up you get confused, miss signals and react too quickly or too late. After your first hectic day you realise that your strategy was OK and you can attribute your loss to your lack of experience.

Greed: Buying a strategy almost inevitably comes with a statement telling you how you can make a boatload of money with relatively little work. When designing your own strategy you will automatically look for the highest winning ratio rather than best risk/ reward. This will lead to classic over trading (if you are destined to win why not increase your earnings by trading more), inability to cut losses (your strategy predicts market direction so all you have to do is wait and this loss will turn into a profit) and believing the market will move further in your direction than it actually does (setting a target that gives you as much profit as you want rather than as much profit as the market can give you).

Fear: After being burned a few times by the greed and inexperienced stage you will have probably changed strategies at least once. After all it isn't your fault it must just be a dodgy strategy. Now it is time to hit the books and find another combination of indicators to use. The more you learn the more indicators you can find that help you make money. Or if you prefer to buy another "Grail" system it must be more complicated like something the professionals use. Unfortunately all of the extra knowledge, indicators and complication leave you almost paralysed when it comes to entering a trade. Coupled with the losses you incurred during your "greed phase" entering a trade becomes scary. That moment of doubt where you question your indicators or the market's recent behaviour causes you to miss your entry and forget about the trade altogether. As you know only too well this trade was the best of the day or possibly even the whole week!

Another common mistake associated with fear is late entry. All of the characteristics of complete failure to enter are there but rather than miss the trade completely you enter late. This completely destroys your risk reward and an unsuccessful trade costs you much more than it would if you had entered at the correct time.

Just when you thought fear could only influence your entries it turns around and has a bite at your exits too. Exiting too early can cause you to take an unnecessary loss. Picture the trade: you enter correctly and the market moves a little way in your direction. All of a sudden the market turns around hard and your position starts to represent a loss. Rather than sticking to your stop loss (your defined risk) you exit early and think that you have saves yourself some financial pain. Just as you exit or just before your stop loss is triggered the market turns on its heels and ends up reaching your initial target.

Scenario two causes you to take your profit too early. The market approaches your target and goes through a natural correction. As you see the market eat into your profit you decide enough is enough and you get out while you are still in the black. Of course the market resumes its initial direction and hits your original target.

Fear will cause you to develop a lack of faith in your chosen method. Depending on how many times this has happened before you will either go back to the drawing board with your method or lose faith in your ability to trade at all. You start to believe that surely nobody makes money from trading.

This is the point at which many traders have what they call the "aha moment". All of a sudden it becomes clear that successful trading isn't down to the system at all it is down to the person using the system. This is the moment when each trader realises where the Grail can be found.

Finding The Grail:
Do we need a system at all?

If the secret to the market Holy Grail lies within each trader then what is the point of a system at all? Simply put a system represents a reason to enter the market. If you don't have a system then you have no reason to enter the market at all.

The Basis of a System:
Every system should be comprised of the following:

Trading science: Whether you use technical indicators or fundamental analysis this is your science. It doesn't have to be complicated; in fact simple is often much more effective. This will generate your buy or sell signal.

Money Management: Arguably more important than your signal is how to manage the resultant trade. You have to set strictly governed rules that determine how much of your trading capital you will risk per trade. Part of money management is your risk: reward ratio. If you have a risk: reward ratio of 1:4 then a profit factor of 0.5 (50%) you will be banking a very handsome profit indeed!

Discipline: If you don't have the discipline to stick to your trading science or your money management then your system may as well never have existed. Being disciplined will help eradicate late entries and early exits. In short it is the most important factor in every system.

It is very hard to apply discipline to something you have no confidence in. Therefore we recommend starting from scratch with a new strategy, something simple. This does not mean you should fork out hundreds of Dollars on a new system. Our Scalping For Forex ebook outlines a proven, simple approach that is an ideal tool to help you on your path to the Market Grail.

There is No Substitute For Experience No matter which strategy you use to help build your discipline and money management there is no substitute for experience of the market you are involved with. This experience includes knowledge of price action, chart patterns and momentum cycles to name but a few. For example, if you are trading using a momentum breakout strategy there is no point in trading during a slow, choppy market. This is something that you can only learn from experience of price action and you shouldn't hope to grasp it over night. Once again, trading isn't easy and it certainly is not a get rich quick scheme.
 
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Legion said:
"the SUB CONSCIOUS will automatically find the solution to any problem "

Would this include Finding the trading grail (which could be All Of YOU ) transformed into squiggly lines.

Hmm, so the grail can be created , why does the author suggest otherwise? ahh he says it's YOU, but you can transfer YOU your output? Its inside your head and ohh look, now its squiggly lines on a screen? So that can be done?

Hmm , Im not sure as the author says dont look for it.. but then reading what you said it suggests any problem solved...... who is telling fibs please?
You are on the right track.:cheesy:
 
Charlton said:
Not at all, but it will not be found out there, in a black box. Rather it will be found in there, when light is allowed to alluminate the dark spaces within.

Trading is technically not that hard, but it can be made as intellectually as hard as one likes. It boils down to a simple fact of buying something at one price and selling at a higher price, enough to cover all the associated expenses.

Performing technical or fundamental analysis provides an edge in which you try to weight the odds a more and more on your side.

Creating a plan, sticking to good money management and removing psychological barriers are all needed to ensure one survives long enough to see the edge's probability take place.

The grail is understanding and accepting the true nature of probability.

Charlton

If Pat will permit me to post this for those who are interested. I thought it was aposite to this thread.

Man tries to make for himself in the fashion that suits him best a simplified and intelligible picture of the world. He then tries to some extent to substitute this cosmos of his for the world of experience, and thus to overcome it -- .He makes this cosmos and its construction the pivot of his emotional life in order to find in this way the peace and serenity which he cannot find in the narrow whirlpool of personal experience -- .The supreme task -- is to arrive at those universal elementary laws from which the cosmos can be built up by pure deduction. There is no logical path to these laws; only intuition, resting on sympathetic understanding of experience, can reach them -- .


Albert Einstein
 
rols said:
If Pat will permit me to post this for those who are interested. I thought it was aposite to this thread.

Man tries to make for himself in the fashion that suits him best a simplified and intelligible picture of the world. He then tries to some extent to substitute this cosmos of his for the world of experience, and thus to overcome it -- .He makes this cosmos and its construction the pivot of his emotional life in order to find in this way the peace and serenity which he cannot find in the narrow whirlpool of personal experience -- .The supreme task -- is to arrive at those universal elementary laws from which the cosmos can be built up by pure deduction. There is no logical path to these laws; only intuition, resting on sympathetic understanding of experience, can reach them -- .


Albert Einstein
There you are....and he wasn't a trader. Beautifully put, I must comment.
 
rols said:
If Pat will permit me to post this for those who are interested. I thought it was aposite to this thread.

[

Hope I didn't give the impression I was anti posting or something ?
Another Pat perhaps
 
Legion said:
"the SUB CONSCIOUS will automatically find the solution to any problem "

Would this include Finding the trading grail (which could be All Of YOU ) transformed into squiggly lines.

It will depend on YOUR way of thinking - if you really believe that you can make your Vision a reality, then why should you not be able to do so. YOU create YOUR own successes - and YOUR own failures.

Hmm, so the grail can be created , why does the author suggest otherwise? ahh he says it's YOU, but you can transfer YOU your output? Its inside your head and ohh look, now its squiggly lines on a screen? So that can be done?

The author is entitled to his opinion - but it is that - his opinion.
How YOU interpret information - squiggly lines on a screen - will again be dependent on how YOU think - this is a fact. It is also a fact that YOU can improve YOUR way of thinking so that YOU can achieve your set Goals.


Hmm , Im not sure as the author says dont look for it.. but then reading what you said it suggests any problem solved...... who is telling fibs please?

The same information will be interpreted differently by each person - again it is how YOU think that will make the information a lie or a truth for YOU.

Interesting posts and comments - I will add a new post to the How To Think Correctly thread in the Psychology section, for further comments.
 
Chump

chump said:
Well the Holly Grail I was at school with was a very decent sort of lass.

Chump behave will you.
This is a SMUT FREE board :cheesy: :LOL:
 
The Grail of Trading does it exist

YES

The grail of trading is a method of trading the markets that has a high win/loss ratio, is profitable in nearly all market conditions and can be traded by someone who has very little market knowledge

It has nothing to do with psychology and finding oneself

Trading is a business its not personal
 
dc2000 said:
The Grail of Trading does it exist

YES

The grail of trading is a method of trading the markets that has a high win/loss ratio, is profitable in nearly all market conditions and can be traded by someone who has very little market knowledge

It has nothing to do with psychology and finding oneself

Trading is a business its not personal

I agree. The article is somewhat esoteric. It reminds me of a Buddhist priest's selling point: "the truth is in you". We aren't dealing with metaphysics or psychology here. A Grail is a Grail regardless of whether someone doesn't succeed with it. Someone else will.

Definition of the Grail of Trading: Success rate = 100%

Anything else is not the Grail. Beware of cheap imitations.

Does It exist? I don't know.

Joe
 
equtrader said:
Success rate = 100%

Anything else is not the Grail. Beware of cheap imitations.

Does It exist? I don't know.

Joe


100 % ? thats a big number Joe. :) what about sudden news shock's? there must be a % or few thats gonna dent 100% over time
 
The holy grail i hasten to add would have to mean perfection.
and as it stands its pretty unlikely anyone over a meaningful period of time would be able to achieve this.
Thus the question needs to be raised whether the holy grail is the end result of money or perfect trades.
we know perfect trades though a romantic notion is not realistic but we can achieve profitable trading accounts without having to achieve 100% success rate on trades
therefore the holy grail in a realistic scenario must mean consistently profitable as opposed to consistently winning
 
therefore the holy grail in a realistic scenario must mean consistently profitable as opposed to consistently winning

I would call that a consistently profitable trading system rather than "the holy grail". I would expect something miraculous from a holy grail if such existed, which it does not.
 
literally speaking its a myth but we all know in this case it means something else
it means to achieve perfection or thats what most believe it to mean
perfections is unrealistic but to make money is not but then again for those that dont make money or are trying to, the thought of making money consistently would probably be looked upon as a 'holy grail'
 
andycan said:
The holy grail i hasten to add would have to mean perfection.
and as it stands its pretty unlikely anyone over a meaningful period of time would be able to achieve this.
Thus the question needs to be raised whether the holy grail is the end result of money or perfect trades.
we know perfect trades though a romantic notion is not realistic but we can achieve profitable trading accounts without having to achieve 100% success rate on trades
therefore the holy grail in a realistic scenario must mean consistently profitable as opposed to consistently winning

How true of life generally I think. One strives to inch nearer and nearer to perfection knowing that it is not possible to ever achieve it. In many cases without even realizing it.
Some even strive in the perfection of evil.
 
Pat494 said:
How true of life generally I think. One strives to inch nearer and nearer to perfection knowing that it is not possible to ever achieve it. In many cases without even realizing it.
Some even strive in the perfection of evil.

the holy grail could be recognising and accepting there is no perfection, and accepting the reality for what it is, rather than what we wish it to be.
 
One should imho have goals/targets in life or living devolves into merely existing. The journey in life is to attain something or get part way to perfection. It gives energy and purpose to life.
I aim for 100% success in trading, even while knowing its not possible. It is however possible to get better and better at it. There lies the fascination of trading for me and perhaps for you.........
 
dc2000 said:
Trading is a business its not personal
dc2000

You are right - it should be a business for it to be successful, and psychological/emotional baggage should not be a part.

The problem is that many are not consistently successful. Whether the reasons are related to the process of analysis of the markets, the execution of the trades, risk analysis, money management or psychological reasons that interfere with these have all been discussed on other threads, so I won't go into further detail here.

In essence, as you say, it is a business, so perhaps we should think about what would be the Holy Grail for any business and see if it applies here

Charlton
 
"for any business and see if it applies here".....LOL you are closer than you possibly know with that one.....let's think in terms of a client base that rarely questioned the value in the transaction . Now do we know any market with those characteristics :eek:
 
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