Saturday, May 06, 2006

Day Trading ends!!

Hi all,
Wanted to take some time out this morning and have a chat with you all, this might be a long post and it might be the last one ever.

As of this week I have ceased to be an active day trader.

Yes, you read right - I'm giving up 'active' day trading.

I now run three separate accounts using the grail system developed by myself and Mike, my partner.
One account (the main one) is the million pound experiment account which you have been reading about in the grailtrading blog. This will continue to its target which should mature at the end of 2007 or thereabouts. What a nice Christmas present that will be.

The second account is what I call my income grail account. This account does not compound but plays the grail system in exactly the same way as the main account with the difference that money is taken out of the account on a regular basis. Basically every £4000 invested into the account returns around £1000 per month in income and this will be my 'wage packet' for the foreseeable future.

So, why after all this time am I giving up day trading and what advice can I offer for aspiring traders?
When I say I'm giving up 'active' day trading that does not mean I'm giving up day trading altogether. Grail in itself is a day trading system. By 'active' day trading this is what I mean.

For the past 5 years I've been an active day trader. Using indicators, multiple timeframes and multiple currencies etc. I sat there all day long waiting for the right setup and I placed my trades and took my profits or losses as we all do. Day in day out sat in front of 5 monitors getting a tan from the radiation given out :)

Five years is a long time in this game, most don't make longer than six months and disappear without trace. After five years I'm tired of the constant up and downs of the job. When you are hot you take four steps forward and one step back soon to be propelled forward again. When you're cold you step four steps forward and five steps back getting nowhere. Day trading using an indicator lead system is like this all the time as all indicators can ever tell you is what has already happened. That's not to say I think indicators are useless, far from it, used properly they give you an increased probability that your chosen direction will be the right one.

The problem with this style of day trading is that its so bloody frustrating and this takes it's toll on you, I'm not prepared to go through that anymore.

The grail system that we use is easy, no indicators apart from price, no discretion and no real heartache. it either wins or it loses and the wins are more than the losers, simple as that. My edge with this system is only around 5% so I have around 55% winners - it only actually equates to around 8-12 pips per day on average and you may think to yourself ';whoopee doo' 8-12 pips is chicken feed. but let me ask you this, do you have a system that takes 8-12 pips a day on average EVERY DAY - by taking EVERY TRADE that your system shows? - chances are that it does not and if it does then ill join you in Monte Carlo for a beer one day soon.

The city of Las Vegas has been built on a 1% edge. That's right - there is on average only a 1% edge in a casino and of course that is in the house's favour. so please don't scoff at grail's constant 5% :)

So that's that, as of now I'm no longer a day trader, swing trader or position trader as defined by most traders definition.

So why bother reading this anymore?

Every now and again I come up with some pearls of wisdom that I like to give, so the blog will continue albeit on a very sporadic schedule.

I'm going to start by giving my opinion about how you can get yourself to the stage where you give up day trading too. Now you think that I'm going to sell you something, and nothing could be father from the truth. Ive stopped selling systems totally and I'm not about to start again, the hassle from assholes like baruch and others who couldn't trade for toffee just isn't worth it. These guys won't be able to make money whilst ever they have a hole in their arse.

I'm going to give you the secret to making it in this game of Forex. In my opinion anyway.

First of all you need to dedicate at least 10 hours a day to the market. What's more you need to do this for two years at least using indicator led systems. You need to lose money, win money and lose it again. You need to go on this never ending cycle until you give up Forex.

The reason for this is that I have to tell you the only way to keep your sanity and make it in Forex is to have a completely mechanical system that wins more money than it loses.

That's simple to say you may think but you really need to read that again. The only way to make it in Forex is with a completely mechanical system that wins more money than it loses.

Here's your problem though. You are human, you have thoughts and processes going on in your head that completely stop you from following a completely mechanical system until you are really really pissed off with trading.
Up until that point you think that the superior intellect of the human race (debatable) can make decisions based on factors of news, char patterns, indicators, gut feeling etc etc. You get excited by trading, your pupils dilate when you have a winning trade the same way they do when you see an attractive member of the opposite sex. You enjoy taking the risk and see it as a 'sexy' way to earn a living. even if you don't think you have discretion you do - your mind automatically want to play and have some fun.

You are drawn to the market and you don't see that you're losing money, you see that if you get this right you can make more money than you ever thought possible - no-one to stop you in this free universe apart from your own creativity.

and herein lies the problem. As a human being you are programmed to solve problems - constantly. this in-built problem solving subconscious stops you from following a completely mechanical system and as such stops you making money.

Because your trades have discretion in them you cannot consistently repeat the same thing over and over again and I don't care what you say, anyone that uses indicators to trade does not have a completely mechanical system. You may say that you do and you have that right - but let me ask you the following based on hat you consider to be your 'completely mechanical system'

1. Do you have very precise rules for entry and exit of a trade? and I mean precise.

2 Do you take every single trade which meets the rules mentioned above no matter whether news is due, there's been an earthquake, or NFP has just come out 20 seconds ago?

3 Do you EVER hang onto a trade longer than your system tells you to or close out before your system says so?

you know what the answers should be. Yes, Yes and No

Basically what I'm saying is that you should spend your first two to three years in Forex trading as every other newbie does. Test systems to the hilt, use discretion, swing trade, use 1 min charts, use 4 hour charts etc etc - really explore the market and get to know it.

One day you will realise one thing.

You cannot make money discretionary trading with enough consistency!

Sure, you will have good runs, and then you'll have bad runs, you might get to a break even point where you are trading but making nothing and losing nothing but until you really really get bored and pissed off you will not develop your own Grail system.

The only way to be successful in Forex is to have a 100% discretion free mechanical system which gives you an edge.

After about 3 years you will get so demoralised by the market and bored that you begin to look at ways of NOT to trade. That's what a truly mechanical system is. You don't 'trade' in the real sense of the word in that you aren't looking at charts and studying fastidiously. you will look and develop a system of trading where you have no decisions to make whatsoever. You enter and exit every trade exactly to the pip and your head never even has to think about it.

You win and lose with no emotional content because you know (through testing see below) it will make money, hell you don't even check the charts when your trade is in.

To get to this point you will have gone through 3 years of hell suffering stress and loss of belief in yourself but you'll also have had a lot of fun and learned a terrific amount.

Then comes the rewards.

If you are at the stage where you want to give up trading after 2-3 years then well done. you are at the point where you could really make a breakthrough. If you still enjoy the up and down world of day trading then you aren't here yet. When you are really ready to throw in the towel come back and read this again before you do..

you need to work on a system that uses nothing which could in the slightest way offer discretion. You need to test it and test it and test it again, optimise it constantly spend your whole working time working on this one system till you have either proved it works or proved it does not. Your objective should be to prove that it does not work.

I reckon that to properly test a system it needs a good 3 years of data which is HAND tested - sure, use wealth lab or another test engine initially but then when you find one that looks promising TEST IT BY HAND, try every different parameter you can and TEST BY HAND EVERY TIME.

I reckon that to test a system properly takes about 6 months of full time work, that's about how long it took us to develop grail and since that time we have spent additional hundreds of hours in testing different parameters, different pairs, different timeframes etc etc etc - to test a system, a single system, could take you years to check every variable!

We now have a system which we believe (and tests support that belief) will make us multi millionaires in a few short years.

This blog will remain here but wont be added to much at all, if you would like to see our progress then check the grailtrading blog every month - that's where the real action is.

I, like you went through emotional hell to get this far and now have secured a very prosperous future (according to the tests and the results so far)

Was it worth it ... you decide.

For those who can see the diamonds planted in this page - see you in Monte Carlo one day :)

From The Desk Of ...


dreads said...

I dont understand I use to follow you a few years back when you posted on moneytec and you made live calls making 100 pips or more easily . Have you made a profit the last couple years. Is it the stress that gets to you or you arent making enough money consistently? I find that you need to take time off ( a week or so) just to clear my head. Good luck in the future.

spahiu said...

sounds a bit like putting all your eggs in one basket....good luck anyway :)

Tank99 said...

I tried to email you at for some information on the grail fund but the email was returned. Is this the correct email?

duckfu said...

cheers mate

Soultrader said...

dreads, youll understand in a few years mate - yes i can make 100 pips in a day sometimes, the rest is pure drugery though and i want a life.

whats the point of having a million quid if you dont enjoy it - see what i mean?

even making pips on pips every day gets to you sooner or later mate - the 'thrill' in forex is the route you travel - when you get there its like any other place when you hang around too long - boring.

as yu trade and learn you have this nirvana in your head of being a brilliant trader and making lots of money - well it happens but when it does you suddenly find you can't stop looking for it even though you have it - if you're not careful you can then start going the other way .

learn to trade by all means - then learn not to - get truly mechanical and the riches will come - best thing is that you'll actually have the time to spend it too :)

Nomadic said...

I guess Hilda baker wasn't all it was cracked up to be eh Soul?

Soultrader said...

nope, Hilda is the best system ive ever seen for intraday trading - just that i dont want to intraday trade anymore.

I now have my life back and still make shedloads of money :)

Nomadic said...

Well selling the grail should have made you some money, PT was right, there is a sucker born ......

Soultrader said...

grail will never be sold -and who is PT?

Daniel said...

some of them just don't understand it yet. They will, when they see that they don't have a life. I will be going a similar route as you. I'll day trade for as long as it is necessary for me to make sth mechanical, and and then go on vacation until the end of my days :)