Many traders have devoted their time, money, and energy to find the ultimate holy grail in forex trading. Why is it considered important and why it's better for you to look for something else?

Many forex traders aim to get high profits and dream to become billionaires in no time, but in reality, not many can pull that off that easily. In fact, more than half of them ended up losing a lot of money in the beginning. Therefore, some of them begin to search for the perfect strategy or what we commonly know as the "holy grail" strategy that is supposed to help them reach their goals.

forex holy grail

Forex traders have been trying to find this holy grail for many years now, believing that it will get them winning trades and make them instantly rich. Its presence is considered very important that lots of them are willing to sacrifice their money and even invest a lot of their time in search of this strategy.

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The Quest of Finding the Forex Holy Grail

The term "holy grail" in forex trading basically refers to a strategy, system, or indicator that works really well so the trade will always be profitable in any situation. That means, the strategy must have a deadly accurate prediction and analysis of the market, so if you use this strategy, you will have a 100% probability of winning every trade.

In other words, finding the holy grail strategy means that you will become the richest person in the world with the fattest forex trading account ever. So it's not surprising that the idea of having such a profitable system is really attractive to many traders and the quest of finding one is becoming a thing now, especially among beginners.

Beginners usually focus only on getting profit in a short period of time. They still lack knowledge and haven't really understood the risk of trading yet. Thus, it's hard to accept that loss is actually a part of forex trading and that it is sometimes inevitable. That's why the concept of finding a holy grail sounds so appealing to them. On the other side of the table, many companies and shady brokers see this as a big opportunity to earn more cash. You may find that there are brokers that claim to provide a flawless strategy with 0% risk, only for them to get people to register without really providing said strategy.

Unfortunately, the truth is there is no such thing as the perfect forex holy grail. So if you're searching for one right now, you won't ever find it. It never existed and it never will. Many people have tried looking for it and might have found one that seemed to fit the description, only to find out that the system has flaws and fails at some point. Even if it does perform well, it may not work for all traders.

 

Why Forex Holy Grail Strategy Doesn't Exist

Below are the reasons why you may never find forex holy grail for your trades even though you have abundant resources to try every single strategy out there:

 

1. No One Can Accurately Predict the Market Every Single Time

The currency market is highly volatile and unpredictable, so things can change very quickly. Those changes can be caused by many different factors, so it's impossible for any individual or group to completely take over and gain enough power to control the price movements. Therefore, there won't be any strategy that is always accurate to predict the future movements of the market.

Unless you have some kind of superpower that could predict what the central bank will announce or warn you of the next natural disaster and economic turmoil, then forget about finding the miracle of the holy grail strategy anytime soon. Even predictions with odds as high as 90-100% are not always accurate as there is always a chance of false signals.

 

2. Humans Control the Market

Although it is a well-known fact that mechanical trading with automatic software such as EAs has gained huge popularity in recent years, the market sentiment remains the more dominant market driver. Even now, most trading decisions are still largely determined through the manual system.

If we use human behavior as the main driving force of the market, then there is surely no such thing as a perfectly accurate prediction because humans are unpredictable and we don't know what action they might take in the future. More than that, each person may have different opinions about things, which makes the market even more complicated and hard to predict.

 

3. No Strategy is Always Profitable in Any Condition

The forex market is not a place for gambling. While the market may look random and too complicated to understand, you can identify patterns in the price movements that you can use as the basis for your technical analysis. In fact, trading strategy is one, if not the most crucial part of forex trading. So a trader's success is mostly determined by their calculation and prediction instead of just pure luck.

However, it's also important to acknowledge that even those complex analyses are only based on past statistics that may or may not happen again in the future. That is why not all strategies can perform well in the market. Also, keep in mind that the forex market is mostly driven by market sentiment and human behavior, so trading plans can fail for various reasons.

 

The Keys to Successful Trading

But even so, just because there is no ultimate holy grail system, it doesn't mean there's no way you can increase the odds of your trade and win a lot. There are many professional traders that are able to manage their trades so well that they can get consistent profit in a long time. Instead of wasting your energy and time on finding the non-existent holy grail strategy, you should just focus on more important things, such as:

 

1. Find Your Trading Preference

Every trader has a different taste and preference when it comes to trading style. That is why while there are many good strategies to choose from, and there is no universal system that works for everyone. You should find your own unique trading style, apply it in your trades, then see if it works. If you're still unsure, it's best to start by using a demo account so you won't lose any money if the strategy fails.

 

2. Manage Your Risks

Risk management should never be underestimated. Even with a properly built trading strategy, you can still lose the trade. The risk of getting losses will always be present due to unpredictable market movements. So as a trader, you should focus on gaining more than you lose. Keep in mind that what matters the most is not how much money you get when you're right, but how much money you lose when you're wrong. Thus, having a good risk management system is highly crucial to avoid uncontrollable losses.

The first thing to do is to set the limit of risk that you can afford, so the trading results are realistic. When calculating risk and reward, traders often make mistakes by determining the reward first or setting the stop loss level too close to the entry point, which can cause the strategy to not work well. Instead, what you need to decide first is the risk and then the reward. By doing so, you will be more concerned with the risk than the reward that you can achieve.

Usually, the ideal reward level is about 1, 2, or 3 times bigger than the risk. In this case, the risk to reward ratio is either 1:1, 1:2, or 1:3. This principle also works for the trailing stop method.

For example, in the overall trading scenario, we lose 65% and get only 35% profit. If we use the 1:2 risk to reward ratio and we've traded 100 positions, then that means we lose 65 times and win 35 times.

Let's say the loss per trade is $100, so our total loss is 65 x $100 = $6,500. On the other hand, our reward is two times bigger than the loss, so it's $200 per trade. If we accumulate the profit, our total gain is 35 x $200 = $7,000. As a result, we still have a $500 profit from the overall trade.

Remember that having effective risk management will generate constant profits in trading, so it's important to pay attention to it and apply it in your trades.

 

3. Use the Right Time Frame

Time frame is another thing that you should consider when forex trading. Oftentimes, traders got trapped in lower time frames such as 5 minutes and 15 minutes charts. They are tempted by short-term price movements which can lead them to a lot of false signals and noise. These false signals will make them over-analyze the market and therefore, create false predictions.

The habit of using lower time frames is definitely unproductive and mostly filled with empty predictions. In other words, you just basically gamble your money away. The truth is, you don't have to enter the market too frequently in order to be successful. For this reason, it's better to use the daily time frame instead.

Trading with a 5 minutes time frame will stimulate the "reward centers" of your brain, which then cause instant satisfaction. On the other hand, if you focus only on the daily time frame and manage to control your patience and discipline, then you will be able to trigger the higher parts of your brain to develop.

There are several other reasons why trading with a daily time frame is an excellent choice:

  • The daily chart provides a clearer picture of the market so it can show the price movements and market sentiment more accurately. Thereby, the daily chart may increase the probability of the long and short-term predictions.
  • Daily charts can reduce your trading frequency. Success in forex trading is largely determined by the quality rather than the overall quantity of your trades.
  • By not entering the market that often, you can reduce your trading risk. Say you only enter the market three times or even once a month, then you can increase the risk percentage in accordance with your tolerance limit, so the position size still makes sense (not too small and not too big).

Even though it's not easy to move on once you're accustomed to trading with a 5 minutes or 15 minutes time frame, it's important to be realistic and think forward. The first thing to do is change your mindset and try to focus more on your long-term goals.

 

4. The Psychology of Trading

There are lots of various unpredictable possibilities involved in forex trading. That is why you need some consistency in your trades, which can only happen if you have good control of your emotional state. If you often get emotional when you see extreme price movements that don't match your expectations, then you should be careful. These emotions can motivate you to ditch your trading plan and risk management, causing your trade to fall into pieces. Hence, it is important to stay realistic and calm while trading, keep your head clear so you can make reasonable decisions that you won't regret later.

 

The Bottom Line

Now we know the reasons why there is no such thing as the ultimate forex holy grail strategy that works in perfect accuracy every single time. However, that fact alone does not eliminate the possibility of getting constant returns because there are things that you can do to minimize the risk of losing. Instead of looking for a forex holy grail that you think could give you buy and sell signals with 100% accuracy, it's better to just accept the fact that it doesn't exist and focus more on building the right strategy for you.

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It all comes back to how you manage your risks as well as your emotional state, and how you adapt to the changes on the market. After all, forex trading is completely different from gambling because it is not a place to play around. Any professional trader would tell you that in order to be successful in forex trading, you really have to put some effort into it and learn how to trade properly.