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W.D. Gann, Murrey Math and White Elefants
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W.D. Gann, Murrey Math and White Elefants

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W.D. Gann, Murrey Math and White Elefants

Let us have some fun together and have a look at the Murrey Math indicator, which has been downloaded a several thousand times. You can find it here:

https://futures.io/download/ninjatrader-7/indicators/311-download.html

I have spent a few hours to understand the concepts and the various indicators, which are available for MetaTrader and NinjaTrader, and here comes my personal opinion on the subject. @Big Mike, @Prtester, @sam028, @joehickle: I do not want to insult anybody, but I cannot refrain myself from posting some conclusions. I also want to point out that the statements below reflect my personal opinion, and that my opinion can and should be debated and not taken for truth. Actually, I would be very pleased, if somebody was committed to defend the value of the concept and the indicators, as it could help to foster my own understanding.


My Conclusions (Short Form)

(1) The teachings of W.D. Gann: A peculiar blend of applied psychology (quite valuable), numerology (nonsense) and astrology (at least questionable).

(2) The geometrical concepts of Murrey Math: Pseudo-mathematical gibberish founded upon Gann's numerological exhalations.

(3) Murrey Math Lines: A marketing tool to sell junk to unsuspecting traders.

(4) The MetaTrader version of the Murrey Math Lines: Free version of above produced by Vladilav Goshkov / Alex.Piech.FinGer, which uses full days for daily lines.

(5) The Murray Math indicator for NinjaTrader: A false transscript from MetaTrader to NinjaTrader, which has a number of glitches and which is no better than any random lines projected on a chart.


Feed them With Indicators

Many users are happy to plot some lines on their charts, without ever questioning, how those lines are calculated and what are the ideas behind the algorithm that creates them.

https://futures.io/traders-hideout/19777-awesome-new-chart.html

In the end, if all traders follow the same false lines of guidance, it might actually work. Trendlines, Fibonacci retracements or floor pivots are just such examples. There is no reason that a trendlines works, except that many traders attach an importance to them. And for that same reason there are false trendlines breaks initiated by traders who feed on the default traders who use the trend lines.

Murrey Math lines are not as frequently used as trend lines, so it is more difficult to exploit them. The NinjaTrader version of the Murray Math lines, which produces a unique set of lines probably nobody else is watching, cannot even be used in that way. It is a white elephant walking through the markets.

Now that I have made many new friends, I would like to start a serious discussion of the subject.


Just a Few Arguments

"Price is traveling simultaneously through all the sub-octaves of a binary algorithm of the square of the number base."



Based on the teachings of W.D.Gann square numbers are the foundation of the theory of everything. The MetaTrader indicator actually uses a lookback period of 64 days to calculate the Murrey Math lines. The lookback period does not depend on the selected bar period, which is always adjusted to match N days. So even if it is plain nonsense, the MetaTrader indicator does create confluence zones, as the same lines are produced with different periods. Given the proliferation of MetaTrader, this may even have a measurable impact. The NinjaTrader indicator, however, uses a lookback period of 200 bars (not even a square number ), which entirely depends on the bar period of the chart. For example, if you use weekly Murrey Math Lines on a 1 min chart, they are based on the last 3 h 20 minutes of the Friday session and can actually be much narrower then the daily Murray Math Lines. The indicator really just produces a collection of non-sensical lines.


Genealogical Tree

Numerology (W.D.Gann) -> Market Geometry Murrey Math -> MetaTrader Version -> NinjaTrader Murrey Math Lines

What is the fourth power of nonsense?


Random Line Theory

For those who are still sceptical, please go to this excellent thread, which will also tell you a lot on Murrey Math Lines.

https://futures.io/traders-hideout/7364-random-line-theory.html


My Apologies

I apologize for having insulted those who have put some effort into applying the concept of Murrey Math lines, but at the same time I feel responsible to caution aginst the use of tools which are of a questionable value.

But I will be listening to the arguments of those who still believe in white elephants .....


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  #3 (permalink)
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I looked at Murrey Math right at the end of my indicator ignorance days. I did not know any better. Murrey Math actually was one of the indicators that helped me wake up and face reality

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

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  #4 (permalink)
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Big Mike View Post
I looked at Murrey Math right at the end of my indicator ignorance days. I did not know any better. Murrey Math actually was one of the indicators that helped me wake up and face reality

Mike


Thank you for supporting an open discussion of the subject.


Actually I am just bringing up the subject, because somebody has asked me to code a modified version of the Murrey Math Lines.

I delved into the subject and came to the conclusion that the project is not feasible, or at least that it does not make sense.

I would be happy if somebody proved the contrary, but to find out, I had to create this thread.

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Big Mike View Post
I looked at Murrey Math right at the end of my indicator ignorance days. I did not know any better. Murrey Math actually was one of the indicators that helped me wake up and face reality

Mike

Big Mike,

I take it that the use of any indicator, not just Murrey Math, would be "indicator ignorance" because if they work better than 50/50 it is because of the self full filling prophesy and not because of the market tendencies. Long term behavior of the markets can only (reasonably) be influenced by supply and demand, first thing in EC 101. Any short term behavior is then only noise and most indicators try to exploit the noise.


Last edited by aligator; May 27th, 2012 at 06:48 PM.
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aligator View Post
Big Mike,

I take it that the use of any indicator, not just Murrey Math, would be "indicator ignorance" because if they work better than 50/50 it is because of the self full filling prophesy and not because of the market tendencies. Long term behavior of the markets can only (reasonably) be influenced by supply and demand, first thing in EC 101. Any short term behavior is then only noise and most indicators try to exploit the noise.

Most people would say that price 'did' something at the MML line. And that is the problem.

Anyone who thinks this way should view the random line theory thread.

Simplest answers are usually true. Fat Tails linked my 'awesome new chart' video, and I agree. The trader in that video also thinks lines have special powers.

Sent from my DROID RAZR using Tapatalk 2

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

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  #7 (permalink)
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I have been told Murrey visits the forum.

So I want to point out, my opinion is that if Murrey is profitable using MML it is simply because he is a good trader, and not because MML is useful. He 'made' it useful, not the other way around.

Just my opinion.

Sent from my DROID RAZR using Tapatalk 2

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

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  #8 (permalink)
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Thanks for starting this thread, Harry.

What I find fascinating is that trading schools of thought have parallels in modern philosophy.

In the 17th and 18th century, two main philosophical schools emerged:

There were rationalists, represented by Descartes, Spinoza, and Liebniz, who believed that reason (or rational structure) was the reliable guide to reality and knowledge.

In opposition, there were empiricists, represented by Hume and Locke, who believed that experience was the most reliable guide to reality and knowledge.

Fast forward to trading today.

There are two main schools of thoughts:

1) "Rationalists" - traders who believe there's a 'secret' order to the markets that can be used to trade successfully. Gann (and his descendants) fall firmly into this category.

2) "Empiricists" - traders who believe that 'the market will go where it will go', and that analyzing those specific empirical behaviors is the way to trade successfully.

I feel that all trading approaches generally fall into one of those camps.

I never understood #1. If there is a 'perfect' secret order in the markets, I doubt that some Joe Schmuck sitting at his computer will uncover it. That's not to say that there isn't one... but it is likely to be of an infinite higher order than our thinking allows us to grasp intellectually. It's not a matter of the right indicator () or the right wave count ().

(Analogously, you have some of the brightest minds on the planet hitting a wall trying to reconcile the quantum theory and the general theory of relativity. They are finding that the apparent simplicity of certain context-dependent conditions breaks down when trying to paint the whole picture.)

"...the degree to which you think you know, assume you know, or in any way need to know what is going to happen next, is equal to the degree to which you will fail as a trader." - Mark Douglas
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I've never read a word of Gann, but I've seen him referenced countless times on various fora over the past decade. From what I can gather, he was, like Livermore, a trend-trader who pyramided into positions. He focused on money management and psychology.

So far, so good, I guess.

He then went off the deep end and started selling courses based on all kinds of voodoo. Either he blew up (again), or he was playing a very cruel joke on the investing public.

I'm sure it is as valuable as this:
Amazon.com: Handicappers Guide to Dogtrack Astrology (9780960483402): Elmer Edwards: Books

I haven't lost a bet yet!

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Oh, I almost forgot...

SACRED SCIENCE INSTITUTE: Where Ancient Wisdom & Future Science Meet...

Gann seems like a schoolboy compared to these guys:

Consciousness enters the arenas of manifestation, down-stepping through the frequency spectra of a time matrix, in accordance with precise mathematical-geometrical templates. The accretion of (non-manifest) electromagnetic units of identity-awareness to form quarks, atoms and gross matter is ordered. So too are the processes by which the resultant spherical energy domains evolve through the spiralling cycles of time. Encoded and reproduced within each fractal iteration, each holographic tessera, are to be found the patterns and laws of the whole. Herein lies the key to the financial markets.

Long before our presently recorded history, our world bore host to civilizations who understood the science of manifestation templates, the scalar wave grids existing beyond the veil. For reasons far beyond the scope of this book, the depiction inherited by the Kabbalists does, in fact, mirror certain alignments within our reality field. But it is a distortion of the geometry of primordial consciousness.

A financial market is a spherical energy field of consciousness. Like all phenomena, its structure derives from the unseen manifestation templates. And the nodal transmission lines, the “distortive boundaries”, have a direct bearing upon price-time behaviour.

The spherical nodes may be thought of as dimensional control centres. They regulate the eternal fission-fusion cycles through the first phase of which ante-matter units of conscious sound vibration split apart to form interconnected units of bi-polar light radiation. These particles and anti-particles are projected at a 90 degree angle of separation. In simple terms, the variances between the fission-fusion cycle rates and angular rotations of particle spin allow multiple reality fields of conscious energy to co-exist (invisible to each other) within the same apparent space. And it is through the nodal connection lines that the flows of consciousness, the mathematical-geometrical sequencing of dimensionalised frequency bands (indeed, the properties of time) are regulated.

The proposition that our Universe is a holographic construct implies that correspondences must exist between all phenomena.

Paradoxically, it is the trader’s natural (but usually subconscious) resonance with the group consciousness of a market which often accounts for lapses of discipline and errors of judgement. Major pivots tend to occur in a market when time counts and price levels (or price movements) are harmonically related to the shared encryptional characteristics of the individuals who participate in it. The greater the number of individuals entering or exiting a market at any given point, the more strongly the individual trader will be pulled into resonant alignment with their actions.

If photons of an appropriate wavelength strike the atom, their energetic quantum (measure in electron volts, eV) will be absorbed, causing the electrons to “jump” into higher energy state orbitals. In much the same way, as buyers enter a market they raise its energy state and thus “excite” prices into higher orbital shells of harmonic equilibrium. Through sympathetic resonance, prices will be drawn towards these points of equilibrium where they can, once again, rest in harmony with the fundamental tone of the market.

It is said that 90% of traders lose their money in the markets. Since a market can only move up or down, one would expect even pure guesswork to yield an approximate 50:50 ratio of winning to losing trades. In truth, with the advantages of modern computer analysis, the winning trades should far exceed the losing ones. The fact that this does not occur indicates, quite plainly, that the markets must operate in such a way as to negate the individual trader’s probability of success.

When their stops are hit, the traders, though aggrieved, take comfort in the fact that their analysis proved to be correct – the market did indeed form a pivot and change trend as predicted. They conclude that they were simply unlucky on this occasion, and thus repeat the process in subsequent trades. But they find, to their chagrin, that the same thing happens again and again. How many times have you entered trades based on thorough and precise analysis (which later proved to be correct) only to find that the market had somehow managed to extend its current trend by exactly the amount necessary to hit your stop? This is not an accident.

When traders use the same technical indicators as each other, they will tend to draw similar conclusions as to the trend of the market and formulate similar trading strategies based upon the apparent levels of support and resistance. Paradoxically, of course, the greater the degree of consensus, the less reliable the technical indicators will prove to be.

Cycles evolve and recalibrate in harmony with a market’s encryption. This principle has long been recognised by the advanced practitioners of astrological science. In their careful study of the solar return chart and the rotational progressions of the natal chart, they seek to accommodate an ancient conception of the solar orbit as an escapement through which the hidden mainspring of fate is steadily released. In truth, the astrologers are compensating for the gradual rotation of the spherical holographic domain within which the conscious identity is stationed. More specifically, they are compensating for the accretion of dimensional frequency and resultant shifts in angular rotation of particle spin though which consciousness aligns with the accelerating time pulse rhythms of successive probability vectors.

This phenomenon can be ascribed to the holographic properties of our reality field. There awaits, behind the façade of individuation, a world of immanent correspondence. And it is the task of the analyst to penetrate the doctrinal (and bio-energetic) frequency barriers by which this world is obscured from the masses. In effect, it is the task of the analyst to identify and harness the fractal replications of a supervenient order.

But markets are dynamic. They rotate within the nested holographic domains of the unified field. And, as they do so, their angular relationship to the forces which shape them must adjust. In other words, the phase alignment between a market and any given cycle is transient in nature, constantly shifting.

The physical senses afford us little more than a vantage point from which to interpret the mathematical fragmentation of conscious energy. In advanced terms, they may be said to record the outward projection of a symbolic reality through the electromagnetic sequencing of the chemical DNA. In simplified terms, they may be said to create from inner focus the perception of external form. And it is by shifting this inner focus, by shifting what the Toltec shamans described as the “assemblage point”, that we may begin to transcend the chaos of the financial markets.

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