The Five Mini-Holy Grails of Trading

“The Holy Grail is not what you would expect it to be. It is something that is different for each person. It’s a hidden secret you have to discover for yourself but it is obvious~ once it is realized.”- David Mobley, Sr.

Most new traders go on a quest for “The Holy Grail” of trading. They want the can’t lose system that just prints money. Many believe that rich traders know what it is and just keep it a secret. Well the secret is that there is no “secret” system or methodology that always wins. There are many robust systems but no 100% winning system, not even close. The big secret is that many of the best traders in the world have about a 50% win rate and many of the best systems have around a 50% win rate or less with each entry.

There are some key secrets of winning traders but new traders do not like these secrets and do not believe they are the truth. Many new traders argue about these principles even though they come out of the mouths of the best traders in the world with the best track records. Here are 5 real mini-Holy Grails, they are not THE answer alone but put all five together and they are the Holy Grail.

  1. Big wins and small losses, with a 3:1 risk/reward ratio you can be a winning trader with a 33% win rate.

  2. Never lose more than 1% of your total trading capital in any one trade. This brings your risk of ruin down to almost zero and turns the volume of your emotions down to a manageable level. This risk management rule causes the trader to be disciplined in their position sizing and stop loss placement.

  3. A trader must trade a robust mechanical system or trade with a rule based methodology that gives them an edge. You have to trade with a long term winning strategy and understand why it wins.

  4. Disciplined traders are the ones that eventually make the money and keep it because they are able to take their entries and exits with out being blocked by their egos or emotions.

  5. Without perseverance traders do not make it. They eventually quit somewhere down the path to success like people do in all areas of life. If one thing is the “The Holy Grail” of trading it is perseverance. All the legendary traders just decided they were going to be traders. How they were going to do it was just details. They just did what they had to do to be successful in the business and went out and paid the price to win.

Its hard to beat a person who never gives up. -Babe Ruth