Holy Grail
- Thread starter winstonn
- Start date
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HI WINSTON
GOOD TO READ THE SELF RATIONALISATION ARGUMENT
In bullish times we think that underlying value is a "maya jaal"
In Bearish times we think price is a "Maya jaal" and underlying value has emerged at last.
Sentiments push us from one extreme to the other .
would you perhaps agree?
HI WINSTON
GOOD TO READ THE SELF RATIONALISATION ARGUMENT
In bullish times we think that underlying value is a "maya jaal"
In Bearish times we think price is a "Maya jaal" and underlying value has emerged at last.
Sentiments push us from one extreme to the other .
would you perhaps agree?
---------------------------------------------
hi
one certainly cannot beat the market all the time in he short or medium term.
But your chances of beating the Market rise dramatically on the long term
You need not beleive this .
Just read Benjamin Graham "Intelligent investor" 2 times .He gave us the concept of "diversification" to minimise risk.
hi
one certainly cannot beat the market all the time in he short or medium term.
But your chances of beating the Market rise dramatically on the long term
You need not beleive this .
Just read Benjamin Graham "Intelligent investor" 2 times .He gave us the concept of "diversification" to minimise risk.
The Search for the Holy Grail: There Are NO Trading Secrets!
When traders talk about trading system design and its pitfalls they often talk about the search for the Holy Grail. They talk about the obsession of finding one specific indicator that will guarantee them continual success in the markets. Some software packages even come with indicators that are known as the Holy Grail and this only adds to the mythology of an ultimate indicator. Unfortunately whilst all traders talk of their search for the Grail few actually understand the legend behind this search and even fewer understand its relevancy to trading. And most importantly how understanding the legend can improve trading performance.
Most are familiar with the Christian myth surrounding the Grail and the search for it by knights of the round table. This myth itself first appears in written form in a 12th century French fable entitled Conte del Graal (Story of the Grail), this tale is also known as Perceval and is believed to have been written in about 1180. The myth itself revolves around a vessel from which Christ is supposed to have drunk at his last supper and which was also used to catch some of his blood during his crucifixion. The Grail was then carried to Britain by Joseph of Arimathea, where it lay hidden for centuries. The search for the Grail became the principal quest of the knights of the round table. It was thought that the Grail was guarded by a custodian known as the Fisher King. King Arthur believed that the finding the Grail would cure Camelot of its ills and restore its glory.
Given its supposed history it is easy to understand the importance of the Grail to Christian mythology but the question remains as to why this is important to traders is less obvious. Most traders look merely at the external features of the legend, the fact that it was a fruitless search, the grail was never found. Traders associate this with their quest for the perfect indicator yet this is only half the legend. Being a parable the legend of the grail requires a bit of interpretation. King Arthur send his knights on the quest to enable Camelot to recover. At the time of the quest Camelot was racked by both internal dissent and an external threat. Arthur thought finding the grail would fix these problems. The meaning of the parable is clear it is about the individual not the situation. It is about individuals looking for an external solution to what is an internal problem.
Such a situation manifests itself in traders. How often has the lament been heard, if only I had a better system, or if only I had different data, or maybe if I tried Fibonacci numbers for my moving averages. Many traders have even believed that if they change the colour of their indicators that this will somehow improve their trading. As if altering these external variables will alter their trading performance.
It is undoubtedly true that we need entry signals or setups to enter the market but their importance in trading is vastly overrated. Tomes have been written about signal generation, indicators move in and out of vogue, the current trendy indicator appears to be the moving average ribbon. Charts of price action are now being buried beneath layer upon layer of coloured lines. It is as if by obscuring raw price action traders somehow hope to divine its intent.
Yet Charles LeBeau author of The Technical Traders Guide to Computer Analysis of Futures Markets claims to have tested every possible combination of moving average conceivable and found their performance to be little better than random probability. In any serious testing trend following indicators struggle to have a reliability of above 50%. The MACD histogram, which is thought to be among the best of all indicators, often has a reliability of below 50%. I have personally run a test trading the SPI on an intraday basis by tossing a coin in the morning and found it to be profitable. It is extremely difficult for traders to accept that the tools they use may not be as effective as they thought, or that their methodology may have a reliability below that of simply tossing a coin.
If your trading breaks down then it is more than likely due to some psychological block not your indicators and finding new indicators will not improve your trading. What will improve your trading is an understanding that trading is far more than a search for the ultimate indicator. What has been demonstrated from interviews with top traders is that methodology or the means by which they engage the market is largely irrelevant. What is important is their underlying psychology and how they apply this to the market, it is not what number they use for their moving averages.
Top traders have numerous features in common, they are organized, disciplined, self reliant, analytical. All of these are characteristics of individuals who excel in any endevour but there is one characteristic that truly sets them apart. They are all grown ups, this may seem like a somewhat facetious remark but top traders realize that ultimately their success or more importantly failure comes down to them as individuals. Traders who look for the Grail are looking for an external crutch to lean on and to blame when things go wrong, these are the same sort of people who blame their broker when a trade goes wrong. If you have chosen to take someone else's advice or you believe that indicators are all there is to trading then that is your problem no one else's. No magic indicator will save you from yourself and your own folly.
What will save you is an understanding that internal problems such as a lack of discipline or an inability to accept personal responsibility for your trading cannot be solved by some external solution such as downloading hundreds of indicators for either your Supercharts or Metastock packages.
This is the lesson of the Grail.
With permission from: http://www.tradinggame.com.au.
http://www.turtletrader.com/holygrail2.html
When traders talk about trading system design and its pitfalls they often talk about the search for the Holy Grail. They talk about the obsession of finding one specific indicator that will guarantee them continual success in the markets. Some software packages even come with indicators that are known as the Holy Grail and this only adds to the mythology of an ultimate indicator. Unfortunately whilst all traders talk of their search for the Grail few actually understand the legend behind this search and even fewer understand its relevancy to trading. And most importantly how understanding the legend can improve trading performance.
Most are familiar with the Christian myth surrounding the Grail and the search for it by knights of the round table. This myth itself first appears in written form in a 12th century French fable entitled Conte del Graal (Story of the Grail), this tale is also known as Perceval and is believed to have been written in about 1180. The myth itself revolves around a vessel from which Christ is supposed to have drunk at his last supper and which was also used to catch some of his blood during his crucifixion. The Grail was then carried to Britain by Joseph of Arimathea, where it lay hidden for centuries. The search for the Grail became the principal quest of the knights of the round table. It was thought that the Grail was guarded by a custodian known as the Fisher King. King Arthur believed that the finding the Grail would cure Camelot of its ills and restore its glory.
Given its supposed history it is easy to understand the importance of the Grail to Christian mythology but the question remains as to why this is important to traders is less obvious. Most traders look merely at the external features of the legend, the fact that it was a fruitless search, the grail was never found. Traders associate this with their quest for the perfect indicator yet this is only half the legend. Being a parable the legend of the grail requires a bit of interpretation. King Arthur send his knights on the quest to enable Camelot to recover. At the time of the quest Camelot was racked by both internal dissent and an external threat. Arthur thought finding the grail would fix these problems. The meaning of the parable is clear it is about the individual not the situation. It is about individuals looking for an external solution to what is an internal problem.
Such a situation manifests itself in traders. How often has the lament been heard, if only I had a better system, or if only I had different data, or maybe if I tried Fibonacci numbers for my moving averages. Many traders have even believed that if they change the colour of their indicators that this will somehow improve their trading. As if altering these external variables will alter their trading performance.
It is undoubtedly true that we need entry signals or setups to enter the market but their importance in trading is vastly overrated. Tomes have been written about signal generation, indicators move in and out of vogue, the current trendy indicator appears to be the moving average ribbon. Charts of price action are now being buried beneath layer upon layer of coloured lines. It is as if by obscuring raw price action traders somehow hope to divine its intent.
Yet Charles LeBeau author of The Technical Traders Guide to Computer Analysis of Futures Markets claims to have tested every possible combination of moving average conceivable and found their performance to be little better than random probability. In any serious testing trend following indicators struggle to have a reliability of above 50%. The MACD histogram, which is thought to be among the best of all indicators, often has a reliability of below 50%. I have personally run a test trading the SPI on an intraday basis by tossing a coin in the morning and found it to be profitable. It is extremely difficult for traders to accept that the tools they use may not be as effective as they thought, or that their methodology may have a reliability below that of simply tossing a coin.
If your trading breaks down then it is more than likely due to some psychological block not your indicators and finding new indicators will not improve your trading. What will improve your trading is an understanding that trading is far more than a search for the ultimate indicator. What has been demonstrated from interviews with top traders is that methodology or the means by which they engage the market is largely irrelevant. What is important is their underlying psychology and how they apply this to the market, it is not what number they use for their moving averages.
Top traders have numerous features in common, they are organized, disciplined, self reliant, analytical. All of these are characteristics of individuals who excel in any endevour but there is one characteristic that truly sets them apart. They are all grown ups, this may seem like a somewhat facetious remark but top traders realize that ultimately their success or more importantly failure comes down to them as individuals. Traders who look for the Grail are looking for an external crutch to lean on and to blame when things go wrong, these are the same sort of people who blame their broker when a trade goes wrong. If you have chosen to take someone else's advice or you believe that indicators are all there is to trading then that is your problem no one else's. No magic indicator will save you from yourself and your own folly.
What will save you is an understanding that internal problems such as a lack of discipline or an inability to accept personal responsibility for your trading cannot be solved by some external solution such as downloading hundreds of indicators for either your Supercharts or Metastock packages.
This is the lesson of the Grail.
With permission from: http://www.tradinggame.com.au.
http://www.turtletrader.com/holygrail2.html
Good post matadewa. A lot of what you say is true, but I think the level of success one achievesi s highly dependant on what that person wants.
Indicators all work under certain conditions, it is identifying the conditions where they dont work and then finding out why. Certain underlying conditions create certain movements, this is the way the markets have always moved and always will.
Not sure I agree with Charles Lebeau statement entirley.
I agree that most indicators work only about 50% of the time, but the trader has to look at the market from a different perspective, not just from that of the indicator.
The key to success in using ANY indicator is first to identify the phase of the market and then you can determine how that particular indicator will work under those conditions.
This approach with a deeper understanding of market structure will increase indicator performance immensly.
If you can switch your thinking to the fact that the market is NOT random, you are heading in the right direction.
My two pence worth.
MW
Indicators all work under certain conditions, it is identifying the conditions where they dont work and then finding out why. Certain underlying conditions create certain movements, this is the way the markets have always moved and always will.
Not sure I agree with Charles Lebeau statement entirley.
I agree that most indicators work only about 50% of the time, but the trader has to look at the market from a different perspective, not just from that of the indicator.
The key to success in using ANY indicator is first to identify the phase of the market and then you can determine how that particular indicator will work under those conditions.
This approach with a deeper understanding of market structure will increase indicator performance immensly.
If you can switch your thinking to the fact that the market is NOT random, you are heading in the right direction.
My two pence worth.
MW
Hi Winston,
Psychology in trading comes from several factors. Firstly from a lack of technical knowledge. Without this you will never have faith in your decisions and it will be akin to gambling. This is by far the largest contributor to negative trading emotions. The other common factor is that of not having a plan. Without a plan you will always be second guessing yourself in a state of hope or fear.
Most traders have a "understanding" of the markets that allows them to be successful under certain conditions. They can recognise theses conditions and follow the same rules over and over again, if they try using these rules under different conditions the system fails.
Most systems fail because the trader has failed to identify the phase that the market is in and will use the same criteria e.g ema xover or macd over with the idea that if it worked the first time, it will work again. Of course if the market is in a different phase they will be dissappointed and will eventually throw away a good trading system simply because of a few missing factors.
Another factor that induces psycholgy is PRICE. Price analysis and indicator analysis combined are like oil and water.
The key to overall success is knowledge of the markets, their underlying structure, price volatility and the results that a particular indicator
represents.
Good luck
When I first started learning about technical analysis 24 months ago, I was amazing at how many indicators existed. My thought was to keep it simple and start backtesting to find out which indicator would make me a million dollars. Being relatively naive, I thought there was one that existed, I just had to find it. After doing backtesting on numerous indicators, I realized that I was wasting my time. I came to the conclusion that if I relied on an indicator to give me buy and sell signals, I wasn't going to be doing this long.
The more seasoned traders that are reading this know what I'm talking about. I want to bring this to the attention of absolute beginners only. I am NOT saying that you should stop trying to find the holy grail or do backtesting. These are all great learning exercises that can only be beneficial to your trading.
I like to experiment with formulas and backtesting because though there isn't any 1 standard indicator that can make you money, there are people out there that are making money with a complete trading system. They have been able to automate this trading system so that income is automatically generated for them.
The holy grail is you and yourself only : your strat ; your discipline ; your MM ; and your guts to stick to this. there should be a balance in the amount of indicators you use, like news you take in, like lots you trade... all is about balance and discipline ... indicators they all bring the same amount of info once you have been around...good luck
The more seasoned traders that are reading this know what I'm talking about. I want to bring this to the attention of absolute beginners only. I am NOT saying that you should stop trying to find the holy grail or do backtesting. These are all great learning exercises that can only be beneficial to your trading.
I like to experiment with formulas and backtesting because though there isn't any 1 standard indicator that can make you money, there are people out there that are making money with a complete trading system. They have been able to automate this trading system so that income is automatically generated for them.
The holy grail is you and yourself only : your strat ; your discipline ; your MM ; and your guts to stick to this. there should be a balance in the amount of indicators you use, like news you take in, like lots you trade... all is about balance and discipline ... indicators they all bring the same amount of info once you have been around...good luck
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