Month 8 May 2006

May has been a fine month - but before i start on that i want to remind you of a story you once read as a child.

"Nah nah nah boo boo, I'm faster than you!“ shouted Harriet Hare as she sped down the road. Normally, Timothy Tortoise was a very easy going reptile. He was happy roaming through the forest at his own pace. But the nasty taunts of Harriet Hare were starting to make him angry. Later that day Timothy finally arrived (last as usual) at the playground by the river. Sure enough, as soon as he arrived, Harriet started teasing him again.

“A heavy green shell and short little feet, you’re the slowest guy I ever did meet!”, Harriet taunted. Timothy slowly turned his head to look Harriet straight in the eye, “I am too slow or so you say. To find the truth, let’s race today!” All the animals in the playground gasped. A race? Between Harriet Hare, the fastest runner and Timothy Turtle the last to show up? What an odd thing that would be to watch. “I’ll set up a course for you to race on”, offered Freddy the Fox. Harriet Hare laughed out loud, “A race you want? A race you’ll see. I know I’m faster than Timothy!” And so Freddy the Fox set up a race course all the way from the playground by the river to the big oak tree at the edge of the forest. All of the animals met at the starting line early in the afternoon. “On your mark…” shouted Freddy. “Just a minute Freddy,” giggled Beatrice the Bear, “um, Timothy hasn’t quite made it to the starting line yet.” “I’m fine,” smiled Timothy, “I always make it to where I’m headed.” “Get set… Go!” chanted the animals all together. Harriet Hare was off like a shot. She made it around the corner by the meadow before Timothy even had all of his feet across the starting line. Freddy the Fox groaned and shook his head. He'd been hoping his friend Timothy would somehow manage to beat Harriet -- she was always such a show off. "Oh well, let's head over to the finish line everyone. If we cut across the meadow maybe we'll manage to get there in time to watch Harriet cross the finish line." Off the animals went, leaving Timothy to slowly make his way down the path Freddy had set as the race course. Meanwhile, Harriet had run so fast that she could actually see the finish line already. She had to sit down, she was laughing so hard, "I can't believe the nerve of him, to think that he might actually win!" Harriet gazed over to the finish line and realized that none of the spectators were there yet. "Perhaps I'll rest underneath this tree, so when I win the crowds will see. After all that turtle's slow, he'll take all day to catch up I know." Harriet lay down and promptly fell asleep. Timothy made his way down the path along the river, across the meadow and right past the snoozing Harriet. He didn't stop and rest anywhere along the race track. As Timothy approached the finish line all of the animals began to cheer. Harriet awoke from her nap and ran as fast as she could, but she was too late. Timothy picked his last foot up across the line an instant before she made it there. Harriet pulled her ears and stomped her feet, "No fair, no fair, no fair, I say! I am the fastest any day." Timothy smiled and nodded slowly, "It's true I have a slower pace, but slow but steady wins the race!"

Ok, indulge me :) you will see from this months results weve done quite well, the figures you wont see yet are that so far from inception the account has grown 342% and at one point this month it was over 400%!

Now there are traders out there scratching their head and panicking all day trying to squeeze every pip they can out of the market - they won't give up and have sleepless nights whilst the hare in their head says "keep going!!" they burn themselves out and never actually get anywhere apart from in a big hole.

Now this is the bit that may suprise you. I am a tortoise.

This bit will really suprise you ......

The results that you are seeing with this account - and you have to admit they are pretty good arent they!, the results you see are the result of ...........

yep, believe it or not .........

they are the result of just 9 pips a day

Think about that for a moment

Just an average of 9 pips a day is going to make me super rich. The hare's of this world will be laughing at this - they are soo fast and soo good that they think 20 -40 pips a day is easily attainable. They are soo clever that they will piss all over my 9 pips a day.

Well, ask yourself why they arent millionaires then?

so endeth the lesson :)

Onto this months results and action.

May was a stupendous month, remember last month when i said that if we hit 40k then stage 2 of the plan comes into action? - well we didn't just hit 40k we hit 50k! - at one point our accounts were up over 65% ON THE MONTH!

So technically the reason for this sudden volatility during April and may was that gbp broke out of a range that it had been in for over six months - that was bound to produce fireworks - good news for us but i'm sure a lot of people got burned.

I guess that you are wondering what this stage 2 is all about. At all times we know that 25% of the account is safe money. when we hit 40k we knew that 10k of the account (our initial stake) was safe and i dont like safe money sitting there doing nothing.

so, 10k was taken out of the account and placed into a new account - the 'income account'.

We have been running the income account since january this year and the idea is that whilst grail is going to build and build to a big pot, in the meantime we need an income to live off. so was born the income account.

The income account trades grail in exactly the same way as the main account with the exception that it is played without compounding at a constant leverage.

The basic idea is that for each £5 per pip you trade makes you £1000 per month. We play the income account at high leverage. we started off with 10k of our own money and at £20 a pip - so a 4k take every month.

Our testing showed that once a year at this level we would have to put money in as the drawdowns would bust the account but we took the risk that we would get good money out before this happened - we were right and to date we have taken out 20k from a 10k account.

Anyway, when the 10k from the grail account became free we decided to add it to our income account and reduce the leverage to a safe level where the account will not bust.

so you will see from the account screenshots below that there has been 10k taken out to make yet more money. so dont forget that in the future when you see the account. There is now 20k in the income account which is played at 15:1 (£30 a pip) and gives us £6k per month on average.

The figures from the income account will be tagged onto the end of the grail account on a quarterley basis but they do not form part of the million pound target.

So, how was the month emotionally? to be honest from sweet inspiration to desperate despair.

this month the staking plan meant that our stake increased substantially and to be honest we didnt have time to get used to it. it took us 6 months to increase our stakes threefold and then suddenly within 3 weeks it had increased a further twofold.

during the first six months the growth was slow and steady - each increase in the stake was easily assimulated and by the next increase we were well used to the previous one.

This month our stakes increased in large jumps and our minds did not have time to get used to the jump - what previously felt like a safe stake suddenly seemed very high and of course like all traders we started to sweat the action and have 'scared money'

particularly when you add in the stake from the income account - at one point we were the equivalent of 16 full dollar lots in the market and at the beginning of the month this was just 9 - the jump was rather fast eh?

when we did eventually get into a drawdown which was bound to happen, after 4 days i was really starting to sweat and as day five started into negative territory i was looking for the gas oven to stick my head in. - instead i just took a look at the account and noted that even if it had failed that day (which thankfully it didnt) the account would still have been 20% up on the month. that settled the fears and the day actually finished up, as did the next. phew!

You may remember last month we were talking about Capital Spreads, well our curiosity got the better ois us and we thought we should do some due dilligence on the company that we were going to take 1 million from.

We paid for a Dunn & Bradstreet report on the company London Capital Group Ltd.

The report said that the company was very safe and had little chance of failing - however on reading the P&L for the company we took a decision that it just is not big enough for us to trust our hard earned to as next year our projections show that we will take more from them than they have earned in the last 3 years.

This, on top of conversations i've had with the MD has caused us to look elsewhere for a place to put our money.

This is a shame really - Cap spreads platform lends itself easily to our system, they are mostly fair with entries and as a whole I like doing business with them, but other things also came into our thought like this ...

During one conversation we had with them it became apparent that once we reach £300 per pip it could cause them problems with execution - now bear in mind that there are three of us playing this system with them and with 2 accounts each and you start to see what i mean. - combined at the end of the month we were at £267 per pip and by this time next year we will each be at around £400 per pip.

Capital spreads is a great company but i don't think they are big enough to handle 3 players at that sort of level.

One thing that does bug me is that before we even went on cap spreads you may remember at the start of this blog that i spoke to them about the levels we would be playing and was told we were fine to go ahead. obviously the guy we spoke to thought that we were yet another bunch of suckers who were going to lose.

I dont blame him for thinking that because most are, but it does bug me that i was open and straight with the guy about how much we would be staking and everything was rosy unti we actually start to reach that level.

Anyway, here's what we have decided to do.

Having done some more due dilligence, in april I decided to fund my A.Nother broker account and see how the platform handles our system. Its a bit more work but handled it ok.

It handled April and May ok so at the end of april we emptied our income account on cap spreads funded A.Nother broker to see how it handles £30 a pip.

So far so good but we are going to play it for a good month first before we think of transferring over the main account.

Its important to say that we are not ditching cap spreads totally. the main account is still over there but what we will do is switch the main account over to income and the income account at A.Nother into the main account - so dont be suprised if there is some messing around with the screenshots in the coming months.

We will keep the income account at cap spreads basically until they tell us to sod off, which I dont think they will on that level.


anyway, time for the figures then, have fun, back next month.

• Opening balance:£30,397

• Closing Balance: £34,491
  
  
• Holding Account £10,000
  
  
• Real Closing Balance £44,491
  
  
  
• P/L: £14,094
  
  
• % Gain on account: 46.4%
  
  
• Lowest account value: £ 30397
  
  
• Highest account value: £50,242
  
  
• Maximum Drawdown: £13,568 = 27%% peak to valley

Month 7 April 2006

Hiya all,

Month seven then and 25% of the way to our goal.

Might seem a bit strange to you that we are still aiming for the million and only 17 months to go - hell, i would be dubious too but think of it this way - our moneymanagement means that we literally double our stake every 4 months on average.

That means that 10k becomes 20 in 4 months which we managed in 5 months (bit behind)

Step 2 ios 20k to 40k, then 40 to 80 etc etc - see what i mean.


At the moment progress is painfully slow - year two is the big mover when we are 100k+ in the account.

So, anyway, Month 7 has been a strange one - very early in the month we were 30% up on the month which then slipped back down to zero gain and in two days weve rushed up again as you will see below with the monthly report.

Some might say "why not quit for the month once youve made your target" - good question but our backtests show that some months will do as much as 52% and as there is no way to predict what will be a good month or a bad month then we just play on.

It may also interest you to know that I have almost now become a full time Grail trader. Ive almost given up scalping and daytrading for good. I have a second account which trades grail and every time the account reaches a specific limit I take money out to live on. It makes me around £4000 a month which is enough to pay the bills etc whilst the main account grows untouched.

Why am I going this way? well believe me after four years+ of day trading you grow very tired of it. Grail is a simple mechanical system with no thought processes going into the trades whatsoever. some days it wins and some it loses but overall it makes money.

Day trading to me is like chinese water torture. No matter how hard you study and work you can never be like 95% right, best you can manage in my opinion is around 80% and that's when you are on top of your game - and to me it isnt worth the extra work and heartache to carry on when i have a system that needs no mental anguish at all. - why bother chasing chickens when you have a goose which lays golden eggs?

Next month it may be time to reveal the 'extra' strategy which will come into play when the account reaches 40k. Thats if we get there by then :)

Anyway, time for the figures then.

• Opening balance:£22510

• Closing Balance: £30,397
  
  
• P/L: £7,887
  
  
• % Gain on account: 35.13%
  
  
• Lowest account value: £ 22,403
  
  
• Highest account value: £30,397
  
  
• Maximum Drawdown: £7184 = 24.2%% peak to valley

Month Six - March 2006

Ok, month six then



although we have made gains this month they are again below par and we have not reached the 6 month target of £32k, in fact we are 10k down.

The month has been very uneventful with trades just wiggling around - no biggies but also no big losses. - just the way the market has been.

Still, we are at a good percentage of return for the 6 months but im really hoping to get a better next six months.

monthly report and 6 month report below

Monthly Report:

• Opening balance:£20108

• Closing Balance: £22,510
  
  
• P/L: £2402
  
  
• % Gain on account: 11.95%
  
  
• Lowest account value: £ 16,531
  
  
• Highest account value: £22,648
  
  
• Maximum Drawdown: £3,577 = 17.7% peak to valley

6 Months Report

• Opening balance:£10,000

• Closing Balance: £22,510
  
  
• P/L: £12,510
  
  
• % Gain on account: 124.10%
  
  
• Lowest account value: £ 8640
  
  
• Highest account value: £22,648
  
  
• Maximum Drawdown: £6,458 = 34.5%% peak to valley

Month 5 - February 2005

So, here we are.

Into month five and sort of back on schedule (well almost!)

This month had a lot of catching up to do after last months loss, so its probably going to put us behind a month, here's hoping that we manage to catch up with it

Over the past week or so ive done some analysis on 2005 and as a whole it preformed a little under par. £10,000 invested on 1st january would have grown to £74000 which is 740% give or take a bit. This may sound a lot but at high leverage its not the performance we expected. To reach our million we need to produce an average of 22% per month growth. This equates to around 1000% per annum that we need.

well, if it takes a little longer to get the mil than we thought then what the heck, but at this moment in time the target still stands.

Ok, February then.

This month we did not have a single maximum stop out. I guess thats making up for last month when we had a boatload of them.

Performance has been very good although it has not felt that way with so much ground to gain on January - Effectively we needed a large percentage win this month to get back on track and it did feel that we were merely treading water for the month.

We have had a good gain, but a dropped month takes some getting over. hopefully this will even in during the next few months.

The good news is that the account has now doubled in size - eat that jupiter fund with your piddling 30% pa

anyway, heres the results for the month, next month comes the quarterley report and the six month report on top of the usual monthly one.

Have a great March :)

• Opening balance:£13,940

• Closing Balance: £20,108
  
  
• P/L: £6168
  
  
• % Gain on account: 44.2%
  
  
• Lowest account value: £ 13,420
  
  
• Highest account value: £20,108
  
  
• Maximum Drawdown: £1,608 = 9.1% peak to valley

Month 4 - January 2006

Hi all, thanks for dropping by on the million pound experiment.

If you dont know what this is all about then please read the very first post from this blog - should be either at the bottom of this page or from the links at the side.

January 2006.

Well, January has been heartbreaking to say the least - A good start to the month put us onto a new high of the equity curve to over £18k and since then we have been in drawdown.

The drawdown is worse the last one we had in November and again this is the part that is heartbreaking.

Let me tell you the reason for grail. Grail is 100% mechanical that requires no user input throughout the trading day.

To me this is trading nirvana. After more that four years as a trader you get to a point where it bores the pants off you hour after hour and you start to look for something that can take away this tedious existence in front of 5 screens all day. To me that is what grail is.

Grail is not, (nor was it designed to be) a 100% winning trading strategy. To me the holy grail of trading is a system you dont have to think about or have decisions to make as to when to close or enter etc.

The trouble is, as many of you will know, that the first ten minutes of any trade is the hardest to keep your cool, that is where we are at in grail. the first six months is like the first ten minutes of a daytrade.

as a trader you will know that once in the money with a good stop in place covering some profits its a breeze to hold a position. well in the case of grail - the first 100% is the hardest and once the initial capital of 10k has doubled to 20k in safe position (ie 28k as 28K minus max expected drawdown of 40% = 20k) we cannot feel safe.

This month we saw £18k drawdown to almost12k - a drop of £6000 doesnt feel right unless you are playing with a six figure account, which we aren't. guess ill just have to get used to that.

It is also our first losing month on the system for a year, last February being the last one.

We are of course going to continue, if the last 4 months has told us anything it is that grail has this amazing ability to bounce back from the doldrums and suprise us in just a few days.

Im hoping that next month's report will be much better that the one which follows.

Till then, happy trading.

Monthly Report - January 2006.

• Opening balance:£17,088

• Closing Balance: £ 13,940
  
  
• P/L: -£3,148
  
  
• % Gain on account: -18.42%
  
  
• Lowest account value: £ 12,239
  
  
• Highest account value: £18,697
  
  
• Maximum Drawdown: £6,458 = 34.5%% peak to valley

Month 3 First Quarter Dec 2005

Ok, heres the first milestone then. December was our first milestone on the way to our Million.

The yardstick for December is £17,000. We reached that the first time on the 28th December and then had a down day and closed the year on a plus -final balance is shown on the report below and is to target so time for a good celebration this new years weekend.

Youll notice there are two reports this month - the monthly as usual and the quarterley report. The gain on the account has been just as expected and we are on target.

emotions this month started to play in - on one day of the month we thought we knew better than the system and could outperform it - we closed the position early at the point where it invariably went in the winning direction.

we then spent two hours trying to get back in at our original entry - we got it in the end and as it happened it was a losing day but thats not whats important - we should never have questioned the system and just played it as is.

Needless to say since that day we have stuck to it religously and will continue to do so.

The problem I think is boredom - when you find something that works well you try and try to make it better - big mistake in the case of moving entries.

On saying that we have spent some time in looking at the money management aspect of the system and as of January 2006 we will be implementing something which seems to give an extra 10-20% per annum on the take. This has been properley backtested and makes a marginal difference to drawdown but a substantial difference to end capital so we have deemed it worth the extra risk.

Next Target is on March 31st which is £32,000 - interim reports will of course follow each month.

all thats left is to wish you all a very healthy, happy and prosperous new year!

Quarterley Report

• Opening balance:£10,000

• Closing Balance: £ 17,088
  
  
• P/L: £7,088
  
  
• % Gain on account: 70.8%
  
  
• Lowest account value: £ 9,882
  
  
• Highest account value: £17,901
  
  
• Maximum Drawdown: £4,620 = 31.8%

Monthly Report - December 2005

• Opening balance:£13,767

• Closing Balance: £ 17,088
  
  
• P/L: £3,321
  
  
• % Gain on account: 24.12%
  
  
• Lowest account value: £ 12,702
  
  
• Highest account value: £17,901
  
  
• Maximum Drawdown: £3,332 = 19.6% peak to valley

Month 2 - 1st - 30th November

Well, what can I say?

November turned out to be probarbly the most difficult month that I've ever done this strategy (yes, been doing it for a while before this experiment)

November suffered a terrible drawdown which almost made the biggest drawdown on record of the system for the last three years. Although we knew the worst case scenario could happen we just didnt think it would happen at this stage of the game - 6 months down the line would be fine but not in the first 2 months please!!

The month started well as on the 4th day we were at new highs of account equity thanks to a slight change to the system. Let me explain.

Although Grail is a long term system that has been worked out over a long period of time - every six months we re-evaluate the settings in use to make sure it's still at it's optimum for the prevailing market conditions. 2005 has been a very volatile year for cable and as such a change in one of our parameters was deemed to be necessary. After running the backtests we were convinced enough to make the change and this was implemented on the 1st of the month.

You may be asking is that is what caused the drawdown and the answer is no, on running the previous scenario the drawdown would have been larger although not to a large degree.

At the point of the lowest drawdown I must admit that we got very nervous - especially as it was eating into original capital. However true to form on the very next day the method gave what we expected it to do and came in ok.

The month is not to target though. To make the million we must hit an average of 22% per month. This should average out though as we go through the next 18 months. In our tests we had months which increased equity as much as 60% and the next 18 months should give some months much higher than others.

Onto the figures then - check back New Years Eve to see if we reached our December target of 17k equity

• Opening balance:£12,486

• Closing Balance: £ 13,767
  
  
• P/L: £1281
  
  
• % Gain on account: 10.2%
  
  
• Lowest account value: £ 9,882
  
  
• Highest account value: £14,502
  
  
• Maximum Drawdown: £4,620 = 31.8%

Month One - 1st - 31st October 2005

Ok, month one over then and performance is within expected parameters.

Full screenshots of the live account are below - any information that could identify any system parameters have been removed. and there are 3 pictures as it doesnt all fit onto one screen.

Before the summary ill add some text. Even though we had full confidence in the system, the first half of the month was a little hairy to say the least - slight doubts begin to surface when your first few days produce nothing by losers. Its also very easy that when a position is looking to continue in a winning trade to leave it open overnight.

However we stuck to our rules which by the way are totally without discretion and we came out on top.

Ive had one problem with the broker this month who slipped me by one pip whilst they didnt slip my partner - this was rectified on the account as you will see from the statement. Ive also had some refferal money paid into the account which is 2X£50 payments for recommending a friend which has to be taken into the final balance - bloody ell i thought, could make a killing just by doing that all day!!

good thing is that the friend also gets £50 so all is fair :)

Just the results left then - somne may look at these and scoff, fine, scoff away - but remember from little acorns come big oak trees :)

see ya all at the end of November.

Results of the first month, bear in mind our frst target is 17k by end of december.

• Opening balance:£10,000

• Closing Balance: £ 12,486
  
  
• P/L: £2,486
  
  
• % Gain on account: 24.8%
  
  
• Lowest account value: £ 8,630
  
  
• Highest account value: £13,326
  
  
• Maximum Drawdown: £1,370 = 13.7%

Launch Time

Ok, Monday the 3rd of October marks the first day of The Million Pound Grail Experiment.

Below is a screenshot from my capital spreads account - I have five broker accounts in total but from Monday this particular account will be used for this experiment alone.

As you can see the screenshot does mask some information. Obviously the account number but also any information that could compromise the systems integrity. There are only a handful of people that know of this system and its going to stay that way.

So, where I hit the stop level you will find blanks before and after, where i hit a take profit level you will also see blanks and as i publish the account once a month you will only see information that does not threaten the integrity of the system.

You can say what you want but the basic advice is this - if you dont like it or you are reading this to try and work out the system then dont bother looking. this is for my use in charting the progress and nothing more.

You may think that im going to sell this system - that is not going to happen so dont hold your breath - anyway, there are many more systems that make many more pips that this for the active trader, namely Hilda. As i explained in the first post this is an investment strategy rather than a trading system.

So, to business. You will see below that i had to add a couple of hundred quid to the account to bring it up to the 10k starting total - at least from that you can tell it's not a demo account.

Like any trade you ever take - the hardest part of the trade is right at the beginning and im sure that month one will be like that. The account is to be played with a leverage of 10:1 with a twist - the twist is the bit that might be a little scary to begin with so it will be interesting to see how it goes. I have no problems in playing the system - ive traded it for the last four months live and im 100% confident in it - the new compounding though has not been tried before except backtesting it.

The backtest looked good but then it was only 6 months of a test rather than the usual 3 years i like to do. All backtests that i do are checked by hand. Also interesting to note that the length of this 2 year experiment is almost as long as the backtest performed on the system itself!

The updates will not be that regular but i guess i might have some comments to make as we go through the first month. If you dont want to read them then just check out the last day of the month when the account status will be revealed.

With that i hope you wish me well as we enter what is traditionally the best trending months of the year. By now most of the muppets have gone broke and are back to demo and the real traders start to build their winter nest egg.

Good luck for October 2005, and rool on October 07 and my million quid :)

Broker Conversation

Ok, in the comments on the last posting someone asked for more info on my conversation with my broker.

I called my broker and asked to speak to the managing director who i got through to immediately.

before i tell you how the conversations went let me address the concerns i had:

1) the broker specified a maximum of £100 per pip

2) eventually there would be a lot of money in the account - how secure were they?

3) would their 'dealer assist' trade placing be able to get the fills quick enough on large trades

4) could in effect two or more of us playing the same system put the stability of the actual company in jeapoardy?

On looking at these questions one thing struck me - I need to have a good win-win relationship with my broker. Many people in the forex world seem to feel an advesarial relationship with their broker - 'the broker ripped me off' is often said.

We have to realise that a broker is in this for the money just as we are - they want to make money and we want to make money - there is no reason at all that we cant both achieve the same thing with a good level of co-operation.

so with the aim of forming a relationship i picked up the phone and got the MD.

Im a bit of a blunt guy and after the initial introductions i asked my first question which was "how many million pound accounts do you hold" he answered and said he couldnt give specifics but when i said im not after their names - just how many, he told me there was several.

I asked how big his biggest account holder was and he told me that he had a couple of punters with accounts in excess of 7 mil.

I then addressed the £100 a pip limit. It turns out the £100 a pip limit is a 'per trade' limit and you can open as many trades as you wish.

I asked what the reaction would be at being suddenly presented with a trade of £700 a pip and he said it would certainly raise some eyebrows and may be difficult to fill without notice. however he also told me of one client who regularly trades at upwards of £1000 a pip without issue.

We then spoke at length about the security of the company and safeguards that were in place. He told me that by law in the uk they have to place all client funds and winning positions into a fund which is untouchable by them - he told me that each day the company had to report on the size of this fund, the customer holding and current winning positions to the FSA (financial services authority) and that they were unable by law to use any part of that account to cover losses.

I have since verified this with the FSA.

After a long conversation of around 30-45 mins the general gist is that once up to £200 a pip i should be contacting for a personal trader and telephone my orders in giving some warning to them to help them out.

They make money by getting a better fill at market than they offer we punters and of course from the spread - they will generally get 1 or 2 pips better filled than we do .

personally i dont have a problem with this and he even said that at decent levels of trade we will be able to negotiate for a better rate of say a 2 pip spread thanks to the volume we will be trading.

I mentioned that the system i trade could well result in occasional winning days of £300,000 and asked if this would cause a problem to the liquidity of the business if there were a few of us doing it. He told me that if we were to take 300k in a day that they would be looking to make 310k on the trade and that the fund holding of the business could easily swallow that kind of take over a sustained period.

it works like this - you cant be advesarial with your broker if you are playing large sums - this has to be a win win situation for both parties concerned as if it isnt this is when they start to shaft you.

Subsequent investigations with the FSA, Dunn & Bradstreet and other sources have settled my mind that there will not be a problem in excecuting our strategy of 10k to 1mill.

Welcome to Grailtrading!

Right, hello and welcome to grail trading.

if you wish to comment on any part of our postings on here then feel free.

what's this all about?

The Grail is a Forex investment strategy which we have found has almost no chance whatever of losing based on a month by month basis. Note here that I said 'almost' as there has been one losing month in the last 3 years.

Its important to note here that the quest for a holy grail trading system has been every traders pursuit since man began to trade the markets. The famous holy grail would be a 100% winning system with that analogy and as this does have losers then we cant add the tag 'holy' to it :)

We don't class this as a trading system - we class it as an investment strategy and mentally there is a difference. An investment is not something that you watch every 5 minutes on a chart and an investment is not something that you expect large returns from immediately , day by day or week by week as you would in a trading system.

This kind of strategy is not played by many in the Forex game as to be honest its boring and you have to have discipline of steel and determination to see it through to a conclusion. It's not 'get rich quick' its more 'get rich slow'

Grail returns can only be measured on a monthly and preferably 6 monthly basis.

Why this site?

Our aim with this blog is to open a real money account on 1st October 2005 with £10,000 of capital and turn it into £1,000,000 within 2 years using a method of compounding the equity throughout that time.

This site will be our yardstick to measure the effectiveness of the investment and to compare it with the best hedge funds and investment vehicles available on the market today.

Following the publishing of our initial targets below we will publish on here screenshots of the live account. Obviously account numbers and actual trade entry levels will be blanked out but you will be able to see the account rise and fall during any given month by watching the equity which will be shown in is entirety.

We feel that we may hit hurdles along the way - for example the burning desire to take out some profit before the account comes to it's fruition or maybe the temptation to add to the account if it falls short of it's monthly target. We don't want that to happen but it will be interesting to see how we handle that.

There are also other problems we may come across. For example, as we live in the UK we will be using spread betting companies to trade with and the one we have identified (capital spreads) currently have a limit of £100 per pip allowed to be traded. This could be a serious problem that hampers our progress in our compounding and we may find we have to open more accounts or even switch altogether to a 'peoper' Forex broker to continue (FYI £100 per pip is roughly equivalent to 18 standard lots with a single lot being $100k)

it will be very interesting to see the responses we get from our spread betting company and we will log our experiences here as we go through.

How do you know this will work?

The system has actually been traded for around 18 months with a different configuration to great success. Our new parameters have been only forward tested for 3 months but does concur with our 3 year backtest which was hand checked for accuracy and found to be within 3-4% of actual results.

The backtest revealed that £10,000 invested in May 2003 would today be worth more than £2 million. The drawdowns were acceptable and so we are confident in its pedigree.

However it is worth noting that past performance can never be relied on for future actions and this is why we are risking an initial pot of £10,000 and not loading it to the hilt with everything we have.

Who is 'we'

There are two of us doing this both at the same time and with the same entries. The other party will remain anon.

Will you be selling this system?

No, this system is such that every single entry is the same for every trader.

We feel that if this was traded on the same broker by even just a handful of people that the broker would start to recognise the pattern and do something to stop it being traded. you may think that this is crazy and that theywouldn't care - but when the account is at say £700,000 its quite possible that the system could take as much as £154,000 in a single day. How would your broker feel if he had say 20 traders doing that on a semi regular basis and all on the same day?

now then - updateI whilst i was thinking of this i just thought lets try and get this sorted so i rang the MD of the brokerage and had a good long chat. lets just say that it wont be a problem, ill cover this in more detail when we get to this point.

Anyhow, no, it wont be for sale this isnt a marketing blog.

Targets:

Obviously we cant measure the success if we dont have a yardstick. Below is our target map of milestones to reach. The targets are aggressive and are stretch targets. however if they arent met we will not deviate from the system.

Dec 31st 2005: £17,000
March 31st 2006: £32,000
June 31st 2006: £58,000
Sept 31st 2006: £104,000
Dec 31st 2006: £188,000
March 31st 2007: £340,000
June 31st 2007: £612,000
Sept 31st 2007: £1,000,000

That's it!

Well, thats the introduction over with. As from 1st October 2005 I will publish on the first of the month the account status and the movement in the month.

Wish us well :)