A fascinating read for all

It will grip you. Although it is a blog, it may as well have been a Dan Brown novel...

http://www.grailtrading.blogspot.com/

It's terribly well written, couldn't stop untill i finished all of it. Fasinating how they found a perfect system but failed on forex' most basic points: moneymanagement and balls of steel.

Thanks for the link

Very interesting post indeed. Thanks for sharing.

I am a big believer of that money management should be a function of expected edge. Furthermore, I agree with the blogger that the edge is dependent upon (sticky) market conditions, and thus that the edge is variable over time. Combining the two concepts, you end up with non-static money management.

This is good thanks for sharing.. it confirms some of my theories.. pretty sweeeeeetttt

Forex Factorys very own member "Soultrader"

Very interesting read, Tom, many thanks for sharing. I'm giving this a belated bump because others might find it interesting also.

What strikes me as interesting is that they say "the bigger the drawdown the better the system works - thats because of a very clever money management strategy which i cannot reveal."

Yet I'd guess it was that "very clever MM strategy" that did them in. Look at the attached chart that I've copied from the blog. They say that "that's (the 4 consecutive doji-like candles between lines 3 and 4) what killed Grail, our test data just was not enough and did not cover all market conditions."

So the system made money thru 40+ candles, but it only took 4 candles to undo all of the prior good work. That's not so much a fault of the test data, that's the failure to use conservative AND CONSISTENT sizing.

Everywhere I see folk denigrating the "2% rule", saying that it's not aggressive enough, or imaginative enough, that it can be outperformed by using a more clever, exciting means. "You can't grow a small account using the 2% rule" say the likes of 'pro' trading coach Nial Fuller.

But what price preservation of capital? The Grail traders learned the hard way. In fact, it seems that they only learned part of the lesson, because they blame their failure on insufficient test data.

Meantime, I'm staying with my view that folk try to build systems around 'imaginative' MM because they don't have a real edge..... until I see some real evidence to the contrary.

David

What those guys lost in their grail PURSUITS, they gained in the book sales. The book unfortunately is a best seller in AMAZON.

Do the math and you will most likely arrive at the same conclusion with me.