Why is there no Traders Holy Grail? | Forex Factory

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Why is there no Traders Holy Grail?

  • #1
  • First Post: Sep 2, 2009 5:30pm Sep 2, 2009 5:30pm
You've seen it over and over again: "there is no holy grail in trading".

As a newbie, it's hard to accept what other, more experienced traders, says. You just have to see for yourself. Nothing wrong in that. I know I had to travel that road

But what if we discuss this with a sort of semiscientific angle? Maybe that'll prevent some newbies from losing money. I will present a couple of alternatives. Please feel free to add, remove and comment.

One perfect system
Ok, what if a "perfect system" actually existed? What would happen? Wouldn't, first of all, all the big players use it? And I am convinced that, eventually, that the small players (us) would get access to that system. Would there still be so many "there is no holy grail" statements in the forums? All the time?

And this: Can the market function if all traders use the same system?

Several perfect systems
I've got only one argument/question here. If there are several "holy grails" out there, why do 95% of all new traders fail? Got to admit, though, that I haven't verified the 95% figure...

No perfect system yet discovered
Do you really think that someone in our small player community would discover the holy grail? I mean, the big players have got a bunch of people, skilled in trading, mathematics and statistics, working full time to refine and develop their trading systems.

Additional comments
Maybe something like this has been posted and discussed before, but when I searched the forums for "holy grail", I got so many hits and I haven't got the time to read them all. But that doesn't matter, I think. It can't be repeated too many times.

Regards,
beam
  • #2
  • Edited 6:32pm Sep 2, 2009 5:54pm | Edited 6:32pm
One perfect system
Ok, what if a "perfect system" actually existed? What would happen? Wouldn't, first of all, all the big players use it?

Large traders are playing a different game to us, they need to find the other side of their trades. MO(derived from common sense) is that none of these large players use systems as there known on this forum, they trade based on value and/or a very elaborate game of rock paper scissors. Also, dont forget that an exchange rate is a tool to controll its economy, this isnt all about market profits, its about controll.

And this: Can the market function if all traders use the same system?

Think about it, everyone wants to buy at exactly the same time, so, no sellers anywhere..... no sellers = no trades, so?


Ps, trading is an information game (IMO), and thats how I beleive anyone trading in their 8 figures + treats it. Information is down to contacts or research, and you cant know what others know unless they tell you. The retail traders will find out what the informed know as soon as they want to exit their possitions.
Living the adventure in my head.
  • #3
  • Sep 2, 2009 6:14pm Sep 2, 2009 6:14pm
Holy Grail only exists for the governments and big banks in the forex market. They have the money and the power to move things around.

Individual traders or investors with no power and very little money to be succesful is an uphill battle.

When they ask rick santelli of cnbc about the floor trading vs the electronic trading and why the floor should continue his answer is an answer to your question. He says it's the difference between watching a football game on tv vs. being at the actual game and watching on the stands.

They have the access to see who is buying what and who is selling what. They have the inside scoop directly from the floor. They are each others buddies on the floor. Now, if you take rick and give him a computer and tell him to trade forex at his home office he will be in the 95% failure section without a doubt.

No system is bullet proof because trading involves human emotions even at the highest level. Geitner says stupid things so as Bernanke and here we go the market makes a sharp move. No machine could prevent that from happening. Who could have thought goldman's watch dog Paulson could let Lehman fail and Bear saved and sell Merrill to BOA. Maybe the entire financial crisis of the century was not really that big of a deal and billions changed hands on those trades. Again the human element. Only the time will tell the real story.

This is my 2 cent on your great topic.
  • #4
  • Sep 2, 2009 7:09pm Sep 2, 2009 7:09pm
IMO--

you wouldn't find the "holy grail" outside of yourself. What you seek is a tool that YOU use. You are the holy grail. You can use only one tool, or a hundred, but the result you get reflects back to how YOU use them.
  • #5
  • Sep 3, 2009 5:23am Sep 3, 2009 5:23am
I'm not searching for the HG. This thread was an attempt to get people who think there is one to start thinking about why there can't be one (for small scale traders). The questions in my first post were rhetorical.

peace
  • #6
  • Sep 3, 2009 5:37am Sep 3, 2009 5:37am
Quoting beam
You've seen it over and over again: "there is no holy grail in trading".

As a newbie, it's hard to accept what other, more experienced traders, says. You just have to see for yourself. Nothing wrong in that. I know I had to travel that road

But what if we discuss this with a sort of semiscientific angle? Maybe that'll prevent some newbies from losing money. I will present a couple of alternatives. Please feel free to add, remove and comment.

One perfect system
Ok, what if a "perfect system" actually existed? What would happen?...
Are (or can) all the surfers in the world ride the same wave at the same time?

No need to.

Holy Grail begs for a definition (aside from calling it a perfect system) - what could work for one on a small scale might be useless for another on a larger scale - and vice versa.

Further, it does not have to be perfect, it has to work.

regrads
daytrading
Enter Signature
  • #7
  • Edited 6:49am Sep 3, 2009 6:31am | Edited 6:49am
I have a particularly simplistic view on this which many may not agree with but there you go:

I run a shop re-selling all manor of amazing widgets and gizmos. I do not manufacture, I’m merely a middleman trying to identify and profit from the demand of my customers.

I try to buy my widgets and gizmos at a price which I think I can then sell on to my customers at a profit. Sometimes, I will buy an item whose value to my customer suddenly shoots through the ceiling. Sometimes my products show a steady and continues growth in demand. Sometimes there is no immediate demand for a product I have just bought, but over the coming minutes, hours, days, weeks, there is a steady increase in customers coming through my door so I will buy more of these products until I have saturated the market and demand dries up.

Sometimes I buy a widget and nobody wants it, and in order to free up my capital to reinvest in products for which there is demand in the marketplace (or in which I judge there will be a requirement), I have to sell at break even or at a loss.

My shop has many products in it. Some are in demand, some are not, and I balance my book accordingly.

I particularly admire Leon, Pipmutt, Daytrading and some of the traders on here who seem to apply a far deeper understanding and intelligence to the market, however for me, the FX market is just another shop on the high street and is no different to selling bread or sex toys.

Supply, demand, profit and loss. The rest, to me, is needless froth (yes, I am aware the term needless will be contested by many, including the aforementioned members).

One poor selling product does not (or should not) spell the end for my business, one great product does not mean I’ll start arriving at work by helicopter.

I will subscribe to one major difference with the general business model however that, as a retail trader (which most on these forums are), I often find myself akin to being sat in a dinghy in the middle of the Atlantic on a cloudy day with no sun or landmark to set sail for – welcome to world of FX, where the only constant is change; if you run a McDonalds or a typical retail chain, there are established blueprints for success (or expected success based upon establsihed best practice) whereas in trading, everything changes (please see the thread on negative expectancy in which far smarter people than me have debated around this).

There is no holy grail in anything in life, whether you run a corner shop or an billion dollar hedge fund, but the problem with the retail currency market is it is incredibly easy to enter and is deliberately marketed as an easy way to make a lot of money. That combination generally attracts the kind of personality which isn’t going to set the world on fire in any field, at least not legally.

And as for the whole 95% fail rate which is used to scare every newbie (of which I am one) away, 95% of people in life fail, just look around. Those who want to succeed will find a way, however long it takes and however hard the road.

I think it was one of Thomas Edison’s quotes which sums it up best: “Opportunity is missed by most people because it is dressed in overalls, and looks like work.” Or perhaps Benjimen Franklin’s summed it up better: “If your head is wax, don't walk in the sun.”

Just my opinion of course.

Dan
  • #8
  • Sep 3, 2009 7:28am Sep 3, 2009 7:28am
Quoting AstonDan
I have a particularly simplistic view on this which many may not agree with but there you go:

I run a shop re-selling all manor of amazing widgets and gizmos. I do not manufacture, I’m merely a middleman trying to identify and profit from the demand of my customers.

[font=Arial]I try to buy my widgets and gizmos at a price which I think I can then sell on to my customers at a profit. Sometimes, I will buy an item whose value to my customer suddenly shoots through the ceiling. Sometimes my products show a...
Great post, Dan -

In actual fact, I will not contest your use of the term 'needless' in the context of your example.

I am going even as far as to say that you are absolutely correct; the financial market is - like any other market, fruit and veg or sex toys as you metioned - a place where you try and buy value and sell for profits, in which ever form one might accomplish that.

Where the term does not apply is in the choice and knowledge of your specific market and your specific product. You have enough knowledge and experience in your 'shop-environment' to make qualified judgements about which of your products will most likely yield a profit - sometimes it won't work out as planned, but the overall picture is a positive (or profitable) one in your business.

In the same way, the specific background knowledge you referred to (or specified them as one of my attributes), is the same type of product knowledge and expertise everyone needs in a business for it to succeed.

All these discussions here and in books about trading would not look any different (except for the words and professional terms) if there were a forum for the 'widgets, gadgets and gizmos' you re-sell. You generate a profit because you know that 'froth' inside out and you don't think about it anymore - it has become your second nature, I guess. If I wanted to break into that market, I would probably write the same as you have here.

You need knowledge in order to keep matters simple - only people who don't know their market tend to make things complicated.

So, in my view, transferring your motto as you did is the correct approach - but you need to know your chosen market.

regards
daytrading
Enter Signature
  • #9
  • Edited 8:15am Sep 3, 2009 8:04am | Edited 8:15am
Quoting daytrading
You need knowledge in order to keep matters simple - only people who don't know their market tend to make things complicated.
Hi Daytrading,

Could you/would you expand a little or explain what it is you mean by knowledge?

I know that reads like a daft question but there's a thread going at the moment on orderflow in which some participants post that they 'know', and i mean 'KNOW' where the market is going next. To me, this seems hard to believe (note i did not say unbelievable or untrue, before anyone jumps down my throat).

Now if you mean knowledge gained through experience - market behaviours (patterns, just for Leon ), chosen market participants, time AND timing etc etc, then i am far more comfortable with that.

If the former were true and had repeatable and expectant merit we have our elusive holy grail and i would expect time served 20+ year guys like you would own most of the Cote de Azur and spend most of your days with Cheryl Cole (that's why i'm trading anyway). But i just don't see that.

I simply don't believe in a secret knowledge that exists (at least in FX), however i do believe in experience and insight based on that. I assume you fall into the latter catagory and that is what you meant by knowledge.

Sorry, that seems like a bit of ramble and is maybe me mixing up threads, but hopefully you understand my question.

Dan

PS. As an aside and to maintain my analagy, nobody was buying my sex toys and bread this morning but New York is showing an appetite
  • #10
  • Sep 3, 2009 8:16am Sep 3, 2009 8:16am
Quoting AstonDan
Hi Daytrading,

Could you/would you expand a little or explain what it is you mean by knowledge?

I know that reads like a daft question but there's a thread going at the moment on orderflow in which some participants post that they 'know', and i mean 'KNOW' where the market is going next. To me, this seems hard to believe (note i did not say unbelievable or untrue, before anyone jumps down my throat).

Now if you mean knowledge gained through experience - market behaviours (patterns, just for Leon ), chosen market participants, time AND timing...
Hey Dan, nice posts.

I wouldnt consider trading away from the charts as trading on 'secret knowledge', rarther as using information about other market participents to trade in the fast lane. And when I talk about trading I wouldnt be silly enough to say I could KNOW what was going to happen, at best id be 'very confident'.

chart price patterns make me feel sick, and If I remember correctly then DT is not a fan of patterns either. Although he does trade solely of a chart.

Leon

Ps. Ive got a friend who is totaly obsessed with Cheryl Cole, computer wallpaper, and emails me news stories about her.... asif I care?! lol
Living the adventure in my head.
  • #11
  • Sep 3, 2009 8:24am Sep 3, 2009 8:24am
Quoting Leonlorenzo

I wouldnt consider trading away from the charts as trading on 'secret knowledge', rarther as using information about other market participents to trade in the fast lane. And when I talk about trading I wouldnt be silly enough to say I could KNOW what was going to happen, at best id be 'very confident'.
Hi Leon, sorry, i didn't mean to be flippant towards you at all. I hope you didn't take it that way.

I wholeheartedly agree with you on information being enormously helpful, but can we as outsiders ever really know that information.

I know you don't like a chart but as i've said before, imo it's how you interpret what they are telling/showing. I couldn't give a monkeys about H&S or wedges etc etc, but i believe i can garner enough information from a naked chart which is informed from some of the information you may be talking about.

For me, where i'm at, i think i have all the tools i need on a chart in the high, low, open and close.

And no to Cheryl Cole? How about Kimberley then?
  • #12
  • Sep 3, 2009 8:29am Sep 3, 2009 8:29am
Quoting AstonDan
And no to Cheryl Cole? How about Kimberley then?
Nobody famous, I fell in love on the weekend, gone all soft.
Living the adventure in my head.
  • #13
  • Sep 3, 2009 8:41am Sep 3, 2009 8:41am
Hi All !!

Some wise guy once said that Holy Grail dosn't exit, oh, sorry it exists!

You see it every time you look in mirror!! It is YOU!! Only You, and your smart thing between your ears which is called brain!! This is the Holy Grail !!

Once Warren Buffet pointed out when somone asked him what is the difference between him and normal, people like we are.

He said:
'We wear the same clothes, we eat the same food, so basically the only difference is that you use a car to get to work, I use a helicopter instead of a car'

It was genious, what he said, wasn't it?

The only one difference between people like we are, and people like Warren Buffet, is the way thinking, and the way how he is using his brain. That is all!

Another brilliant thing what he said is that, he loves what he is doing, he loves investing, and money is only like a bonus in whole this process.

If you invest only to make a money, you shold stop, or sooner or later you will reach the bottom. It should be your passion, hobby, whatever you can called it. Money is not a purpose, it only helps to realize your real dreams!
That I think is the right attitude to trading.

Cheers!
  • #14
  • Sep 3, 2009 9:37am Sep 3, 2009 9:37am
Quoting AstonDan
Hi Daytrading,

Could you/would you expand a little or explain what it is you mean by knowledge?

I know that reads like a daft question but there's a thread going at the moment on orderflow in which some participants post that they 'know', and i mean 'KNOW' where the market is going next. To me, this seems hard to believe (note i did not say unbelievable or untrue, before anyone jumps down my throat).

Now if you mean knowledge gained through experience - market behaviours (patterns, just for Leon ), chosen market participants, time AND timing...
Hi Dan,

How does a farmer know if his crop will turn out great at the time when he puts the seeds in the ground?

The weather could have a devastating effect on the harvest - nevertheless, he has to plant the seed to at least have a chance of a harvest.

There is no 'secret' knowlege and noone knows where the price WILL go next. We have to deal with uncertainties on the price front but we deal with certainties on the risk front - that is imperative.

When I say 'knowledge' I don't mean just common sense, but also accumulated specialised knowledge about what you are dealing with. That includes for example the ability to create a hypothesis, test it and build a workable theory based on observation as well as collection of data.

In simple terms, if you take a look at the opening in the UK (let's say 6am) for the past 20 years and you find that for example on 220 trading days out of 260, the price in cable moves 7 pips up - you can establish a hypothesis based on that occurrence.

You can call that experience to some degree as well, or tricks of the trade.

regards
daytrading
Enter Signature
  • #15
  • Sep 3, 2009 9:50am Sep 3, 2009 9:50am
Quoting daytrading
Hi Dan,

How does a farmer know if his crop will turn out great at the time when he puts the seeds in the ground?

The weather could have a devastating effect on the harvest - nevertheless, he has to plant the seed to at least have a chance of a harvest.

There is no 'secret' knowlege and noone knows where the price WILL go next. We have to deal with uncertainties on the price front but we deal with certainties on the risk front - that is imperative.

When I say 'knowledge' I don't mean just common sense, but also accumulated specialised knowledge...
Thank you DT. It's been great seeing you post over the past couple of weeks.

I am guilty of generalising things while you write in much more specific detail, and so what you have stated above regarding the farmer and specialist acquired knowledge would, by my definition, fall under what i had termed 'experience' (the most valuable knowledge and greatest understanding comes from experience in my opinion).

That is not to do you a disservice at all, more to support my view that there is no short cut, no easy road and no easy answer, which is essentially what the awful term 'holy grail' is trying to achieve.

Thanks again,

Dan
  • #16
  • Sep 3, 2009 10:52am Sep 3, 2009 10:52am
In my opinion, there are many holy grails in trading. Its the definition of holy grail that is in question. In my opinion, if you can trade a system for over a year, and on average, it will produce 20% to 30% equity growth, I consider that a holy grail. If your definition of holy grail means it never loses a trade, or it doubles your account every week or even month, then you will search hard to find your holy grail. I have been trading full time for 4 years straight, and my holy grail has returned a average of 25% a month. I am very happy with that. Most new traders just need to adjust their expectations and understand that trading is not about todays trades or even tomorrows, but trades accumulated over months and even years. Thats just my opinion.
  • #17
  • Sep 3, 2009 11:22am Sep 3, 2009 11:22am
hi all,

my simple view is. if you use a system that you build yourself. you understand the system and you use it to consistently profit from the market. you will have your own grail, as you are using what works for you. thanks
  • #18
  • Sep 3, 2009 6:26pm Sep 3, 2009 6:26pm
winnningfx is very correct, IMOHO....

And, there is such as thing as a good enough system (for you).........perfect?, no....but good enough to make you money consistently...but you have to find it yourself.....

I found mine in LINE CHARTS.....I find it easier to see pure price action there in LINE CHARTS, than in bar or candle charts.....does it work for everyone???...no, but it works for me....

If I may just give you one word of advise........do not use any indicators, use price action, feel the flow, study hard and long.....all the info is there....

FWIW

PAPION
An ocean of boundlesness......
  • #19
  • Sep 3, 2009 6:51pm Sep 3, 2009 6:51pm
Holy Grail

1. Daily charts
2. Trendlines (handdrawn)
3. Fibs
4. One Oscillator
5. 1:1 leverage entries. Hold position and re-enter on retrace.
  • #20
  • Sep 4, 2009 1:30am Sep 4, 2009 1:30am
Martingale with infinite supply of money. If I had infinite amount of money I don't think I would trade.
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