Your own HOLY Grail (and how you know you've found it)

This is to all the traders struggling out there.

There are three types of people in this world.

Type 1. A person is told not overtrade, overleverage, and is told to stay disciplined, use money management and follow a plan. This person listens and becomes a profitable trader.

Type 2. This guy is told all the above and he decides he is going to blow a few accounts and learn the hard way and eventually after getting burned he changes his ways and becomes profitable.

Type 3. This guy despite being told continues to loose money and doesn't want to demo or stick to a simple plan and jumps around. Despite all the meaningful information he disregards that and ends his life never being able to trade successfully.

Now think about yourself and which category you are in. The 1st category of people are very few. I personally am in the 2nd category. And I believe most of you are. I've been through all the crap on the internet. I've jumped from system to system and tried to find the holy grail. I'm guessing most are like me. The need to get burned by the fire to realize that I'm not going to put my hand in there again. The people on the third category are there so the other two can make money from them. (I know it sounds harsh but its true.)

Let me tell you one thing. No matter what you read or hear and even If I go on telling you about discipline and money management it won't get through your thick skull. I know it didn't get through mine in the two years I've been struggling.

You will go trading this system and that system and whoring yourself with different systems but will never be satisfied. You are addicted but keep selling yourself out to whatever new system is in the block claiming to make money. And when you're out of money you get withdrawal symptoms and sell more of yourself out. It's a vicious never ending cycle until it bleeds you dry.

Back to the point. No matter how much you read and hear it won't sink in until you want it to. But let me tell you one thing. When it does you will know.
After jumping around I found a simple strategy which I kept coming back to again and again. But I kept looking for the holy grail. The thing is I finally settled down and started trading using that simple strategy.

Why do you think that even students of a specific teacher trade the system differently than who they learnt it from? Its because of individuality. We are individuals and no two people are alike. Give two people the same system and they both will trade differently.

The core point being You will know when you've found your HOLY GRAIL!

You will have a realization that you've been running around and the profitable system you wanted to trade was so simple and why you hadn't thought of it before. I can speak for myself when I say my entire mindset flipped around within a couple months. I realized I didn't need to be in a trade all the time to make money, I didn't need to trade 20 pairs to make money. All I needed to do was to wait for My edge.

I sincerely hope this was helpful for some out there. And the best wishes and I hope you find your edge soon (Your own personal Holy grail).

simple system is not for me...

yes I do develop a system, but for other will said too much indicators.

that is reason I do not want to share to make people confusing.

yes I belong to type 2.

in fact. if you are sure where trend is going why not risk more.

bottom line, if you see the chart and you can saying what would you do with your system to find the entry signal. then you have the system you need.

Yeah, I am going to be type 1

lol wish you best of luck.

as type 2.

what do you mean change way I mean in what way?

over leveage?

if that is case I will not change it.

now just I have problem to trust my indicator to hold the trade longer. by knowing what is my max. stop loss is. you will feel better on your trade.

instant of 4 pips profit I could got 50 pips profit

I hope to be a trader type 1

I'm still sticking to be n1, but I'm afraid of being a case of beginners luck at the moment... let's see if i found my perfect tool and this good streak lasts for me!

This is what I think. Regardless of the 'type' of trader you imagine yourself to be, without a personal holy grail so to speak, you are dead in the water. In order to make good money trading, you have to be right a great majority of the time. How often depends on your target pips vs your stop loss pips. If decide to trade a small timeframe for instance less than an hour like the 5m 15m or god forbid 1m then you have to be right almost 100% of the time because you can not profit enough to pay for spread and loss and still profit +ve when your go for say 10 pips with a 12 pips sl.
Anyone that says this will work to you is lying.

For instance, say you have your little setup lurking on the charts and you see where you can get in and grab 10 pips and get out; you place your SL at 10 which gives you a 1:1 ratio. Once you get in this kind of trade, how often do you think price will just say "YES SIR" and - head your way - the moment you pull the trigger? I promise you it will not be that often. So you get in and price decides it wants to go against you 15 pips first... well you just got stopped out.

On the other hand say you've studied a setup where you can take trades on the 4HR charts. On 4HR chart a scalp would be 60 to 80 pips (or more) profit but your stop loss can be as low as 25 to 35 pips. So you get in and provided you were careful to enter at the right time, price might go against you 10 to 20 pips but since you are on the higher timeframe you have a much higher chance of riding out the temporary wave against you and your profit margin will be much greater allowing you to profit much easier after paying spreads, comissions (if your broker charges them) and profit gains.

But even with this, it is still necessary to have a system that works literally 90% of the time or more! Otherwise the best you can hope for is to have fun breaking even and never realizing our goals of freedom by trading.

Sincerely,
Good Ol Joe

The nature of trading and markets in general is not the environment a type 1 would generally seek out. I know quite a few type 1 personalities and when I approached them about trading they all said no. Too risky. And these are big time commercial real estate developers.

Seriously though, from a risk stand point the one guy said at the end of the day "I can see/touch/stand on my investment. I can be directly involved in the process of the plan, execution, of the project hands on and make an impact. With markets I can plan a trade but then it's 100% out of my control except where/when I get in and out."

Found mine...it was the mindset.

When it can be used to trade to make some consistent profit over the months and over the years

Agree 100% The type 1 personalities are very risk averse which I believe the best traders/invertsors need to be. Take Buffet for example with his quote:


I'm in the type 2 camp as well and the change came when I realised, accepted and acted on the fact that the answer to my becoming profitable was internal not external. Anyone who can make money on a demo but can't on live should recognise this as well - what's the difference between demo and live? The answer to that question is the area that needs the work not the holy grail system.

Type 3 people in my opinion aren't suited to any entrepreneurial venture that involves work, patience and resilience. They believe get rich quick exists whether it's in FX, internet marketing, peny stocks, MLM, "no money down real estate" etc etc. They will keep buying the red hot sales messages and jump to somehting else whe they don't see quick easy results.

Just my 2c

I never believed that I needed to work on my mindset to be profitable. I knew that if I am losing over an extended period of time, its because my systems were just the regurgitated ideas of what majority of people use. So in trading, it doesnt make sense to use taht if i'm trying to profit. It goes back to the idea of zero sum marketplace

I started to focus on the difficult questions early on like "what is my edge?" , "how does my system exploit market/trader ineffiencies?" "Why should my system results in profit over others?" etc.

To me the the easiest thing to work on is mindset..but having a sustained edge in the market is difficult and requires years of work.

FWIW, I agree that it's important to get the method sorted first. To state the obvious: without some kind of formal plan, the trader has no framework to remain disciplined to.

Psychology is a no-brainer, in that it's an existential rather than an intellectual issue. But it's surprising the extent to which the P/L of the current, or recent trades, can play on our minds, as we make trading decisions. Another important reason for having that formal plan.

I had an essay on trading psychology, that I wrote several months ago, published here, that explains the above in more detail.
There's also an excellent post on the topic by topherhk88 here.

One word - Bollocks.

(Sorry, but it's just that I can only read so much of this stuff and it just gets the hackles on the back of my neck standing up. )

I have a rough idea of a plan. I have approximate entry points and I decide when to take some of a trade off (to realise small profits - you know, "bank" it) and a rough idea of when to take it off (usually when i think my trade is losing legs and I've lost X% of potential profits). And when it works, it works very, very well. When it doesn't, I need to hedge a little or take a small loser off (offset normally by another trade thats in a slightly better profit to offset).

Compare what I just said to this (in the linked article) - "But this is unconditionally predicated by the previous steps: establishing definitive rules for entries, exits and trade size that are based around non-random price behavior; and absolute statistical confidence that these rules deliver a winning edge."


No, the edge is being smart enough to know that you don't need to "overthink" it. I watch Ichimoku (but could be MA's, etc) on a range of TF's. I base my entries on 1 hr..but starting to shift to 2hr. But damned if the 15min doesn't give me a whiff of "well, no time like the present" to get into a trade, as long as there is some general confirmation all the way up to weekly (e.g. weekly may just be turning the corner, daily is pushing up into or through the cloud and H4 has just peaked, turned, and about to or has started retrace).

So please, please can people stop being so damned DEFINITIVE about some sort of empirical, scientifically analysed, mind-blowingly difficult, overly precise calculations for lot size, entries and exits. Please!

This is really NOT necessary. At all. I promise.

And getting rid of stops was the real "holy grail" for me (I just had to throw that in there). HG is learning that what I said is true and it's is NOT some kind of system/strategy. It's knowing it's as loose as you think it is and approximate as it seems - know one knows where's it going, but use the price movements and indicators to give you a feel for direction. That's it.

Fair enough. Sorry if my post made you angry.

I wrote the linked material a few years ago. I just re-read it, and it still makes good sense to me. The topherhk88 post is outstanding IMO.

Let's just agree to differ.

I am trying very hard to be trader type 1, but I don't always succeed. I can't say that I have found any kind of Holy Grail though.

I say the opposite. beating the spread is easy to do but only if you have the right mindset and that takes years of work to achieve.

Im not interested in arguing the point but I do find it most interesting that completely opposite beliefs are held and I accept that yours work for well for you.

It means that

either one of us is wrong or,

that there is no truth except that which we make for ourselves and therefore both beliefs can lead to profitability

heres an idea - you show me how you easily achieve a profitable mindset and ill show you how I easily beat the spread. That way we can get rid of the hard work aspect of each others belief systems

I'm type 2.

You have to experience some things personally before you can understand it.

I'm on my way to holy grail after having some experience n overcoming it by not repeating it

I'm a bit of type #2 and am really a type #4. What is #4? I think #4 is a trader that always look for possible simple ways to accomplish complex things. Then eventually got reasonable profits.