DeMark and Murray Trading Strategy


This trading strategy is a combination of two original methods of market tech analysis by Tom DeMark and Henning Murray. Both methods work in the form of indicators that make all calculations and drawings automatically, which might be a blessing for those who do not feel confident about DeMark’s and Murray’s methods. The strategy equally suits Forex, futures, and stock markets. Signals must be searched for on H1 and H4, though using the strategy on larger timeframes is not prohibited either.

Desktop for working by DeMark & Murray method

Desktop explications:

  1. An Exponential Moving Average with period 9, applied to Close prices;
  2. An EMA (31), applied to Close prices;
  3. Thomas DeMark’s indicator that draws trendlines on the chart automatically and calculates possible profit goals;
  4. An indicator for calculating and drawing Murray arrays;
  5. The Momentum indicator with period 14 and level 100. The position of the indicator regarding Momentum shows whether the whole signal is valid.

A signal to buy by DeMark and Murray

For a signal to buy to appear, the chart must demonstrate the following:

  1. The EMA (9) must cross the EMA (31) from below;
  2. Momentum must be above 100;
  3. The price line must break through the DeMark trendline and close above it;
  4. The Murray indicator must confirm the signal (the price is above 2/8, 4/8, or 6/8).

An example signal to buy

In this example, it is very well visible how much the price grew after all the conditions were met.

A signal to sell by DeMark and Murray

For a signal to sell to appear, the following conditions must be met:

  1. The EMA (9) must cross the EMA (31) from above;
  2. Momentum must be below 100;
  3. The price line must break through the DeMark trendline and close below it;
  4. The Murray indicator must confirm the signal (the price is below 8/8, 6/8, or 4/8).

An example signal to sell

Stop Loss and Take Profit for trading by DeMark and Murray

Place a Stop Loss 10-15 points (100-150 pips in 5-digit trading or in 3-digit trading for USD/JPY) away from the nearest important support level for buying and resistance level for selling.

As for the Take Profit, there are two options: pessimistic (easily reached) and optimistic (realistically reached but potentially complicated to reach). A TP is placed at the optimistic level, and when the price reaches the pessimistic one, it is allowed to transfer the position to the breakeven.

Also, for setting the TP levels, you can use text clues of DeMark’s indicator that you can find in the left upper corner.

The strategy does not presume trailing positions – unless the situation comes dangerously close to a reversal or if it becomes just dubious. In these cases, you can simply drag the protective level closer or simply close the position fully/partially.

Money management when trading by DeMark & Murray

Your money management method must be proved and trustworthy. If you do not have one, I recommend risking 1% of your fixed deposit in each position. If you face several losses in a row, try stopping and analyzing what has gone wrong.

This strategy suits those who are not happy to draw trendlines and set important levels manually or those who simply cannot do it. If you opt for H4 as your TF, you can quite easily combine trading with some other work.

By Dmitriy Gurkovskiy, Chief analyst at RoboForex