There is no Holy Grail principally because market prices are determined by the attitude of investors and speculators to the changing economic and financial background. These attitudes tend to be consistent but occasionally are irrational, thereby defying even the most logical of analyses from time to time.

Garfield Drew, the noted market commentator and technician, wrote in the 1940s, “Stocks do not sell for what they are worth but for what people think they are worth.” How wise can we explain that any market, stock, commodity, or currency can fluctuate a great deal in terms of its underlying value from one day to the next?

Market prices are essentially a reflection of the hopes, fears, and expectations of the various participants. History tells us that human nature is more or less constant, but it also tells us that each Situation is unique.

Why there is no Holy Grail

Let us assume, for example, that three people own 100% of a particular security we will call ABC Company.

Shareholder A is investing for the long term and is not influenced by day-to-day news.

Shareholder B has bought the stock because he thinks the Company’s prospects are quite promising over the next six months.

Shareholder C has purchased the stock because it is temporarily depressed due to some bad news. Shareholder C plans to hold it for only a couple of weeks at most. He is a trader and can

change his mind at a moment’s notice.

A given news event such äs the resignation of the Company’s President or a better-than-anticipated profit report will affect each shareholder in a different way.

Shareholder A is unlikely to be influenced by either good or bad news, because he is taking the long view.

Shareholder B could go either way, but,

Shareholder C is almost bound to react, since he has a very short-term time horizon.

From this example, we can see that while his or her needs are different, each player is likely to act in a predictable way. Moreover, because the makeup of the company’s holdings will Change over time, perhaps the short-term trader will seil to another person with a long-term outlook.

Conversely, the long-term shareholder may decide to take a bigger stake in the Company, Since he can buy at depressed prices. Although human nature is reasonably constant, its effect on the market price will fluctuate because people of different personality types will own different proportions of the Company at various times.

Even though the Personalities of the players may remain about the same, the external Pressures they undergo will almost certainly vary. Thus, the long-term investor may be forced to sell part of his position because of an unforeseen financial problem.

The news event is therefore of sufficient importance to tip his decision-making process at the margin. Since the actual makeup of the market changes over time, it follows that the psychological responses to any given set of events also will be diverse. Because of this, it is very difficult to see how anyone could create a System or develop a philosophy or approach that would call every market turning point in a perfect manner.

How to develop Holy Grail Trading System

 This is not to say that you cannot develop an approach that consistently delivers more profits than losses. It means merely that there is no perfect System or Holy Grail.

We shall learn that forecasting market trends is an art and not a science. As such, it cannot be reduced to a convenient formula. Having the perfect indicator would be one thing, but Putting it into practice would be another.

Holy Grail and Trading Pshycology

Even if you are able to “beat the market” the greater battle of “beating yourself,” that is, Mastering your emotions still lies ahead.

Every great market operator, whether a trader or an investor, knows that the analytical aspect of playing the market represents only a small segment compared with its psychological aspect.

In this respect, history’s great traders or investors—to one degree or another—have followed Various rules. However, these successful individuals would be the first to admit that they have no convenient magic formula to pass on äs a testament to their triumphs. The false “Holy Grail” concept appears in many forms; the fail-safe System, or perfect indicator