Trading with the Guppy Multiple Moving Average
By Daryl Guppy 2003© Director http://www.guppytraders.com
Trading Tactics, Better Stock Trading
This Guppy Multiple Moving Average (GMMA) indicator tool is based on the relationships between groups of moving averages. Each group of averages in the GMMA provides insight into the behavior of the two dominant groups in the market – traders and investors. The indicator itself does not initiate an entry or an exit. It allows the trader to understand the market relationships shown in the chart and so select the most appropriate trading methodology and the best tools. The GMMA is designed to understand the nature of trend activity. If there is no trend, then the tool cannot be usefully applied. Traders should not attempt to make it work in conditions to which it is unsuited. The indicator was first discussed in Market Trading Tactics and in more detail in Trend Trading (April 04 release), by Daryl Guppy. It is also demonstrated in case study examples in the weekly Tutorials in Applied Technical Analysis newsletter. We track the trader’s inferred activity by using a group of short term moving averages. The traders always lead the change in trend. Their buying pushes up prices in anticipation of a trend change. The trend survives only if other buyers also come into the market. Strong trends are supported by long term investors. The investor takes more time to recognize the change in a trend but he always follows the lead set by traders. We track the investors’ inferred activity by using a group of long term moving averages.
The GMMA is used in six trading situations · Classic trend breaks · Join the trend · Using price weakness · Rally and trend break · Better exits · Bubble trading A brief example of each is included in these notes.
CLASSIC TREND BREAKS
download this file guppy_movingaverage.pdf