The Holy Grail!

You've searched forums, read books, been to seminars, discussed it in chat rooms, but the system that wins EVERY TIME continues to elude you.

The hunt for the grail is a highly destructive behavioural pattern that affects almost every trader at some point in their career. Typically the trader starts by learning a system/strategy and trades it for a short time. The strategy may prove profitable almost immediately, or it may incur an early loss. Either way, sooner or later a loss will happen. At this point, the trader decides that this is not the system for them, and heads off in search for a new method.

In jumping from system to system in this manner, the trader never gives a strategy enough time to prove itself over the long run.

The chat rooms and trading forums, while sometimes being an excellent source of information and ideas, are dangerous in fuelling this cycle of strategy jumping. The very nature of these resources means that they continually offer new ideas, which to the trader means new temptations.

Beware of becoming a forum-follower and re-entering the cycle of always jumping aboard the 'next big thing'.

Know Your Trade!

There are three experienced traders, A, B and C and a fourth 'novice' trader whose not too sure what he's doing.

TRADER A
This trader's method is based on a channel breakout.

When his chosen market has a bar which breakouts of a well defined trading range, then he buys (assuming a breakout of the top of the range).

He places his stop at the top of the prevailing trading range.

TRADER B
This trader's method is also based on a channel breakout, but is a more
conservative trader than A.

When his chosen market has a bar which breakouts of a well defined trading range, he waits until the price retraces back to the top of the trading range and bounces back up. This is confirmation to him that the breakout is genuine; He therefore buys (assuming a breakout of the top of the range).

He also places his stop at the top of the trading range.

TRADER C
This trader's method is also based on a channel break out, but this trader takes 'failed break out' trades.

When his chosen market has a bar which breakouts of a well defined trading range, he waits until the price retraces back into the trading range and goes through the bottom. This is confirmation to him that the breakout was false and he will therefore short the market.

He places his stop at the bottom of the trading range.

NOVICE TRADER
The novice trader decides to use the same method as Trader A. Unfortunately the trade turns out to be wrong and the market reacts to the benefit of Trader C. A loss for the novice.

The novice trader is aware of Trader Cs methods and so decides to switch to that method on his next trade. However on this occasion the trade goes to the benefit of Trader B. No trade made by the novice, hence no loss.

But the novice now decides that Trader Bs method looks good, and decides to switch to that method on his next trade. However on this occasion the trade benefits Trader A. So no trade was made by the novice, hence no loss was occurred.

Novice gets impatient and looks for another method/system/holy grail.

People don't have money problems, they have thinking problems!