What was your "holy grail"?

Borrowed from Schwager's Market Wizards book, a quote from the famed mutual fund switcher, Gil Blake:

“I’m not a big fan of diversification. My answer to that question is that you can diversify very well by just making enough trades per year. If the odds are 70 percent in your favor and you make fifty trades, it’s very difficult to have a down year.”

Also, Warren Buffett on diversification:



I live down the road from Buffett, so naturally enough I'm a huge fan. Buffett speaks hear about being careful to pull the trigger on investments, he says to looks for the great opportunities. To apply this to trading, the idea is the same, but should be stated differently. I see you fellas talking about diversification and trading different market conditions, in my opinion that's a mistake, especially the latter, there is really only one market condition that should be traded, and that is simply a market that's moving with conviction. So to restate Buffett's idea here, part of selecting really good trades is to simultaneously reject a whole lot of really bad trades--that is step # 1.

Part of the sickness in the trading world today is that all of us sitting behind computer screens never get to the real business of trading, when I say "Trading" in this context, think open outcry, face-to-face trading. In my mind, when I see people talking about things like trading sideways markets, I wonder to myself if there were traders in Chicago who sat in the same pit all the time and worked out how to win when all the money was off in other commodities. If there were such traders, I doubt they lasted very long, maybe I'm wrong.

I think, this is one of the reasons why so many traders fail. They called themselves traders, yet they operate with an "investor" mindset ... The forex market is not a place to apply the exotic strategies such as diversification, average-down, double-up, ...
When we trade the forex market, we should simply get in @ Planned-EP and get out as quickly as we can @ Planned TP-or-SL (by "quick", it's "days" in my case) ... Always have the bullets ready as the market is never short of opportunities ...

And another thing is that we don't have to play all market conditions, but only those that fit our own strategies/scenarios ... Warren Buffett once said, "only swing when the ball is in our swing-path" (can't remember the exact wordings, but I think that's what he meant) ...

Hi D. Totally agree with you. Each contributing return stream must as a bare minimum have positive expectancy......however......and here is the rub.......it is the correlation between return streams that is the fundamental contributor towards diversification. Not the raw number of return streams that many think represents a diversified portfolio. Successful diversification relates to the way each individual return stream impacts on the overall portfolio and how it contributes towards improved risk-weighted returns.

PS David, I tend to avoid switching on and off strategies if I can help it as this to me at least is a 'predictive' technique and I avoid any propensity for curve fitting. The strategies used for portfolio composition are 'always on' but they are selective in addressing a particular market condition. The key requirement is that you need to preferably find strategies with positive skew which therefore allow those strategies to survive during extended poor market conditions. When market conditions turn favorable, they fly, but at other times they are specifically configured to preserve capital....if that makes sense. :-)

You have to be careful in the assumption that the strategy that delivers a greater ROI than the rest will continue to do so. While it is always tempting to pick the best return stream, you can achieve better risk weighted returns through deliberate strategy selection that offer the best mix of uncorrelated return streams.

One of the problems many retail traders face is under-utilization of capital. For example they will only employ a small percentage of their capital on a single trade given the inherent risk of a string of un-favourable trades. When focusing on risk-weighted returns, you can avoid this capital under-utilization obstacle and get far greater bang for buck.

The problem with Buffet's value-investing approach is that not many others have been able to emulate his track record......except of course the many fully diversified systematic fund managers who would categorically disagree with Buffet's comment. In fact when you look at Berkshire Hathaways stock selection you would have to question his comment as it certainly is diversified.....mmmmm *scratching head* Maybe he means not very diversified.

Buffets portfolio in Sep 2015 from SEC filings.


Do you enjoy 43% drawdowns for a 8.69% CAGR?



Now try and find some other value-investment funds that have a better performance record.....You will find it is a tough ask trying to find them.

But here are some of the fully automated diversified funds over a similar period.





....and better still in terms of risk weighted returns in the fully diversified systematic space.





From the above, you would have to question that diversification doesn't work.

In fact if you are interested have a listen to Jack Schwager on diversification here (refer to 48 minutes in if you want to go straight to it).

Here is my list:
Research
Risk/Reward ratio
Psychology
Decent news feed
Fundamentals
Technicals

Overall I think research is number 1

Hi, how is everybody doing?

"Plan the trade. Trade the plan." and "We do not plan to fail. We fail to plan." That is all.

I feel like 4for4 and I have obnoxiously repeated ourselves several times . But if someone were to ask me, "what is the foundation, or the basis of your trading?"
... This would ultimately and without a doubt, be my answer.

I also want to thank everybody who has contributed to this thread. Very insightful and thoughtful discussions with some open-minded people... I appreciate it. There is something new to learn everyday from different people. I hope this thread continues to expand with a variety of different traders willing to share their ideas and perspectives.

If you ask me, adding a few possible failures in one's trading plan is realistic. It does happen and one has to account for it.

https://www.tradersreality.com/

This guy talks about the HOLY GRAIL, check what he has to say about it. Newbies should check it out too

Happy Trading guys

man psychology should be number one. Everyone succeeds at managing their methodology and trades. But when things go wrong, what do they have left to manage? Their EMOTIONS. Had they done that first..things would be alot different.

No, I have no Holy Grail trading strategy here! My personal trading strategy provides me only 65% success ratio and I am working hard to increase its accuracy! By the way, in my demo I used so many trading strategies and needed fully one year to make this one!

My holy grail is risk management.
Yep, just like that, I dont really care what trade system it is (you need to backtest it tho, gives you knowledge and can help you finding "something" that can work for you), as I believe that most of them work...
But if you dont manage your risk, loss/profit, you won't stay for long in the market.
And basic knowledge, the market is professional, so if you are professional you have your place here, if you don't you will pay for someone's dinner.

my holygrail is ME myself hihihihihi xixixixixi

I am not sure about this site! But I seem, there is nothing like Holy Grail, 100% in Forex! It’s all about probabilities! No one can guarantee here!

To b frank , till now i've came across many systems in my 5 yrs of trading journey. and i have found that only Price action trading with Candlestick patterns works well One should use only Daily or H4 time frame and strictly no over trading. I had a month where i made 2.5x growth of my balance and still i was trading. finally i lost all the profits in the same month due to over trading.. I learned a lesson. Once the growth reaches 30% to 40% in a month, we should stop trading for that month.

Thats my experience. there is no Holy grail .. Its a game of probability


Im now practicing the correlation hedge strategy . Its really working . most of u guys might have heard, its not a new stuff, but no need to hold trades for long days or weeks, no worries about Stop loss.. just a matter of few minutes , we are done for d day .. 1% a day , thats my target. simple.

i will be starting a new thread on this strategy..

All the best folks.. Happy trading

My holy grail are support and resistance, my methods, money management and reduce emotions..

The Holy Grail is creating an online forum about trading and earn revenue from the Brokers Ads...

I'd like to amend everything I've said in the past. The holy grail for me was one word spoken to me by a trader on here that I respected. He referred to his trades casually as "inventory".

That single word's significance in how to think about trades eventually led me to profits.

To be honest, I don’t believe this way of trading I mean Holy Grail! Because, I see there is nothing like 100% in Forex! Besides, I get only 70% success ratio from my personal trading strategy. But I am happy on this ratio, it’s quite enough to me.

Any good idea can become a holy-grail ...