Ask any quantitative analyst on Wall Street (one of those crazy math and physics PhDs who create complex algorithmic trading strategies) why they still haven’t come up with a ” Holy Grail ” indicator, method or system to make a profit 100% of the time .
You will probably be given two reasons:
1. Impossible to predict the future
Who knows what the head of the Central Bank will say during his next speech?
Or what some famous investor or hedge fund manager would say during a random TV interview?
Do you know when the next terrorist attack will occur and whether it will generate risk aversion?
What about natural disasters like earthquakes or tsunamis?
The list of unanticipated market movers is endless and they can rock the markets and any Forex trading system.
Realize that this is part of trading and you just need to be prepared to limit your losses if they happen.
Be ready for any shocks in the world. And we don’t mean what you think.
2. The market is not driven by data. This is what people do
There are times when data or market themes do not align with price action.
Why is that?
Maybe the result was taken into account in the price in advance? Maybe Forex traders didn’t pay attention to the data when it was released?
Maybe some institutional investor was holding a huge position that was on the wrong side of the market?
Should all players in the market respond in the same way to an unanticipated catalyst?
Whatever the price action, the decisions that spur a trader to action are not always logical or consistent with the information available.
When multiplied by millions of players with different goals/strategies and different trading accounts, it becomes obvious that it is impossible to tell where the market will go at any given moment.
You will not be able to quantify or calculate human behavior and unknown future events in an elegant mathematical equation to completely eliminate risk.
There will always be some level of uncertainty and there will be times when you are on the wrong side of a currency pair.
In fact… There will be a lot of such cases, there is no getting away from it.
Perfectionists are probably better off staying away.
For those of you who always want to be right, we must warn…
No one can accurately predict the market every time.
No one.
However, hope is not lost as long as you still have the strength not to listen to anyone and to persevere in seeking the ” Holy Grail ” of Forex.
Rumor has it that if you meet a pink unicorn standing under a rainbow, it will lead you to an invisible leprechaun who will give you the Holy Grail . Good luck!
