It is widely believed by new traders, that there is a single trading system, that is composed of a small group of indicators, with a certain configuration of indicator settings, that can be traded on any market and always makes a profit. Many new traders spend years searching for the holy grail, believing that it is the key to being a consistently profitable trader. If you are one of the traders that is looking for the holy grail, today is your lucky day, because the holy grail of trading is revealed in the very next paragraph.
The Holy Grail Revealed
The holy grail of trading is ... that there is no holy grail of trading. There is no trading system, no group of indicators, and no configuration of settings, that is guaranteed to make a profit. Disappointed? Well, don't be, because knowing that there is no holy grail of trading is a big step towards becoming a consistently profitable trader.
Market Dynamics
Instead of spending years searching for the holy grail, new traders should spend their time watching markets and learning how the various aspects of market dynamics interact with each other.
An example for short term traders (e.g. scalpers) would be watching the time and sales (also known as the tape), focusing on the ebb and flow of the buying and selling, looking for repeating patterns in the price movement. An example for long term traders (e.g. position traders) would be reviewing many years of market data looking for price and/or indicator patterns that occur at significant prices (such as yearly highs and lows).
By watching the markets, keeping a detailed log of anything and everything, and painstakingly analysing your log, you will develop an understanding of why and how the markets move. With this understanding, you will be able to choose (or develop) trading systems that are based upon market dynamics (such as supply and demand), and you will then have a significant advantage over the traders that are still searching for the holy grail.
