Holy Grail - page 4
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Excellent post iGor,
After many years of searching for the holy grail I have to say that MM absolutely crucial.
The problem with MM is that it is something that also needs to be optimized if near maximum results are desired. The optimization is based on the system you are trying to trade.
Thus MM leaves one just as perplexed in the end, because MM is usually based on probabilities that something usually not not happen so and so many times in a row (grids, semi-martingales, martingles etc), but usually, sooner or later it does...
Please provide us with some guidence as to how you approach MM, as I may simply be missing something.
hi
"That way they would come to the conclusion that only MM and discipline makes the difference (that was at least my holy grail)."
yes I agree with that Igor
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Forex Indicators Collection
MM is the main idea , and in simple words , slow and steady
Excellent post by IGor
You are a valuable asset
Regarding Holy grail, Discipline sit on Top of everything.
holy grail is yourself , since forex trading has started there's no holy grail was found ,
think about it
The Holy Grail is what they refer to as the perfect trading system, the perfect indicator that will guarantee success in every trade you enter.
The fact is, it doesn't exist.
Successful and professional traders have many personal traits. They are hardworking, patient ,focused, disciplined, passionate, and committed to their trading.
They always want to study more and to learn from their mistakes.
So instead of looking for holy grails, just spend more time on your trades. Study and Learn..
A good question to ask would be: where does a holy grail start ?
Many people say I am not looking for the holy grail. But they do.
If I ask in my trading room what do you expect from a system, then the vast majority says: I am not looking for a system that would make profit all the time or holy grail but a system that would produce +/- 70% hitrate and an average winning trade that is 2 x as big as a losing trade.
They don't realize that this is a holy grail.
Important is also that they wish that the winning trades and losing trades would be nicely scattered around....2 winning 1 losing...3 winning..1 losing...
Wich is again impossible.
Only people who done a zillion backtest on 100's of systems are fully awere what to expect from a system.
Each and EVERY system can be placed on a spectrum between trend following systems that have a low hitrate from +/- 30% to 45% to the over-bought over-sold or contrair systems that score between 60 and70% (or the synthetic ones that have a small profit target and big stoplosses)
The trend following systems that have a low hitrate will ALWAYS have avg winning trades that are severall times bigger then the losing trades. But people suffer under the low hitrate. Because with these kind of systems you can have easely 10 consecutive losing trades.
On the other side of the spectrum (above 50%) you have the systems that ALWAYS have avg losing trades that are many times bigger then the avg winning trade. People like these systems at first but they complain that a couple of losing trades eat up all the profit of a nice streak of winning trades.
They think that they only need to find then a system that has the best of both worlds. And there starts their quest for the holy grail.
They don't realize or don't want to accept that EACH and EVERY POSSIBLE system is sitting or on one or the other side of that spectrum.
The middle of the spectrum is a +/- a 50% hitrate and a winning trade that is +/- equal to the losing trade.
If you deduct spread and slipage one realizes that also this is a losing system.
The trend following systems are the best to follow. But they have the tendency to perform bad over longer periods when price is not trending. And price is most of the time not trending. So people can mentally not cope with that FACT.
The systems that have high hitrates have the tendency to perform good most of the time but a few losing trades over a short period of time destroy the winners that were made over a longer period of time. People again can not cope with that FACT.
Needles to say that the 50% systems are not realy helpfull.
So one of the elements of a holy grail is what you expect from a system.
Is that making money or is that mental satisfaction....The holy grail seekers want to have both.
The only serious difference or edge you can give to a system on each side of the spectrum is the MM.
Again the vast majority does not have any clue what so ever what real MM means. Even the ones who red books about it.
They think that MM is equal to counting the losses and profits you made at the end of the day. Or beeing carefull to not be overleveraged.
Or think, if I find a realy good system then I don't need to bother about all that calculations after each trading day.
Or think , profit is profit and loss is loss, so if I can find something that makes more profits then losses then it is clear that I need to make money.
If I ask in the room at the end of the day who have placed all his trades in a spreadsheet so they can keep track of their drawdowns the R/R ratio the avg winn/loss ratio the MAX DD etc....I can be honest..no one...Reason ?..they had a couple of losing trades and they want to forget about them as soon as possible. They don't want to be confronted how bad they did that day.
Even some of the people don't have any clue what so ever how excel works. So there the MM should start but there it also stops. (I did not know how excel worked but I learned-- because I felt that it was absolutly nescessary if one wanted to trade in a professional way).
The ONLY difference or edge you can give a system where ever it is placed on each side of the spectrum, to make it more profitable, is true serious MM.
Never never never will there be a indicator that will tell you to go short on a top or to long on a bottom. Even not something that will come close to this.
If that would be possible then that indicator is a Madam soleil or cristal bal.
The moment that one accepts that he needs to work with the low hitrate but high avg winn/loss ratio or the high hitrate with the bad avg winn/loss ratio but make the difference with the MM, ONLY then he will stop his search for the holy grail and realize that he has to be patient and look to the results of trading over a long period of time. And also realize that losses are connected to trading as breathing is to life.
A lot of people would benefit a lot more from realy learn how to trade, learning how to implement MM in their trading instead of wasting all that energy in their quest for the holy grail.
And that learning is programming , develloping, backtesting, trading, calculating, studyng over charts 24/7 weekens included and this for all possible indicators, the leading indicators the laging indicators, the combination of all possible indicators, the price patterns, the overall TA, the breakout system, the trend following systems , the imaginairy systems (as eliot wave), the grid systems, the different time frames ..etc..etc...That way they would come to the conclusion that only MM and discipline makes the difference (that was at least my holy grail).
iGoR
İf you find the holy grail and you share it, you will get 2 types of reaction:
First one is '' Woov' that is amazing!!''
Second one is '' I can do it better!''Hi Mistified,
Your posting is a very short one but ooh so true.
Give whatever kind of a profitable system to the vast majority of people and they will feel emmidialty the urg to make it "better" after the 1st couple of losing trades or after giving back to much profit of some of the winning positions they were in.
- If people do not have a system they feel lost because they don't know what to do...
- Give people a 100% mecanical system and they will look where they can "improve" it or bend the rules based on their discresionary vieuw because they think..I can do better.
- Give them a system where a lot of discresionary descisions are needed and they feel as lost again as in option1 ....
Conclusion: option2 is the best but aks them if they made the same results as the 100% mecanical system and they will say NO.
That is where they fail completely on the element ...discipline.
regards..iGoR
Just for the record , it does exist
it doesn't trade much " maybe 5-10 trades per month" , it can be applied to most pairs.
and I didn't have to put a crazy SL nor I had to suffer from big draw down to close all trade in proft
SL which is 4 times more than the TP was never hit in most pairs
it wont make you rich in one day
I don't have to prove it , nor I am here to brag about it
I have less than 5 month programming experience and I was able to find it , then I am prety sure others will do, if they haven't already done.
guys think outside the box, istead of using cross try using levels,or combine cross and level, also use pre. candle vs current candle in the indicator to check the direction that gives the trend or diveragnce this sometimes give more info about the trend than the cross or the level, in simple words don't think as a porgrammer think as a trader.
You never fail , untill you stop trying
Long back in jan 2005...... Soultrader from Moneythech posted one excellent post regarding learning cycles,
Link MoneyTec Traders Community Forum - View Single Post - The learning cycle for a newbie trader
Those who are in search of holy Grail must read that post.
I read that post in 2005 and i was newbie that time just started FX Trading.
I Keep reading that post Whenever i look back.
Stage 3 - The Eureka Moment
When you pass this stage ...you come to know what is holy Grail.
Understand 5M and you have your own Holy Grail.
5M = Multitimeframe + Multipair + Mental aspect + MoneyManagement + Market Behaviour
GREAT POST IGor,
Discipline,discipline and discipline.
Trading is a magic tour within u