Do you have a wonderful trading system, one that consistently makes you money? In trading and investment most beginners tend to believe there is a great secret that will bring them success. Thus, begins that search for The great secret (Holy Grail).

You probably believe that you have found your holy grail but this couldn’t be further from the truth. Your system has very little to do with consistent profitability in the markets. Here we categorized the few things that should be considered before choosing a Holy Grail System.

Why Holy Grail

Investors also debate systems within a market such as: trend trading, swing trading, scalping, shorting, day trading, buy and hold, fundamental trading, technical trading, Elliot wave theory, moving average crossovers, etc… They all work if the “person” understands the holy grail of trading. And that is being able to understand YOU and how your mind works.

However, it is not the system that makes one successful. It is YOU that makes the system work properly. What does it mean? Each individual must master their own personal psychological impacts on their trading results. You must work on YOU to become consistently successful!

What is Holy Grail System

A trading system that is considered The Holy Grail should be able to produce profitable trades in any market environment or at least the trading strategy should work over 85% of the time.  Trading is a skill that is either learned from experience, or is paid for and used by retail traders from another source. The Holy Grail is the meaning of a full-proof trading system that works.

A simple fact of Forex trading is that it is a game of probabilities, those traders who learn to view and think about trade setups in terms of risk to reward, are the ones who usually end up making consistent money in the Forex market. However, it is possible to make consistent money even if your discretionary trade setup identification skills are not fully matured yet.

Risk to reward setups are what give all traders an equal chance at making consistent money, a thorough understanding of risk to reward and how to view trade setups in terms of possible risk to possible reward, is the closest thing to the “holy grail” of trading, and is one of the most important pieces of the puzzle to consistently profitable trading, second only to having the proper amount of self-discipline and emotional control.

RISK/REWARD Ratio

This ratio approximates the reward that an investor may earn against the risk that they are willing to invest. It is presented in price form; for example, a risk/reward ratio of 1:5 means that an investor will risk $1 for the potential earning of $5. This is known as the expected return. Calculating risk/reward ratios is an important aspect of risk management, especially when trading in volatile markets, when the prospect of risk is much higher than the potential earnings.

How to place a Risk/Reward Level

When learning to think in probabilities and to view the market in terms of risk to reward, it is necessary to calculate the risk on a trade setup first, then you can calculate the reward as a multiple of the amount you have at risk. By concentrating on the risk first, instead of the reward, you are making yourself more aware of the risk involved on each trade setup, instead of becoming fixated on how big of a reward you might make, as many traders do. This will also turn you into a “risk manager”, rather than a “trader”, the best traders in the world know that consistent trading profits come as a result of managing risk effectively, so consider yourself a manager of risk from now on.

The next thing to do after you have identified a high-quality trade setup and marked the risk level on your chart, is to mark the reward levels as multiples of your risk. You want to draw a line at 1 times your risk, 2 times your risk, and 3 times your risk. These are the reward levels you will mainly concern yourself with, should you choose to employ a trailing stop you can use these 1, 2, and 3 times risk levels to begin the trailing process. This setup will give help to reach your Goal setups.

Conclusion

The “Holy Grail” is not some magical source that is the key to the markets, as most people believe. To unlock the “Holy Grail,” you need to appreciate your own ability to think and be unique. People make money by finding themselves, achieving their potential, and getting in tune with themselves so that they can follow the flow of the market. Getting in tune with yourself means finding an inner peace inside. It means finding a balance between profits and losses. The Holy Grail is not a magical trading system; it is an inner struggle. Once you’ve discovered that, and resolved the struggle, you can find a trading system that will work for you.