The Vain Search for the Holy Grail

[TulipFX]

The Holy Grail. A mythological object said to be used by Jesus at his Last Supper. Legend has it that it possesses miraculous powers. Forex traders have dubbed their search for an EA with miraculous profitability the ‘search for the holy grail’. But like the object of Christian lore does it really exist?

Trades talk, their eyed glazed over of finding one specific system that will guarantee them continual and supreme success in the market. Some software packages claim to be the Holy Grail and this only adds to the legend of the ultimate system.

Many traders are in the quest of searching for the Holy Grail system that allows them to earn profitable results without even incurring any losses on their part. Some say that it doesn’t exist, others still believe that it is there and the only reason why it hasn’t been known yet is that those who know about it are keeping it to themselves.

I admit that I tried seeking for such a perfect strategy when I first entered forex. I spent hour and hour researching and reading, testing and optimisting but never found it. When I say I never found it – I mean I never found the one, true magnificent system which only wins, never loses and will take me onto eternal riches by next month. What I did discover was that I was overlooking many solid systems which produced less spectacular results, but when combined in a portfolio could give the mirage of a Holy Grail.

The search for the Holy Grail of systems could have continued, taken up all my efforts but I doubt it would ever be found.

Should I keep searching, hoping for the winning lotto tickets to appear in front of me? Or should I concentrate on good honest systems which provide a return any sensible investor would be happy with?

After a year or so at the start of my forex journey I realised the only way to truly win in forex is with consistency. Just like you cannot live your life expecting to win the Lotto to make all money matters right, you cannot trade forex expecting to find the Holy Grail.

Did you know, that if you live 16km from a Lotto ticket outlet, you have a higher statistical chance of dying driving to purchase your lotto ticket, then you do of winning the Lotto with the ticket you risked your life to buy?

Getting up, going to work. Putting in the effort. Doing your job according to the instructions is what buys you your car, pays your mortgage, takes you on holidays and allows you to retire.

In trading it’s the systems which consistently pick up the small returns, follow their logic, do their job waiting for their moment to trade which earn you the returns. If you spend your time searching for the Holy Grail, you miss these returns and very soon find you have wasted valuable capital and lost time.

My advice to traders, forget about the Holy Grail. Treat with scepticism anyone who claims a Holy Grail. Work with systems which show consistent results. Use good money management. Use portfolio theory. Take advantage of compounding returns.

I will leave you with a link about the search for fortune and glory, a lifetime trying to get your hands on the Holy Grail. It is a song by Hunters & Collectors; this is their tale of heartbreak:

 

[Wysiwyg]

Hi. Firstly I agree there is no holy grail system of trading. Secondly I think Forex is the hardest market to trade because of the many regular twists and turns. Although a few of those Robot championship traders do well under simulated conditions with their expert advisors, I think Forex trading for the majority is a large bottomless pit.
Hence why so many Forex Brokers cropping up to cash in.

 

[TulipFX]

Hi. Firstly I agree there is no holy grail system of trading. Secondly I think Forex is the hardest market to trade because of the many regular twists and turns. Although a few of those Robot championship traders do well under simulated conditions with their expert advisors, I think Forex trading for the majority is a large bottomless pit.
Hence why so many Forex Brokers cropping up to cash in.

Yes, forex is a difficult market to trade because it is a ratio, not a absolute price. Stocks, if the company is increasing its value will see a share price rise. Currencies are much more up and down. With 4 trillion going through the forex markets each day, it dwarfs any other market in the world. This is both its good and bad points.

Regarding the 'championships' they lend themselves to two things

1. Over leveraging.
2. Curve fitting

If you are not playing with real money, and the highest balance wins - then it makes logical sense to overleverage. All or nothing, drive it like you stole it; that type of thing. IMO profits should be divided by maximum floating drawdown to judge the result. That would better reflect the quality of a system.

These competitions also run for one month. A highly optimised and curve fitted EA could perform for the month if it lucks on a market which is similar to the one it was optimised over. Sure regular optimisations may keep it profitable, but having tested dozens of competition winners none worked over the longer period. Most winners seem to be to have a larger degree of luck then skill in achieving their winning competition result.

Rather then looking for the 3,000% a year make-you-rich-by-June system which is likely curve fitted I look for systems which show 3+ years of consistent results. 20% a year for a system. Run a dozen systems and you are having your returns compound out nicely.

While looking for the 'brilliant' system, you miss out on building a portfolio of systems which can start to achieve brilliant results.

 

[Wysiwyg]

Yes I agree 100% on your thoughts there and appreciate the input.