A real look at Murray's levels or how to simplify to earn
There are laws of the market, which at any time and on any assets will bring profit. Any trader wants to see on the market what the crowd does not yet see, but you also need considerable courage to take the necessary actions in time. Levels of Murray were created for those who want to be relevant and strong.
Classics of technical analysis believe that the market always has two news - bad and good. Bad: the market can not be predicted. Good: to make money - this is not necessary. Thomas Henning Murray was convinced that a serious trader is working in the market, and therefore clearly knows the strategy of his trade even before he receives the appropriate signal. The main achievement of Murray is the creation of a fractal geometric scheme for describing price movement over time, which allows to increase the chances of the trader to be on the "right" side of the market and, most importantly, to leave this market in time.
The Murrey Math Trading System is a classical and fairly successful implementation of the basic market principle "price takes into account all", which predicts the behavior of the crowd with high probability. Due to this, the system is equally successful in the stock market, futures, currencies and options. It represents a practical adaptation of the difficult to perceive theory of Gunn, but it also takes into account the successful developments of Elliott, Williams and Demark, admirers of the mathematical theory of the market.
Fractals and Squares "Price-Time"
To trade the Murray level system, a clear understanding of the fractal concept is necessary - Gunn was one of the first to support the idea of the fractal nature of market prices. In his theory ("the quadraticity of price and time"), the total price movement necessary for the forecast was divided by 8, and then the angle of movement with respect to the trend line was estimated. For example, movement at an angle of 45 ° was considered strong, and a deviation (correction) of 50% of the extreme is the most important. Fibonacci methodology, by the way, also thinks so. However, in practice, the Gann square looked too complicated and required consideration of the attendant factors (for example, the phases of the Moon and the configuration of the main constellations) and remained inaccessible for mass use. Murray's mathematics greatly simplified this idea.
From the point of view of practical trade, the Square "Price-Time" is nothing like a fractal, which can be scaled from a larger square. The minimum square is equal to the minimum price movement that you are willing to control - Murray called this the definition of the "rhythm" of the market.
Gann divided the price range (from max to min) into 8 intervals, because he believed that after a single movement there must necessarily be a breakdown or rollback to one of the levels [1/8], [2/8], [3/8], [4/8], [5/8], [6/8], [7/8], [8/8]. According to his theory, it was necessary to track all movements and choose the most "significant" ones. Hence Murray formed his own set of 9 key lines (main, basic, junior) and 8 intervals, subsequently called the Octave.
Time and levels of Murray
The price gives the "Price-Time" Square a vertical scale, now you need to decide on the horizontal. It is generally accepted that in the calendar year 52 full weeks, that is, trading days 5 * 52 = 260; and since the basis of the theory of Gunn is a square of 8x8, the number of days is rounded to 256, or 4 quarters of 64 trading days. This scheme allows you to easily scale the calculation to predict the market. The square works as a coordinate system, and if the price forms a new extremum, the scale of the Square proportionally increases / decreases. By the way, the world economy also measures the time in quarters, each of which is divided into separate seasons with weather conditions. The zero point for the new Square Murray considered the beginning of the year, which opened in the first week of October, the first quarterly auctions on US Treasury obligations.
The choice of the time interval is a key point and should give a less clear answer to how long the price was trading in a certain range.The starting point is the annual Square, then each one reduces the scale to the most appropriate for the particular trading system. The recalculation of the Square (Octave) is executed when the price unfolds after a strong trend.
If the horizontal (price) sides of the Square perform the role of support / resistance levels, then the vertical sides, or rather their dates, show the reversal points of the trend in time (according to Murray - at the level of 1/8 of the total period). That is, Murray's method should solve the main trade issue: when there will be a turn, calculated mathematically on the price history.
Like any temporal forecast, the Murray calculation suffers from a major problem: it does not take into account the influence of the foundation, the reaction to which can not always be described by the theory of the behavior of the market crowd. If, of course, the market moves without obvious speculation (that is, by technical analysis), and by the time approaches the time of the turn for Murray, then it is possible to include this warning signal in its analysis.
Parameters, settings and properties of levels
Of course, today Murray's levels are calculated and built automatically, using a variety of indicators.
The parameter P is the time interval at which the highest max and the lowest min for the current Octave are calculated. It is from it will depend on the width and frequency of redrawing levels: too much value will "keep" the price movement between the main levels, and too little will build a narrow range and will cause frequent redrawing. There are no unambiguous recommendations for setting up Murray indicators, but there are the main options:
 Apply the default value suggested by Murray (64) - optimal for analyzing daily charts.
 By selecting a convenient multiple of 8 (for example 128, 256) to get enough bandwidth and the main levels (0/8, 4/8, 8/8) were strong support / resistance lines.
 Choose the value P = 200 that is empirically chosen by the traders-practitioners (it makes sense only from D1 and above).
 Use the annual value (according to Gunn's logic) the value P = 256.
Murray levels with the parameter P = 200 react to changes faster than with the parameter P = 256, but are rebuilt much less frequently than with the parameter P = 64 and give a larger range width.
Most of the proposed indicators are practically insensitive to changing the timeframe. If the value of the line coincides for several periods (± 5-10 points), then its trade value is strengthened.
Let us dwell only on some practical features. Let's start from the center - from the balance line
[4/8]
The base settlement level is considered to be the most profitable for opening new positions. If the price is higher [4/8], then this is a strong support level, if lower - resistance.
Before the breakdown, the price fluctuates quite a long time in the zone [4/8], so before entering you need to make sure that the price is fixed above / below the level.
[8/8] and [0/8]
The boundaries of the main range - a very strong obstacle to the price, when analyzing them is very important the presence of a strong trend. From these zones begins if not a turn, then at least a correction. But if in the bull trend the price reached the 0/8 zone, then the probability of reversal is very high and this is considered a good moment for entry. Lines become stronger if they coincide on different TFs.
o there is a trend can change until the levels are reached, and also the price can be consolidated and "hang" for a long time.
[7/8] and [1/8]
If the price has gone too far from the balance line and stopped in the zone of these levels - we are waiting for a sharp roll back to [4/8]. In the breakdown, it will go to [8/8] and [0/8].
[6/8] and [2/8]
Strong levels that are second only to the main ones [0/8], [8/8] and [4/8], work on correction from oversold / overbought zones. Factors that enhance levels [6/8] and [2/8]:
 on rollback, no candle is closed behind the level (2/8 or 6/8);
 in the recent past, these were support / resistance levels.
[5/8] and [3/8]
Any asset spends approximately 43.75% of trading time in this range and is characterized from the point of view of the trend as a state of uncertainty.According to Murray, it is believed that the market is "going through" difficult times, when the price is inside this trading range, and it's very off. But if, after all, the boundaries break through, then the price will be difficult to return back inside the trading range.
If the price moves around the levels [5/8] or [3/8] within 10-12 bars, then it is worth to open the position in the opposite direction, if it moves above / below the levels, then the trend will continue and it is worth entering the trend. Depending on the direction of the breakdown, the targets are at the levels [8/8] or [0/8]. Example
Murray's levels are not adjusted after each bar, like most indicators, but on a strong trend break all the same redrawn. To "catch" this point, two pairs of additional levels are used.
[-1/8] and [+1/8]
"Extreme support" for bearish and "extreme resistance" on the bull trend: breakdown of these levels means a signal about the end of the current trend and the creation of conditions for the opening of trading positions in the opposite direction.
Nevertheless, the levels [-1/8] and [+1/8] have a rather weak statistics of real reversals: often the retreat from them means only temporary correction (to the levels [0/8] and [8/8], respectively) , after which it still continues to move in the same direction.
[-2/8] and [+2/8]
"Final support" and "Final resistance" in the case of breakdown at the price of these levels, the market almost always continues to move in the direction of breakdown-this indicates a so strong trend that the current Octave is recalculated and the levels (most likely) need to be rebuilt for new local extremes. Murray, when working with daily charts, recounted Octave only if 4 or more candles were closed above / below [+2/8] or below the level [-2/8], but today all popular versions of the indicator for MT4 (5) automatically recalculate the levels, regardless of the number of candles behind the level and for any parameter P.
The additional levels [-2/8], [-1/8], [+1/8] and [+2/8] are much weaker than the others, but they can become support / resistance when prices exceed the limits of the main ([0 / 8] and [8)