Murrey Math Daily System

Here is my new system which involves using Murrey Math Levels on a Daily timeframe.

If you don't understand how Murrey levels work, you can read up on it below to get a rough understanding of what they are and how price reacts around them.

Murrey Math

The basic concept of my strategy is to use the break of a Murrey Level to enter our trades and pick our targets. I have added the indicators, template, and two versions of a Trade Management EA I had made called Stealth. Stealth V.1 has inputs for a hidden TakeProfit and Stoploss, a Breakeven Level, and a Breakeven Shift. Stealth V.2 has a Trailing Step function added that kicks in after the Breakeven Level and Breakeven Shift have been triggered. Stealth V.2 is new and not fully tested, so use it at you own risk. Please install these in the proper folders and restart your platform. I trade and manage accounts at The Collective FX, so please download the platform from there website to follow my trades on the same broker.

Any MT4 broker will do, but please fully understand that a different broker may provide different data which will result in your Murrey Levels appearing different than mine.

I will be using 7 pairs which will be:

EUR/USD, GBP/USD, EUR/GBP, GBP/CHF, USD/CAD, GBP/CAD, and GBP/JPY.

If you have any questions you can e-mail me at [email protected]

*** I've added a Trading Simulator that was provided to me by Ronald Raygun for everyone to use as they wish. Instructions are in the zip file along with a self installer.***

***In post #426, we are testing a different variation of the main strategy using only a Target and Hard Stoploss. This means the trade will continue until either the Target or Stoploss is hit.***

The basic setup we are looking for is a price candle to break the Murrey Level and close above for a long trade or below for a short trade (which is in the example below). Once the candle breaks the Murrey Level, it tends to gravitate to the next level which is going to be our target. (see pic)

Once we have made our entry, we need to input some numbers into out Stealth EA. First thing is to figure the initial stoploss. We measure from the entry of our trade to the Murrey Level above the level we just breached through. In this example we are at 212 pips. I know this seems steep but it is really only used as a emergency stop and not necessarily the point where we close out a bad trade (more on that later).

Next we figure our TakeProfit target. We measure from the entry of our trade to the Murrey Level below our entry. In this case it is roughly 96 pips. You may even want to lower this a few pips to eliminate the possibility of spread issues that may hinder getting the trade closed out properly.

The next thing we need to figure out is our Breakeven Point and Breakeven Shift. For this example, for the Breakeven Point, I take the Target pips (96 pips) and divide it in half or 48 pips. The Breakeven Shift is is half of the Breakeven point or 24 pips. So in this case, once price goes in my favor +48 pips, my stop will move to +24. This will lock in 24 pips of profit just in case price decides to take an about face on me. Enter these numbers into the Stealth EA for each trade you do. For those who would like to use Stealth V.2, you'll need to input how many pips you would like to trail the trade after the stop is moved. I suggest using the same number you used for the Breakeven shift, but this is totally up to to you.

A couple of things I look for when I'm evaluating these trades are:

 

1. If the candle breaches more than one Murrey Level. This is a sign to watch out for because we can and probably will have a large retrace which could produce an extremely large drawdown.

1. If the candle breaches the Murrey Level and closes more than 2/3 of the way to your target Murrey level. This does not leave you much room to bank some pips and you have the possibility of a reversal being so close to your Target Murrey Level.

This is not to say you can't make money on these, just be cautious and use common sense. I always use a lower Breakeven Point and Shift on these. Heck, I still made $827.18 on 3 lots with the trade in the first pic!

Now, what happens in a trade where price does not trigger our Breakeven Point and then reverses on us. Well, welcome to Forex trading! Don't worry, this is how I handle it. All I do is when the candle crosses back over the Murrey Level we just breached and closes above the Murrey Level, CLOSE THE TRADE!!!

Losses are part of trading and there are way too many trading opportunities out there with this system to worry about a loss. If you look closely at the chart when this candle closed, we were able to open a long trade immediately after! We may have lost 150 pips, but we would now be in a trade that is already up 540+ pips (as of 10/16/2009)

I've also noticed that we rarely see more than one or two losses in a row. You could always increase the risk on the next trade to recoup the losses on any previous trades, but that would be up to your own comfort level. I personally double up on a loss until I make up ground then go back to a normal trading size. And I only do this because I have the available margin to accomplish this safely.

With regards to lot sizes, it is up to your discretion. I follow this guideline:

 

1. If your profit target is the 4/8, 2/8, 6/8 0/8, or 8/8 = Use smaller lots as price will have more support and Resistance around these points and are more prone to reversals.

1. If your profit target is the 1/8, 7/8, 3/8, or 5/8 = Use larger lots as price will have less support and Resistance around these points and are less prone to reversals.

Important

1. Only look for long entries if price is below the 0/8, -1/8, or -2/8

1. Only look for short entries if price is above the 8/8, +1/8, or +2/8

These are areas of extreme overbought or oversold levels and price can reverse quickly at these points. Also if price is breaching a +2/8 or -2/8, there is a good chance the Murrey Math Indicator will redraw and form new lines. If this happens it would be prudent to close out any trades that are in profit, re-evaluate your profit targets, stops, and Breakeven settings, and let the open trades ride until you are in profit or a close out scenario presents itself.

Just remember, you will have picture perfect trades that hit their targets, sometimes we'll get stopped out and our Breakeven Shift, and even have to close out bad trades. But in the long run, this has proven to be a very consistent strategy and you are welcome to change whatever you'd like to fit your trading style, good luck and happy pips!

Thanks for the attachment. First time on forex factory and a forex newbie to be honest, but I'm an avid learner and I've learnt a lot since I started trading. Your system looks interesting and the Murrey Maths System is quite fascinating. Will be studying more about it tonight before markets open. Thanks

And here are the three trades that I will be opening as trading starts up tonight.

And one more. I will update my target, stoploss, Breakeven point, and Breakeven Shift once the orders are placed. These trades may not happen if there is any severe gap from Friday's close.

very interesting and simple concept

Thank you, countex. Keep checking in as I will be posting trades as I see them develop.

Updates on the current setups:

Eur/Gbp- Entry at .91344 TP-100, SL-160, BE-50, and BES-25

Gbp/Cad- Entry at 1.69352 TP-150, SL-340, BE-75, and BES-38

Gbp/Chf- Entry at 1.66482 TP-196, SL-300, BE-98, and BES-49

We waited on the Gbp/Chf entry due to price gapping below the Murrey Level. Once the Sunday candle filled the gap and closed above the line, we made our entry.

That's a huge spike!

What do you mean? the long black line that "looks" like a spike is pointing to the bottom comment.

Oh, I'm sorry. That looked a lot like the lower wick.

No problem, I thought about that myself after I saved it.

Just to kill some time, I thought I would put together a zip file with pics of all the pairs I'm watching with all the possible trades that could have been taken over the past month and a half. Red lines are the possible shorts and Blue for the longs. The red "X" is because the previous closed out trade puts us past the overbought/oversold areas and are looking for longs/shorts only.

This way you can see on the charts where you would enter and figure out what profit was possible and what you would have saved with the Breakeven shift. We did have some close out scenarios but very few and almost never back to back.

you might hate me for doing this (adding new indicators), I can remove the post later if requested.


IMHO, if you consider long term trend consideration, you can enter the trades and re-enter after a retrace with much higher probability.

I have added fractals and 80 SMA slope direction line and the picture looks much easier to read.

I am not much of an MML expert but this thread brings an interesting concept that I always wanted to test. Trends and Objects in Motion (moving objects will continue moving in the same direction).

Thanks for the intro to your Murrey Math approach Mer and for sharing the components of your system.
As a fairly new recruit to MM, I shall try to follow your posts and learn what I can and possibly ask a few questions along the way.

Regards, TH

Welcome aboard TrendHopper and Countex, I don't hate anyone (unless you insult my mother) so don't worry about that. I'm not one of those evil thread starter's that will not let trader's post their opinions. Feel free to make any changes to the system that you feel will benefit your trading. I just prefer not to post those changes here. I want to keep this strategy as clear and concise for as many who will follow this. Please open up a different thread if you have a lot of changes to make so not to get everyone confused and off the basic strategy, thanks.

jmskates, there are some experimental trades on this demo as I was testing this strategy with another indicator which did okay, but not as well as I'd hoped and a few trades that I held a little longer than I should (in a good way) like the Gbp/Cad on 10/14. Feel free to start following the 3 current trades I just posted above if that will make you more comfortable and up to date.

We do have 3 more trade setup possible today on Gbp/Usd, Aud/Nzd, and Eur/Nzd Be careful on the Eur/Nzd as the candle is more than 2/3 of the way to the target already. If you take this one, use a lower BE and BES on this one to be safe.