What is Guppy Multiple Moving Average (Guppy MMA)?

The Guppy Multiple Moving Average (Guppy MMA) is a technical indicator that is able to identify the changes in trends by combining two groups of simple moving averages (SMA) with different time periods.

Calculation for simple moving average:

Simple moving average (SMA) is the mean number of a given set of values.

Table 1: The price of a stock throughout the past 10 days.

There are 2 sets of moving averages used in Guppy MMA:

1. Short-term: The first set of moving averages has a relatively brief time frame for assessing short-term trading activity. The number of days that is commonly used is 3, 5,8,10 and 12.
2. Long-term: The second set of moving averages is computed based on longer time period for analyzing long-term investor activity. The number of days that is usually used is 30, 35, 40, 45 and 50.

The relationship between both sets of moving averages allow traders to determine their relationship with each other by identifying if the short-term trading outlook aligns with the long-term investment outlook.

Source: MQ Trader Stock Analysis System

How to identify Buy and Sell signals with Guppy MMA?

For a clearer image of the statement above, different types of breakout are demonstrated in the Figure (a) & (b), (c) and (d) as shown below by using Supermax Guppy MMA Hourly Chart.

Figure 1: Guppy MMA hourly chart of (a) & (b) Crossover and trend direction demonstration, (c) Trend reversal demonstration and (d) Sharp move identification demonstration.

Advantages of Guppy MMA

• The GMMA indicators enable traders to have a better understanding on the trend strength
• Better analysis of trading activity and the trend environment can be determined
• Effective evaluation of abnormal price movements including dips and spikes
• Improves the selection of the proper trading strategies

Disadvantages of Guppy MMA

• Not applicable for trendless stocks
• Lagging effect

Conclusion

Guppy MMA trading strategy is a very useful tool to identify the trend strength of a stock. It can be used in conjunction with other technical indicators such as EMA 5 Crossover, MACD and RSI, ADX Crossover and Turtle Strategy to maximize their odds of success.

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Disclaimer

This article does not represent a BUY or SELL recommendation on the stock covered. Traders and Investors are encouraged to do their own analysis on stocks instead of blindly following any Trading calls raised by various parties in the Internet. We may or may not hold position in the stock covered, or initiate new position in the stock within the next 7 days.

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