I've never used graduated filters, but looking at normal holders made by Lee, Cokin, etc for their systems, they seem to hold the filter no more than an inch away from the front of the lens, so I'd narrow GKC's comment and say--why are you spacing it so far from the lens?
Then I'd go on to suggest having someone hold it almost touching the front of the lens and slowly move the transition point past the front of the lens while pointed at and focused on a well lit scene and with you looking at the ground glass under a dark cloth to see if you can see the transition point in the scene, just to see if closer makes it more visible.