Guppy Multiple Moving Average or GMMA
Guppy Multiple Moving Average or GMMA is a technical analysis indicator developed by Daryl Guppy which is used to analyze trends and to identify trend changes. As the name implies it is an indicator based on moving average; exactly two groups of moving averages - short-term moving averages which show short-term trends or trader sentiments and long-term moving averages which show long-term trends – investor sentiments.
Usually the short-term MA group consists of six MAs of 3, 5, 8, 10, 12 and 15 days, and long-term MA group consists of six MAs of 30, 35, 40, 45, 50 and 60 days; all plotted on one chart. The periods and number of MAs of both groups can vary according to trading goals. Generally bullish trend is identified when short-term MAs are above long-term MAs and bearish trend is identified if the scenario is just opposite. Closing in and intersection of two groups of MAs are considered as indicators of tend weakening and trend changes. Similarly convergence and divergence of MAs within a group also can also indicate trend changes.
Advantages of using Guppy multiple moving average include effective trend analysis, adaptation to a variety of trading tactics (short-term and long term), effective analysis of dips and spikes, and better understanding of trend strength. Disadvantages of GMMA include lesser effectiveness in generating MA crossover signals and it is not suitable for all stocks, especially non-trending stocks.
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Usually the short-term MA group consists of six MAs of 3, 5, 8, 10, 12 and 15 days, and long-term MA group consists of six MAs of 30, 35, 40, 45, 50 and 60 days; all plotted on one chart. The periods and number of MAs of both groups can vary according to trading goals. Generally bullish trend is identified when short-term MAs are above long-term MAs and bearish trend is identified if the scenario is just opposite. Closing in and intersection of two groups of MAs are considered as indicators of tend weakening and trend changes. Similarly convergence and divergence of MAs within a group also can also indicate trend changes.
Advantages of using Guppy multiple moving average include effective trend analysis, adaptation to a variety of trading tactics (short-term and long term), effective analysis of dips and spikes, and better understanding of trend strength. Disadvantages of GMMA include lesser effectiveness in generating MA crossover signals and it is not suitable for all stocks, especially non-trending stocks.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by Daniel Pipitone at
5:45 AM
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