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Your post (largely due to the poker references) made me ask myself: what would game theory optimal (GTO) trading look like?
PS I couldn't agree more with what you say about holy grail in trading. It is a bit of an open secret, too easy to miss as most of us do for a long time.
You are never in the wrong place... but sometimes you are in the right place looking at things in the wrong way.
Game theory is fascinating. I have to admit that while actually trading I'm honing in on certain behavioral patterns rather than trying to anticipate my 'opponent's' next several moves. While day trading - swoop in and take the other side of stop orders getting triggered - that's it - as far as certain (not all) entries are concerned. You might be right - you might be wrong - but at a minimum you'll have a little leeway in figuring that out. The market will respond. There's no thinking 5+ moves ahead like some grand master in chess. Put the trade on at a point of asymmetrical risk / reward - either it takes off or it doesn't.
Edit: A trader isn't consistently profitable at the expense of other trader's consistently rational but unprofitable behavior. It doesn't work that way. They are consistently profitable at the expense of their consistently irrational counterparts in the marketplace. People get emotional and do stupid stuff. One man's tantrum is another man's edge. I beg anyone on this site to tell me with absolute certainty they've never placed an emotionally driven, irrational trade.
BTW... Siddhartha is the first (and possibly only) novel that I've read in one sitting. I was in high school. It was an assignment in 'world literature'. I sat down at 3:30 pm. I didn't get out of my chair until 10 pm. I was mesmerized and changed. So - I appreciate the avatar or whatever you choose to call that image.
In answer to the question: "Would you share your Holy Grail?"
...my answer is, YES. The problem is that it is so completely
un-conventional, that Traders (mostly sheep) would not accept
the level of commitment, and the novelty; so...
...I'd share it; but there's nobody who'd want it, or who would
make the necessary commitment to see it through.
I think others have made such remarks; that these things are
perhaps so Individual, and I'd certainly never use what
"most traders use"; because most traders will never make
money consistently.
My approach is Hyper Focussed; and that's too much of a
commitment to usefully share. That's my answer, anywayz
Most traders say they wouldn't share their Grail, because then
the Market would "figure it out" and it wouldn't be winning
anymore... That's nonsense, to me.
This is one of the most important things to know about trading. You do profit at others' expense, and you don't do it if everyone is making intelligent decisions.
Without commenting on whether any particular person has a "Holy Grail" ( ), this is also dead on. As soon as the perfect system is published, people would fiddle with it to improve it. No one would just trade it.
-- Which is also true, if only because it wouldn't be used enough to change the market as a whole. Yes, if it were, it would cancel itself out completely, because everyone would be putting in their identical orders at the same time. Would any get filled? No, not at the price expected anyway. An order needs someone to take the other side. What happens if there isn't anyone? Markets get weird, and big spreads happen. Or some would just do the smart thing and trade against the system. What happens when all the bids are exhausted? Does price still go up? Heh.
-------------------
Of course, while the above is definitely on-topic, the real point of the question is kind of rhetorical. If someone is telling you that they have the genuine "Holy Grail," a perfect system that will make you rich, and they are willing to sell it to you for what is a small price compared to the millions you will surely make with it, are they genuine or are they lying? We'll leave this as an exercise for the reader to figure out.
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
HOW ABOUT DEFINING WHAT A "HOLY GRAIL"
trading approach in "the real world" would need to
incorporate as its primary characteristics?
I'll throw in a few features I believe would be important, but
of course anybody could argue with these.
But straight off the mark, there are Big Issues. I prefer
systems which operate on a daily or day trading basis,
based upon Technical Analysis. Someone else could
say that something other than Technical Analysis, i.e.
Fundamental Analysis needs to be the basis.
And other real possibility is to use a Swing Trading approach
where trade durations span a day or more.
Whether Technical or Fundamental Analytics is used, at
least some Analysis (other than flipping a coin) is used.
And that yields Predictions which say When to Trade,
and in What direction to Trade. (This excludes bi-directional
hedging type systems).
The ability to sustain Price Adversity, which implies adequate
capitalization and reasonable risk control.
And here's a big problem, as I see it, that the system should
not require a huge amount of Custom Development; and
that excludes my situation right off the bat !!
But perhaps a Holy Grail system is simply not available to
"the masses" of traders; which relates perhaps to another
key criterion:
Specializ(s)ation, or finding your Niche area in trading seems
to be a big factor; which means becoming an "expert" in
the market(s) you are trading.
IN THE END, there is only one way to achieve "The Holy Grail"
and that is, as I've said before, to be able to Predict the future
of Price consistently. I hasten to say that this will be "probabilistic"
but you need to have a Strong Predictive Edge, with a track
record.
Since THE "Holy Grail" is an ideal, unattainable (imaginary) system,
we're not going to find one; however, as they say (paraphrased)
"A man's reach must exceed his grasp; or what's a heaven for?"
with apologies to Robert Browning https://www.brainyquote.com/quotes/robert_browning_108884
I believe the purpose of Forums like this is to "inspire" and not just
to present solutions, but I find it's often a problem of Definition
of Terms, and the vague terms like "Learning to Trade" which
often trick the mind into thinking the solutions may be simpler
than they really are "in reality".
None of us are wholly rational agents. Little bit of mindfulness can show that we are in fact irrational most of the time. The market behavior reflects that.
With respect to Siddhartha, that makes two of us! I read it in a single sitting when I was 19. When I looked up from the book, I was changed, as was my world. What I find amazing is that some people read it... and no effect! Just goes to show how different we are.
I am not sure what GTO-optimal trading would be. The best trading IMO is exploitative - i.e. entering where other traders have their stops makes lot of sense. Personally my best trades are from inflection points, right where price, volume, and the dynamic roll over directionally... while the price is still good.
You are never in the wrong place... but sometimes you are in the right place looking at things in the wrong way.
I think there is an error in the description of who takes the other side of your trade. The markets were not setup to facilitate trading between speculators. The markets are not a game of poker. The purpose of the market is to allow participants to instantaneously buy and sell. In the earliest traded markets the public was not allowed to participate. All exchanges when they first began encountered the same difficulty. They started with a bang, but then began to fall apart. Why? Because, there was no liquidity. Eventually, someone got the idea of bringing the public into the game, as they would be there to offer liquidity. The public may be punting, gambling, speculating or trying to understand what really goes on in the market place but they would be there willing to be a buyer or seller. The public is the critical and key ingredient to the success of exchanges. Without the public there is no liquidity to support seamless trading. Thus you guys together with hedgefunds and other speculators do provide an economic function. There are all types of other non-speculators traders in the market both in the short term and in the long term. Even if someone did have a holy grail it's not as if the market would cease to exist. All that would happen would be that they might get filled first. But even they would not have infinitely deep pockets and so could not do infinite size. And we have already seen this happen with the profits of the HFT in the early days of electronic trading and the markets did not stop then. The rules changed and their profits reduced. Even Renaissance Technology can only use so much capital with their holy grail.
I probably rambled on a bit but all I was trying to say is that Markets exist for commercial reasons and understanding those commercial reasons are much more relevant to making a profit than trying to treat price data as some kind of time series to be analysed with signal processing techniques.
