Guide · Trend following
Does Holy Grail work?
Across 375 stocks, Holy Grail cut the worst fall on 100%, beat buying and holding on risk-adjusted return on 5% and on raw return on 10%. Mainly a seatbelt: it softened the big falls on most stocks, but usually gave up return to do it.
What it predicts
In a strong uptrend, buy the first pullback to the 20-day EMA once price takes out the high of the day that touched it. Sell at the old high, or below the pullback low.
- In when, within 5 days of a pullback day, a close tops that day's high while ADX (14) is still above 30. A pullback day has ADX above 30, +DI above −DI, and a low at or below the 20-day EMA.
- Out on a close below the pullback day's low (the stop), or at or above the highest high of the 20 days before the pullback (the target).
Trend following plays bet that prices that have been rising tend to keep rising for a while, and falls tend to keep falling. The family guide
How to use it
- It trades rarely (about 2.0 switches a year), so it suits someone who checks in occasionally, and a single bad call can last months.
- Expect to be wrong more often than right: only 42% of its calls worked. Its results come from the size of the winners, so following it means sitting through strings of small losses.
- It sits in cash much of the time (holding on about 3% of days), so judge it on risk-adjusted return rather than on matching a rising market.
- It worked best on Micro caps (17% beat holding on risk-adjusted return) and worst on Metals & mining (0%).
- Use it as one input. Your signal combines the plays you count with the other factors you weight into one call.
When it worked
Holy Grail did best against holding in the 2008 crash (+45% median gap) and worst in the 2020–21 rally (−43%). Median gap in return against holding the same stock (per year over stretches longer than 18 months; crypto excluded).
| 2008 crash | Recovery 2009–19 | COVID drop | 2020–21 rally | 2022 bear | Since Oct 2022 | |
|---|---|---|---|---|---|---|
| Holy Grail | +45% | −15% | +27% | −43% | +17% | −15% |
Where it worked
By kind of stock: how often it beat holding on risk-adjusted return, and the median Sharpe ratio gap.
| Group | Beat holding, risk-adjusted | Sharpe gap |
|---|---|---|
| Micro caps | 17% | -0.29 |
| Healthcare | 11% | -0.39 |
| Industrials & rentals | 11% | -0.25 |
| Financials | 8% | -0.44 |
| Software & devices | 6% | -0.43 |
| Consumer & retail | 6% | -0.50 |
| Industrials & materials | 6% | -0.38 |
| Real estate | 5% | -0.26 |
| Energy & power | 3% | -0.38 |
| Sectors | 0% | -0.64 |
| Indexes & ETFs | 0% | -0.50 |
| Big tech | 0% | -0.75 |
| Semiconductors | 0% | -0.52 |
| Media & telecom | 0% | -0.42 |
| Metals & mining | 0% | -0.47 |
Where it helped most
Sharpe ratio gap against holding, stocks with 3+ years of history
Right now
Holy Grail holds 4 of 377 names as of the Oct 13, 2026 close.
Changed its call in the last two weeks:
Backtest results since 2005 (or as long as each stock has traded), against holding the same stock over the same dates, after 0.05% per switch. Past results don't promise future ones. This analysis does not constitute trading advice. Please meet with an advisor or independently review sources before making any decision.