3 Reasons There Is No Holy Grail In Your Trading Biz

If you read the trader interviews in the Market Wizard books, all of these billionaire/multi-millionaire traders emphasize the importance of managing risk. If they had a Holy Grail system, risk management would be largely irrelevant.

Here are three reasons why you’ll have better luck being the first man (or woman) to reach the sun than finding a “holy grail” for forex trading:

1. No one can prepare for ALL market uncertainties.

One of the advantages of trading forex is that the bajillion factors that move currencies make it hard for any individual or group to influence price action for prolonged periods of time. Unfortunately, this also makes it difficult for traders to predict future price action.

Unless you gain a superpower that lets you know what central bankers and economic influencers will say ahead of time; warn you of the next natural disasters and terrorist attack, or prepare for similar circumstances, then you’ll unlikely to find a holy grail anytime soon.

2. Humans move the market

At least for now. Though Robopip and mechanical trading systems in general have gained popularity over the last few years, humans still control the ebbs and flows of the forex market. Human behavior is one of the reasons why we still see trading opportunities, where price doesn’t reflect its value based on available data and existing market themes.

Mike may be interpreting an economic release in a different light and place orders in the opposite direction of Harvey’s. Elliot, who handles a corporate account, may hold on to a losing position rather than close a losing trade. Multiply these everyday scenarios and we get an unpredictable mix of potential price reaction.

3. No strategy is profitable in ALL types of trading conditions

Those who have spent some time with markets know that, like human behavior, there are patterns that tend to repeat themselves on the charts.

EUR/USD could react to stochastic signals and trade on a 100-pip range for days. Likewise, AUD/JPY could be counted on to bounce lower from a 100 SMA retest.

But what if the pattern ends and price transitions into another pattern? For example, EUR/USD could suddenly break from its range and keep stochastic in the overbought area as the pair switches to a trending setting. Stochastic, which had been reliable, is now useless while trending strategies start to make sense again.

Most trading systems only work well until price shifts into another pattern. The continuous shifts in trading conditions and the unpredictable timing of when they occur make it difficult for traditional technical tools to be reliable all day every day. It takes discretion to spot shifts in patterns and to identify which strategies would yield profits.

Just because there’s no holy grail doesn’t mean you can’t be profitable trading forex. Many traders are already trading full-time and even more are content to be consistently profitable. The key is to control your risk. Since you can’t eliminate it, the least you can do is to control it with proper risk management.


veteran trader first focus on risk management,money next come

“You should always be able to find something where you can skew the reward risk relationship so greatly in your favor that you can take a variety of small investments with great reward risk opportunities that should give you minimum draw down pain and maximum upside opportunities.” – Paul Tudor Jones

“It’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.” – George Soros

“Frankly, I don’t see markets; I see risks, rewards, and money.” – Larry Hite

“It is essential to wait for trades with a good risk / reward ratio. Patience is a virtue for a trader.” – Alexander Elder

“Paul Tudor Jones [had a principle he used to use] called 5:1. […] he knows he’s going to be wrong [sometimes] so if he loses a dollar and has to spend another dollar, spending two to make five, he’s still up $3. He can be wrong four out of five times and still be in great shape.” – Anthony Robbins on Paul Tudor Jones

“The most important thing is money management, money management, money management. Anybody who is successful will tell you the same thing.” – Marty Schwartz

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