I have developed some simple guidelines for using the Murrey trading system (different from the ones you must commonly find) because I have found them to be most effective, of course, you are welcome to change them so that they fit your trading style. Anyway, in order to use this trading system, you should get the Murrey Math VG indicator available for metatrader 4 (this automatically traces the lines we are talking about).
In general terms the 8/8 and 0/8 lines are extreme resistance and support levels, when price reaches either of this terms it is safe to expect some kind of retracement. I trade the other bars as I would trade regular support and resistance levels. So my system rules would be like this (I trade the EUR/USD one hour chart with this system) :
- When price closes in the 8/8-8/7 or 0/8-1/8 regions I take a trade into the opposite direction with a take profit of 8/5 (from 8/8) or 8/3 (from 0/8) and a stop loss of 50 pips. I move the stoploss to break even after I reach 8/6 or 8/2.
- When price bounces of a line, tries to reverse but closes above the previous Murrey Math Line (by above I mean at least ten pips above) I treat it as a resistance so I take a position in the direction of the trend, as soon as the bar closes, my take profit being the line it bounce from and my stop loss the next Murrey Math Line.(the oppositve applies for lines that act as support)
- When price closes more than 20 pips past a murrey math line that previously acted as support or resistance I take a position into the direction of the trend with take profit equalling the Murrey Math line number that acted as support +2/8, with stoploss being the Murrey Math line -1/8.
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i want to trade using murrey system for NIFTY.please send me how to draw from 1/8 to 8/8 levels. please guide me. i do not have previous knowledge.
Back to Math, how typical of you. The system make a lot of sense. Old school, trading support and resistance, that will never go out of fashion.