Guppy multiple moving average trading

[Rkji]

source : http://www.guppytraders.com

Short Term EMA

3 5 8 10 12 15

Long Term EMA

30 35 40 45 50 60

This indicator was developed by Daryl Guppy.Captures the inferred behaviour of traders and investors by using two groups of averages. Uses fractal repetition to identify points of agreement and disagreement which precede significant trend changes.

APPLICATION

Applied to understand the nature and character of the trend. Used to assess the degree and extent of trading activity. Excessive trading activity can destabilise strong trends. Trend analysis enables more effective selection of appropriate trading strategies such as breakout, trend continuation etc. Can be applied to long side and short side trading. Can be applied to intraday trading. Also used for longer term investment style analysis.

TACTICS

Join established trends at points of price weakness

Join established trends breaking to new highs

Trade breakouts using rally dips and rebounds

Trade downtrend rallies as rallies rather than trend breaks

Recognise trend breaks as they develop



RULES

Degree and nature of separation in the long term group define trend strength and weakness

Degree and nature of separation in the short term group define the nature of trading activity.

Degree and nature of separation between the two groups of moving averages define the character of the trend.

Compression shows agreement on price and value.

Compression of both groups at the same time indicate major re-evaluation of stock and potential for a trend change

Trade in the direction of the long term group of averages

The relationships between the groups provide the necessary information about the nature and character of the trend.

Do not use as a moving average crossover tool



ADVANTAGES

Enables effective analysis of the trend environment

Improves selection of the appropriate trading tactics

Better understanding of trend strength

Effective evaluation of unusual price movements, such as dips and spikes

Effective understanding of trading activity and behaviour



DISADVANTAGES

Not effectively applied to trend less stocks

Cannot be applied to all trending stocks

Do not use as a moving average crossover signal

 

[Rkji]

my rules of trading

1. Cut losses short at maximum 2 %

2. Buy high & sell higher

3. Probing & pyramiding (jesse livermore )

4. Let winners run & losers stopped immed

5. Never read news or seek tips

6. Never trade for the heck of trading

7. Tight trailing stoplosses at 2 % stoploss - always

8. Analyse general mkt index first - before taking any position - up/down
if nifty index is bullish - geberally stocks will be bullish . Vice versa

9. If market order gets absorbed for full quantity pretty easily, something is wrong (specially when swinging a big line)

10.no fancy with indicators, use only ma's as floating S & R

 

[Rkji]

MY RULES FOR TRADING GUPPY MMA

1) short Traders & long investor group's ma's above 200 EMA for long entries & vice cersa

2) Short ma's cross long ma's & once long ma's are well spread, wait for short ma's retrace & look up

3) pyramiding always on upscale & not on downscale, whenever price retraces into long ma's or deep into short ma's, add to positions

4) exits on bubble formation once short ma's are almost coming together & long ma's somewhat becoming horizontal

 

[Rkji]

unfortunately, sharekhan's trade tiger 32 bit versions can't allow 12 ma's to form guppy mma .. it only allows adding 8 ema's at the most.

for the time being i have 10 15 20 25 as short term & 40 45 50 55 as long term ma's on chart.

 

[Rkji]

currently my three trades on mt4 are as follows

 

[linkon7]

GUPPY mma is a visual tool that tells us the health of the current trend...!
it is all about compression leading to expansion...!

which means every expansion in the direction of the trend will give rise to range extension. This is true measure of momentum in the market. when the range extension goes smaller, then we can assume the trend to be maturing.

 

[linkon7]

 

[linkon7]

 

[linkon7]

to give an approximation on how far the range extension can go... we can use accl band...!

 

[Rkji]

linkon

i appreciate your honest efforts to impart learning - a lot

charts were educational, i don't know what is wrong with me but when it comes to observing divergence, maybe i had tried million indicators before just settling watching price action around ma's.

well, i am keen on looking for what EXIT plans you have in your system to get out of a position.

i have learnt in these 2 years of trading to focus greatly on EXITS as they mark a position as profit & loss. trailing stoplosses are helpful but usually i seek short ma's bubble disappearing in long ma's to EXIT a position i have been sticking to for a while.

which charting software is that ?

regards as always
rishi