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Handout GMMA Outline

This document discusses strategies for using the Guppy Multiple Moving Average (GMMA) to improve trading. It explains that the GMMA reveals the relationship between long-term investors and short-term traders to help determine trends, entries, exits, and bubbles. The GMMA uses multiple short and long-term exponential moving averages to identify agreement between these groups on price and value.

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Oyekanmi Agoro
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© Attribution Non-Commercial (BY-NC)
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Download as PDF, TXT or read online on Scribd
79 views

Handout GMMA Outline

This document discusses strategies for using the Guppy Multiple Moving Average (GMMA) to improve trading. It explains that the GMMA reveals the relationship between long-term investors and short-term traders to help determine trends, entries, exits, and bubbles. The GMMA uses multiple short and long-term exponential moving averages to identify agreement between these groups on price and value.

Uploaded by

Oyekanmi Agoro
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PDF, TXT or read online on Scribd
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Better Trading with the Guppy Multiple Moving Average

Daryl Guppy www.guppytraders.com


Author of Share Trading, Market Trading Tactics,Chart Trading, Better Stock Trading, Snapshot Trading, Trend Trading

GUPPY MULTIPLE MOVING AVERAGE APPLICATIONS


Mid trend entry on temporary price weakness Exit confirmation when trends end Breakout trades most appropriate type of opportunity Bubble trading Downtrend rallies

MOVING AVERAGE FAILURE


Moving average crossovers tell us little in real time about the probability of future action Which stock shows up trend continuation? Which stock shown down trend continuation?

Stock A

Stock B

PRICE AGREEMENT AND ANALYSIS


All potential market participants agree on buy price analysis

TRACKING SHORT TERM VALUE


When there is a agreement on price and value then we must outbid our competitors to buy stock Traders are the most aggressive group of buyers

Selection of exponential short term averages TRADERS

Daily chart

TRACKING LONG TERM VALUE


When there is a agreement on price and value then we must outbid our competitors to buy stock Investors are slower to move Their support is essential for any successful trend change

Traders agreement decision point

Daily chart

GMMA Chasing Gold


Investor support is necessary for trend success Under weighting and over weighting drives fund behaviour

Current price for gold stock $1.53

TRADING WITH THE GMMA


Traders probe for weakness and lead trends Investors follow but their support is essential for success Compression signals agreement on value and price across multiple time frames The GMMA reveals the relationship between traders and investors

Bounce or collapse?
Define the trend with straight edge lines Define the trend with moving averages
Trend breakout

10 day EMA 30 day EMA

Moving averages do not help

GMMA Analysis steps


Long term group character Short term group character Relationship between the two groups

Breakout decisions
What is the potential breakout behaviour? How can we determine the balance of probability?
Trend line

Resistance

GMMA Analysis steps


Long term group character Short term group character Relationship between the two groups

Breakout trading
Is this safe to buy? Line chart analysis
Downtrend

GMMA Analysis steps


Long term group character Short term group character Relationship between the two groups

Trading Bubbles
Bubble identification Bubble collapse Bubble rebound Bubble confirmed by: Bubble exit Bubble rebound

Trade exits
Traders quibble about exits Traders looks for excuses not to exit GMMA helps separate false from genuine exit signals

GMMA exit confirmation steps


Determine the weight of confirmation evidence Long term group character Short term group character
1 First penetration below long term group since start of up trend 2 Short term group compressed, turned down and has begun to expand 3 Long term group starting to turn down and compress

Relationship between the two groups Conclusion. GMMA confirms other exit signals

Better trade exits


Dont quibble Use a different method to understand the nature of the trend and to confirm exit signals
If you lie to yourself here What makes you think you will act here? Or here as price falls through support?

Downtrend rallies
Strategy one Quick trades from the long side in a downtrend Strategy is most effective when matched with price leverage or taken using a derivative instrument
Sell as short term group fails to break above long term group

Buy rebound

GMMA Trading short


Strategy two Short trades Enter short when previous rally trade is closed

Guppy Multiple Moving Average


Indicator, explorations and advanced system testing available in Metastock and OmniTrader Create it yourself as a template using 3, 5, 8, 10, 12, 15 EMA and 30, 35, 40, 45, 50 60 EMA Detailed development and strategies in Trend Trading www.guppytraders.com

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