You are right. The point I was trying to make is this:
If you draw 8 equidistant lines on a daily chart. And if you allow for 1/2 point of wiggle room + or - from each line to qualify as a hit. You come up with 8 points of possible "hit ticks". Now, if the instrument you're trading has a daily average range of, let's say 14 points(similar to the ES, for example), you have 4 in 7(almost 60%) chance of reversing on one of those "hit ticks" by pure probability.
No hocus pocus or Murrey Math.
The following user says Thank You to TI Anon for this post:
I am still a little unsure on how to use Murrey Math. You mentioned to first learn what each MML means. But I don't really understand what you mean by stuff like "pivot reverse line", "fast reverse line", "major reverse line", etc.
I read the murrey.doc file you wrote, but I am still lost on how to trade based on this system. How do I know when to buy long, or when to sell short etc. I know for sure I have to sell short when 8/8, and buy long 0/8. But what do I do when its like at 2/8 or maybe 4/8?
My question about Murrey Math adds to the above and goes to anyone who is actually using Murrey Math. What markets have you found that it works with and what time frames have you found that it works with, if it really works? And has anyone figured out how to use the 5 circles that Murrey sometimes draws on his charts?
I suggest you read Nicholas Taleb's book "Fooled by Randomness". In it he explains the pitfalls and outcomes associated with following trading strategies that have expectations no better than pure probability would account for.
As to Murrey Math: I studied it, traded it and realized its limitations. As to if it works, I'll just say, make sure you can recover from your losses if you intended on staying in the game.
I am running Murray math on 3 min and 15 min with 5 and 24 lsma and 13,2 bbands exp with vwap. I suggest watching time spent at price levels. use the 3 min to go towards 15 min. I also use stoch 13,3 and acc/dist flow set2 14,1 DO NOT go against acc/dist flow but at turn move towards confluence onn 15 min. sounds like a lot but it seems to be fluid. Bband help recognize turn as well as stoch. Pull the trigger. Let mre know what you tink
Last edited by Big Mike; March 29th, 2010 at 03:25 AM.
Reason: moved here from wrong thread
I agree totally with what you are saying. I look at it a bit different instead of the randomness of hitting the lines of course ATR will prove that in your time frame, it is a visual aid in price s/r levels and you can see price holding upper/lower areas when trying to shift at extremes. I use 0,4,8/8 and +/- 1,2/8. Of course prev day h/l/c and areas of s/r and pivots should be noted watch a three min and 4750 vol chart as well the bbands 13,2 exp. helps when they line up.
Murrey Math helped me come to my senses and switch my focus and trading energy into the right direction-not because it worked but because it didn't.
After studying Murrey Math, I realized the fundamental nature and weakness of all price based technical analysis. As traders, we search for an 'edge'. If we use price based indicators, we look for some pattern that identifies important "decision points" on our charts. We convince ourselves the indicators have meaning to the market--creating, in our minds, a cause and effect relationship to price movement. When, in reality, they are only establishing a probability relationship with price.
Being successful using a probability based "edge" is different than using a true "cause and effect" one. Most find it difficult to just play the "odds"; our minds play tricks on us, finding patterns where none exist and creating excuses for why a pattern didn't work this time. We hunt for the "missing piece" in our setup...and on and on and on...... Until we run out of money or time.
Instead of finding true "cause and effect" patterns, most traders settle for the probability based ones and end up blowing out their accounts.
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While that statements may sound correct I will disagree. It is price that dictates cause and effect confirmed by volume. Notice I am running a volume chart as well. I have also stated it is a good visual tool by no means the only way to trade in ones arsenal. If we are in a range market , it is absolutely NOT trading off cause and effect. Large firms are running algorithm programs and if you study it long enough they alternate their size and count. Market profile states it best price will gravitate towards areas to facilitate trade. All indicators fail. Confluence is an important factor. I can trade a price chart with no indicators and not have an issue making money. It is the trader not the system. If a trader wants to spend some time on research try measured moves and drawing channels
The following user says Thank You to cber68 for this post:
Thanks for your comment TI Anon, this is quite insightful and also quite true I think. However, the big problem off course is how we can determine what is "true cause and effect" and what is "probability". Any thoughts on this?
That's something I'm currently struggling with. In an earlier post in this thread you've said something like that this indicator is new ground, because it has a different paradigm. I tend to agree with that, however, which kind of indicators or price action could be used with Murrey Math you think?
For example, if you used some kind of moving average crossover with Murray Math, the trading idea is then degenerated to "just another trading idea". In other words: I think that, if we use "common indicators" alongside Murrey Math (or Pivot Points for that matter), that something of the "uniqueness" gets lost in the process. So, what kind of indicators could be used alongside a "support and resistance" trading idea? (I would have to guess oscillators; however, I have yet to see one that gives a good indication of whether or not the price level will act as a support or resistance or not).
Besides that, I have one question regarding the indicator: if I set the settings to "monthly" and "Calculate the Pivot hourly" to false, the indicator will shift if I change the time frame. Is it supposed to do that? I guess not, because changing the time frame shouldn't change the data used for the monthly levels? (loaded 100 days of data btw).
I also noticed that this also happens with the standard Pivot indicator in Ninjatrader. If it's supposed to do this, could someone explain the rational behind this? It seems counterintuitive to me, because a monthly level is a monthly level on every time frame, right?