Most new traders generally go looking for the holy grail of trading. That system that just prints money, they believe it exists and will look relentlessly for it. However there is no holy grail of trading. The closest thing a trader can get to a holy grail in trading is a robust mechanical trend following system with limited draw downs that the trader can deal with without emotions causing them to over ride the system.
Nick Radge as written a great book on this very topic ‘Unholy Grails’, this is a great addition to any trend following trader’s library regardless of your specific method for trend following. What Nick does is take the reader through how he builds mechanical trend following systems that beat the market. His momentum based strategies are based primarily on catching a market wave and riding it for over sized profits. Not through predictions but through back tested mechanical systematic strategies based on momentum that have historically been shown to beat the market during a trend and over the long term. In between these trends the system is designed to limit equity draw downs by automatically stopping out of losing trades when certain parameters are hit. His key message in the book is to create a system based both on simplicity and robustness. His systems allocate the investors account into 20 equal increments to manage risk without diluting returns.
He measures his systems through the metrics of return, risk, and also reliability. Nick does a great job of giving the reader charts demonstrating the historical equity curves of both profits in dollars and percentage of equity draw downs during markets that are not conducive to profits. Nick has placed charts in the book showing the returns of each system year by year based on historical information using the systems entry and exit metrics for its watch list.
Nick has some excellent interviews with very successful traders in the back of the book and how they successfully manage their trading systems in real accounts with real money. He also covers the misconceptions about trend following traders and explains the truth about what they do.
This is just an excellent addition to trend following literature and is a perfect complement to Michael Covel’s writings. I highly recommend.