Nope, this isn’t a post about the Crusades to the Holy Land, in search of some legendary golden chalice.
It is, in fact, a very serious article about the Trading Holy Grail, a mythical quest for one infallible indicator, system or combo of methods that delivers perfect trading results.
And a quest so many advanced beginners embark on at one time or other.
The Holy Grail is an apt name, because like the Crusaders or Knights of Camelot, you can spend years looking for it, and never actually find it.
While the Holy Grail doesn’t exist, the search itself is very real one indeed.
Many have taken up the call, myself included.
After many years tearing my hair out on this frustrating journey, I’m more than qualified to speak of it.
What is the search for the Holy Grail?
It is a myth.
A myth that some trendline technique, moving average combo, timeframe, momentum indicator, or sentiment survey can produce almost effortless gains.
It can be Bradley turn dates, it can be fantastic Fibonacci.
It can be any market technique that any market player has ever or will ever use.
The intrepid hero at the outset of this doomed quest must beware of robbery by unscrupulous system vendors.
Or, by gurus offering the ‘secret of the market’, even other well-meaning traders suggesting their approach is the correct one (mine included).
Once the hero (trader) believes he or she has found the winning formula, they’re overcome with joy.
Dopamine starts firing and dreams of riches take over rational logic.
When it turns out the method is nothing but a mirage, the search begins again at a much-quickened pace.
As time goes on, our adventurer becomes more serious about the market, falsely believing the more studied means more riches.
How does it all begin?
First and foremost the issue of the Trading Holy Grail is an advanced beginner topic.
The call to the quest is strongest for those with a year or so of market experience.
They think their current method isn’t good enough, and have likely taken big hits to their capital.
They make the correct assumption that, so far they’ve been flirting with the business of trading.
But the wrong assumption that somewhere in a distant land called Trading Success, there’s one method that rules them all.
Find that and they think they’re on a winning ticket.
They’ve heard of the stellar gains of legendary Market Wizards.
And see no reason why they themselves cannot replicate such impressive returns, if only they could find the Holy Grail.
You know you’re on the quest when you’re:
- Googling ‘trading systems that work’
- Searching for a trading Guru with a 100% win record
- Devoting a large portion of the day in chatrooms discussing indicators
I say symptoms, because the search is actually a curse.
You know it’s reached a terminal stage when you’re opening the trading platform in the morning with no plan at all.
Scanning charts, seeing what worked last night, and using it as the strategy of the moment – hoping it will work again today.
What is really happening?
As in many great mythical adventures, the protagonist has been bewitched.
Cursed to believe the quest is actually you becoming a better trader.
The mission revolves around learning more indicators, systems, bells and whistles, more levels of support and resistance, better trendlines methods and ultimately more trading.
You think this is what successful traders do.
All you’re doing is putting a band-aid on your own fear of losing money.
Finding that ‘one’ system
There’s little more invigorating than finding a system of trading you think is ‘the one’.
Its a heady feeling, akin to falling in love.
You start having conversations with yourself like this.
The … system is the one I have always been looking for. It really suits my personality.
Such and such a guru is the best, he posts his trades live, his website’s the dog’s bollocks. He even gives out free videos lessons!
This indicator’s perfect. It aggregates sentiment from one hundred sources – and everyone knows that sentiment always leads price.
I’m going to be a Price Action trader, it’s not lagging, unlike the crappy indicators taught to dumb retail traders.
I’m going to concentrate on support, resistance strategies. These are the most important levels in the market. I will always take my profits there.
Fibonacci is the best. The whole universe is controlled by Fibonacci ratios.
Blah blah blah, you keep blagging yourself you’ve found it.
It’s a dopamine high, but like all highs, it doesn’t last.
Soon you come crashing back down to earth, realising the method is equally as flawed as the last.
The search goes on, more time is wasted and you stray further from the true path of profitable trading.
Timeframes as the Holy Grail
The search for the Grail can be very deceptive.
It isn’t solely about techniques. It’s potentially any variable in the trading mix.
Timeframes is one such variable.
You start on a higher timeframe and progress to the lower.
Or, start on lower timeframe and progress to the higher.
You say to yourself something like this.
I like the one hour chart, it trends so much more than the thirty-minute chart.
I’m only going to trade 4-hour charts from now on, they give much clearer signals than the daily.
I am not going to scalp anymore, weeklies are best, less emotional. It’s a no brainer.
But, you cant handle the wider stops on weekly charts!
And you can’t handle the volatility on intraday charts!
With all this chopping and changing you’re missing out on one of the most vital ingredient, consistency.
The mirage of trading psychology
When traders have searched for the Grail high and low, and almost given up hope, they start to realise how much they’ve strayed from the true path.
They’ve acted on impulse, switched systems, overtraded after winners, revenge traded after losers.
They’d be profitable by now, if only they could get a grip on their trading psychology.
So that’s it, Trading Psychology, that’s the Holy Grail they tell themselves.
After all, experienced traders always say trading is 80% handling emotions.
Finally, after all these years of searching, they’ve found it.
But you can go down a rabbit hole of Trading Psychology too.
Freudian, cognitive, meditation, performance, biofeedback which method are you going to use to improve your trading?
Who is best to follow, Steenbarger, Douglas, Van Tharp, The Trading Doctor?
How does the cycle end?
Usually not well.
Those who progress through the various mini-quests along this epic journey often suffer a death of a thousand cuts.
Many actually do become experienced traders. They can tell you all about the market – all without ever become profitable.
And can quote market truisms, ‘it’s all about money management’, ‘the trend’s your friend’, and ‘always short the market at resistance’.
They can tell you all there is about Technical Analysis but are totally clueless how to trade.
Like the Crusaders they’re lost in a far off land, short of water, with little food, and battle weary.
Is consistency the Holy Grail?
If you’ve ever read the Market Wizards series you’ll know one of the recurring answers to trading success is consistency.
The search for the Trading Holy Grail is the very antithesis of consistency.
You’re changing systems the moment it doesn’t conform to your ideal.
Having the patience to stick to a system through drawdowns is essential for a trader.
Many don’t even have the patience to stick to it after two losses in a row!
But I don’t think even consistency is the Holy Grail either, important though it is.
The Holy Grail….maybe
The search for the Trading Holy Grail is born of a need to avoid losses. But, it’s a fruitless, time-consuming search; wasting both mental and financial capital.
So instead of trying to avoid losses why not just learn to handle them?
Could this not be the answer?
It’s a truth in life that when you stop resisting what is, your life changes. And this is doubly true in trading.
Professional traders don’t resist. They handle losses gracefully, some even embrace them.
In every mythical quest there’s always a threshold guardian, protecting the final treasure.
The guardian, or final hurdle to trading success and quite possibly the Trading Holy Grail itself, is simply coming face to face with your fear of losing.
If your bold enough to do that, and defeat the dragon of your own fears trading success is all but assured.