What exactly is a Holy Grail, in terms of characteristics?
- Thread starter OddTrader
- Start date
Just like the holy grail in the traditional sense, it is frequently what the seeker defines it to be.
The Holy Grail (of trading)
Does it existâ¦, and if it exist what does it look likeâ¦,
And how would we know
Is it a gold challisâ¦, or perhaps a wooden cup
The holy grail of trading â is that which allows a trader to consistently and repeatedly - extract profits from the market
Consistently and repeatedly is not/ and does not mean â the same as alwaysâ¦, or 100% of the timeâ¦
You will know if/ when you have it
Every traderâs Holy Grail could be different
Hereâs to you â finding yours
RN
Does it existâ¦, and if it exist what does it look likeâ¦,
And how would we know
Is it a gold challisâ¦, or perhaps a wooden cup
The holy grail of trading â is that which allows a trader to consistently and repeatedly - extract profits from the market
Consistently and repeatedly is not/ and does not mean â the same as alwaysâ¦, or 100% of the timeâ¦
You will know if/ when you have it
Every traderâs Holy Grail could be different
Hereâs to you â finding yours
RN
All things considered, the Holy Grail might just be the ability to withstand drawdowns.
Why? Well, in my own case, I have a strategy which could have taken $10K to over $2.9T over the past two years, using Kelly style position-sizing, if I were willing to withstand 90%+ drawdowns from the high-water mark every so often (assuming I had sufficient capital to place the trades in their proper size). The stats for it are rather mundane, really. 61% winning percentage, 1.3 to 1 winner to loser size ratio, profit factor of 2.1 and a little over 1 trade per day, so it's only when combined with the Kelly position-sizing and a willingness to withstand that level of drawdown that it becomes something so incredibly profitable. I'm sure almost any positive expectancy method with a high enough frequency can achieve somewhat similar statistics if the Kelly method of position-sizing is used.
Of course, then there is the practical fact that there is no market in the world liquid enough to enable such a strategy to be put into effect. But, if you could implement it, you'd have to withstand the psychological hit of watching 90% of your gains disappear without knowing if you'd ultimately lose everything that remains. Fortunately, I have that level of confidence in my strategy, which itself is based on principles similar to what Soros uses in his trading (not saying I'm anywhere near that level, just that I share some of his assumptions about markets always being wrong, rather than right).
If anyone is looking for something which provides huge returns without the risk of drawdowns of that scale, it doesn't exist and you will waste your life seeking it.
Why? Well, in my own case, I have a strategy which could have taken $10K to over $2.9T over the past two years, using Kelly style position-sizing, if I were willing to withstand 90%+ drawdowns from the high-water mark every so often (assuming I had sufficient capital to place the trades in their proper size). The stats for it are rather mundane, really. 61% winning percentage, 1.3 to 1 winner to loser size ratio, profit factor of 2.1 and a little over 1 trade per day, so it's only when combined with the Kelly position-sizing and a willingness to withstand that level of drawdown that it becomes something so incredibly profitable. I'm sure almost any positive expectancy method with a high enough frequency can achieve somewhat similar statistics if the Kelly method of position-sizing is used.
Of course, then there is the practical fact that there is no market in the world liquid enough to enable such a strategy to be put into effect. But, if you could implement it, you'd have to withstand the psychological hit of watching 90% of your gains disappear without knowing if you'd ultimately lose everything that remains. Fortunately, I have that level of confidence in my strategy, which itself is based on principles similar to what Soros uses in his trading (not saying I'm anywhere near that level, just that I share some of his assumptions about markets always being wrong, rather than right).
If anyone is looking for something which provides huge returns without the risk of drawdowns of that scale, it doesn't exist and you will waste your life seeking it.