joe s 

Trader's will never give up the quest for the Holy Grail

That's how traders are always going to be adapting to market conditions. It's the complacent ones that get steamrolled. Also, if I was making a million a year, I think I'd drastically stop exploring trading and focus more on enjoying life.

trepidation 

If you found the Holy Grail, would you share it with the world? By Holy Grail, all I mean is a system or methodology that can consistently yield profits in all market conditions however it does it and also make a good ROI. Would you ask for compensation? I once bought a course and to this day I'm haunted by what this popular guru let accidently slip. He said that these days he was too busy teaching to actually trade. Think about that for a minute. He was living off of other people's hopes and dreams and in doing so was living their dreams. So far there've been alot of people that have been trying to sell the dream of systems and strategies or even signals that make bank. These days I've seen an evolution in the landscape where people try to sell the idea that you can't get rich quick and instead they sell another dream via support groups or training. To me, both of these types of people are feeding off the dreams of other people. That isn't to say they don't produce value, but if they created an absurd amount of value they would be renown across the internet. Just as this is two sides of a coin, so too is the question of the Holy Grail. On one side there's the idea of a self-fulfilling prophecy (candlestick patterns) and on the other there's this idea of alpha decay where the more people that know, the less effective your edge becomes (arbitraging). What are your thoughts?

Im not sure on the phrase 'Holy Grail ' But I know for a fact that I would not disclose my methods that have taken me 10 years of blood sweat and tears to anyone.
I also wouldn't sell any ideas in fear of that person profiting from my hard work.

Anyone that promises you can ''learn to Trade their holy grail'' for a fee is nothing but a fraud.
There are so many scammers out there saying trading is easy to learn it make my blood boil.

I would lease my system to a limited amount of people not sure what that number would be but if I
could get 10 or 20k a month extra why not. Most of us could make money. The key to financial freedom is
multiple streams of income then when I am not trading I can still be making money along with other income
streams

I just found this question pop up on my e-mail and took a peek at some of the responses.
I've been working on educating myself to learn how to trade, making a consistent profit, for over 20 years.
The most important thing I found over the years was answering the question "What is the Grail?"
The best thing that we fellow traders can talk about is to focus in on what a Daily, Weekly and Monthly Consistent Profit should be.
When you can answer this, then you have completed the first step to identifying what the Grail really is ....
Everything else is BS.

mtzimmer1 

I’ll throw in my two cents. I’ve developed a few trading models that are likely to outperform the broad market in both absolute and risk-adjusted return. I trade these models and I share them with my family. I would not sell these models because 1) I don’t want to lose my edge and 2) I don’t want to make money from marketing to struggling traders, I want to make money from trading. Now as far as daytrading goes, I have failed 100’s of times to write an intraday black box algo that is profitable. The only alternative then becomes discretionary trading. When I reach a point of consistent profitability I will certainly share my methodology for free because I think it is less likely for a discretionary trader to lose their edge due to ‘overcrowding.’ -Zimmer

@mtzimmer1 - Thats the good spirit, willing to share. Keep it up.

@Big Mike @bobwest Thanks for the mentions.

There's definitely no holy grail.

Even having architected everything end-to-end, and having every line of code in my possession, I don't think it's possible. There's just so many moving pieces. Even well-oiled, simple and highly mechanical arbitrage strategies that trade 10+% ADV require constant human intervention and fine tuning of risk parameters, and break all the time.

Others have brought up good points about the unreplicable nature of technology and personnel that I'll not rehash. There's others that go behind a successful strategy that are boringly unreplicable: A firm with a >1B quant portfolio will often push billions in volume to test simple hypotheses for improving their execution algorithm. Even a small firm like mine runs A/B tests in the live market that would turnover a few % of the entire market's volume to experiment with strategy changes. It's costly but sometimes you get lucky because you've built up a good buffer of PnL and can afford these experiments. Some firms send people to nonprofit organizations in Asia that run surveys, whose researchers need to be convinced to take your $100k check for their data. I've also run very undifferentiated strategies that just had 30+ small little improvements that took them past the profitability hurdle.

If I could time travel and give my younger self advice in 8 words, the holy grail would be "There's no free lunch," - in blood - for extra emphasis, because I was already warned going into this line of work. The other 3 words would be, "Don't hire X". An indirect consequence of the no-free-lunch theorem is that almost everything is a risk premium, not an alpha, it's just not always obvious what latent risk you're taking on. I feel everyone needs to know this before working on a strategy. Naive examples: You can collect a very long string of profitable trades selling options OTM. There's also a wide class of "carry trades" with seemingly consistent profitability where you are giving up risk-free rate, some operational risk, or more, to hold some inventory to maturity.

Trading is very similar to chess. On average, every generation gets a little better than the last because it accumulates the tools and learnings of the previous generation. There's a couple of dominant players at the top of each style of chess (rapid, blitz, classical, bullet), and the top 3 win nearly all the time despite being separated a thin +3.5% from the rest of the field. From time to time, companies fall off their peak - Getco, ATD, Chopper, RGM Advisors, to name a few, were all incredibly dominant in their heydays. There's other firms to take their place as they deteriorate.

There's no secret sauce to it. Lots of research; plenty of practice; immaculate preparation; learning from mistakes; concentrating on several openings that you are good at. And some good luck on match days.

Like chess, it's difficult to sustain the business because of eventual mental decline - in this case, the reward function is heavily skewed to the 1 or 2 founders who eventually lose interest in running the business. Very few do carve a sustainable succession plan. If you were to ask me to name the most important deciding factor (or "holy grail"), it's just a sustainable succession plan.

One guy who built a great succession plan goes by the name of David Shaw, and he's quoted for saying "I find edges where it's expensive." That's a good holy grail to go by. I personally think it's best to find edges where it's very boring.

SunTrader 

If you want to become a doctor you, of course, learn from other doctors. Not gurus. If you want to become a great doctor that comes from within IMO. Agree or not I've said my piece.

Ah ah...I think I understand. When I say guru, I mean mentors, advisers, shoulders of giants.
e.g. I consider Jack Schwager(Market Wizards) a guru but he will be the first to tell you that he's not a trader.
But you can learn a lot by reading his books and understanding his philosophy of trading.
I do agree with you that over time as you develop your own philosophy you will have less and less need to adopt someone else's philosophy but of course you should always be open to improvements.

Whether I agree or disagree I am always interested in other people's opinion and why.
Your path you must decide

This will probably not be read by the ones who most need it, so let me just repeat it here.

artemiso 

@Big Mike @bobwest Thanks for the mentions. There's definitely no holy grail. ... An indirect consequence of the no-free-lunch theorem is that almost everything is a risk premium, not an alpha, it's just not always obvious what latent risk you're taking on. I feel everyone needs to know this before working on a strategy.

Folks, read this post in full and think on its meaning. If you're not sure about the lingo, "alpha" refers to doing better than a market bechmark. It could be called having an "edge."

If you're not sure who this is, he's the guy who's beating you.

Bob.

--------------------

Edit: for context, refer to these posts:

Would you share your Holy Grail? I think this is probably correct, as a description of how the professionals generally operate. (Actually, not being one, I can't be sure of this, but it is consistent with what I have gathered, anyway. :becky:) We run into the most odd and fanciful …

Would you share your Holy Grail? BTW, I'm pretty certain even if artemiso came in and laid out bullet points on how they accomplish their edge, there is a near zero chance it could be put into action without the personnel he has assembled. Simply knowing the "holy grail" …

bobwest 

This will probably not be read by the ones who most need it, so let me just repeat it here. Folks, read this post in full and think on its meaning. If you're not sure about the lingo, "alpha" refers to doing better than a market bechmark. It could be called having an "edge." If you're not sure who this is, he's the guy who's beating you. Bob. -------------------- Edit: for context, refer to these posts: Would you share your Holy Grail? I think this is probably correct, as a description of how the professionals generally operate. (Actually, not being one, I can't be sure of this, but it is consistent with what I have gathered, anyway. :becky:) We run into the most odd and fanciful … Would you share your Holy Grail? BTW, I'm pretty certain even if artemiso came in and laid out bullet points on how they accomplish their edge, there is a near zero chance it could be put into action without the personnel he has assembled. Simply knowing the "holy grail" …

I don't think the issue is in the reading. There are different kinds of learnings. Intellectual learnings and experiential learnings. The advise you are giving can only be learned experientially.
Therein lies the rub.
Edward O Thorpe said in his biography (A man for all markets) that when he was a kid his mother repeatedly warned him about touching a hot stove. He thought he knew what it meant to touch a hot stove but it was only after he experienced it that he understood what it meant

Aurac 

I don't think the issue is in the reading. There are different kinds of learnings. Intellectual learnings and experiential learnings. The advise you are giving can only be learned experientially. Therein lies the rub. Edward O Thorpe said in his biography (A man for all markets) that when he was a kid his mother repeatedly warned him about touching a hot stove. He thought he knew what it meant to touch a hot stove but it was only after he experienced it that he understood what it meant

"I hear and I forget. I see and I remember. I do and I understand." Chinese proverb (often attributed to Confucious)