Just watched a presentation online of Daryl Guppy and how he uses multiple exponential moving averages (3,5,8,10,12 &15 day & 30,35,40,45,50 & 60 day). Found it pretty interesting and was wondering if anyone uses/has tried this system or anything like it and what their thoughts were. I am new to trading and am trying to work out what sort of trading style/system to develop.
Guppy MMA
- Thread starter jay1541
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It's a lagging indicator but I use it as part of entry setup in my medium time-frame stock trending system. As an example, in this system I only enter long where the 3 day EMA > 5 > 8 > 10 > 12 > 15 > 30 > 35 > 40 > 45 > 50. I have other criteria but this one is useful in establishing the up trend.
Others will have different opinions but it works in my particular method.
But that's jumping ahead. You should have a think about what you are trying to achieve and then find the relevant tools. For instance the GMMA is useless if you only plan on being in a trade for a few days. But it's a decent tool for trades lasting months or years.
Others will have different opinions but it works in my particular method.
But that's jumping ahead. You should have a think about what you are trying to achieve and then find the relevant tools. For instance the GMMA is useless if you only plan on being in a trade for a few days. But it's a decent tool for trades lasting months or years.
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Hi Jay,
Daryl Guppy's book 'Trend Trading' goes into his MMA techniques in detail.
It's been ages since I read it, but from memory I found it just as easy to identify trends by looking at the price action - overlaying a mass of MA's added little information that wasn't already obvious. For example, the short-term MA's compress during a pull back, however you don't need the MA's to see this - just look at the chart.
I must admit, however, that i've never tried to incorporate it into a system as MS+Tradesim has done. It may work well in that context.
I don't know if you have looked into charting software yet, but incrediblecharts.com has Guppy's MMA indicator built in. (Well, it doesn't actually have Guppy's MMA - it's called 'Multiple Moving Averages' and uses all the same averages as Guppy, except for 8-day, which it substitutes with 7-day. Probably a copyright thing). Incredible charts is freeware (unless you specifically want EOD data) so you can learn to your hearts content.
Daryl Guppy's book 'Trend Trading' goes into his MMA techniques in detail.
It's been ages since I read it, but from memory I found it just as easy to identify trends by looking at the price action - overlaying a mass of MA's added little information that wasn't already obvious. For example, the short-term MA's compress during a pull back, however you don't need the MA's to see this - just look at the chart.
I must admit, however, that i've never tried to incorporate it into a system as MS+Tradesim has done. It may work well in that context.
I don't know if you have looked into charting software yet, but incrediblecharts.com has Guppy's MMA indicator built in. (Well, it doesn't actually have Guppy's MMA - it's called 'Multiple Moving Averages' and uses all the same averages as Guppy, except for 8-day, which it substitutes with 7-day. Probably a copyright thing). Incredible charts is freeware (unless you specifically want EOD data) so you can learn to your hearts content.
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This is very true. But when searching through 1500 charts for setups it becomes desirable to automate the process as much possible. MMAs simplify this process as they are an easy to code filter.
GreatPig
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Yeh, I thought that might be the case but as the opening poster says he's new to trading, I dunno if he'll be using that timeframe.
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Thats right MS+T, still finding my feet.....
Hi Jay,
I'm going to assume because you're looking at GMMAs then you're interested in trading via charts. Do you have a charting program and data provider? Or are you using freely available resources like incrediblecharts?
A good charting program will allow you to define your criteria and then search for all stocks (or whatever) that meet it. One of the hazards of charting programs is they are stuffed with hundreds of indicators. That's what will start you on the quest for the Holy Grail; you'll go looking for the "perfect" indicator and get more and more confused. At some point one of two things will happen. Either you'll get stuck on the quest and keep looking for that perfect indicator or pattern, or you'll discover that the true secret is money management. If you get to that point you'll probably find that very simple ideas will work very well if the money management is in place.
The GMMA is as good a place as any to start. What you'll find though is that you'll need to adapt ideas to suit you. So work out what kind of timeframe you want to trade over. Perhaps you only want to look at your trades once a week, or maybe several times a day. Then choose GMMA values that will allow you to manage your trades comfortably on that time frame. One thing I will say is that the GMMA alone will not give you a good trade. You'll still need to decide on exact entry and exit criteria. This is where the ability to learn simple programming language will help you. If you have a charting package like Metastock or Amibroker there are ways to test your ideas so you can get a feel for how they will theoretically perform.
You could even get a free demo account with someone like GoMarkets which will let you access the Metatrader4 platform. I've never really used it but I believe it has the ability to backtest ideas. All of these charting programs use different formula writing languages.
Amibroker might be a good place to look because it is inexpensive, there are many users here to learn from and one of the resident educators, Howard Bandy, has even written a book on how to get the most out of it.
My personal preference is Metastock but I accept it's not necessarily the best. I just find it works very well for what I need to do.
Thanks for the feed back MS+T.
I have Metastock but am still working out how to get the most out of it (I have only just started really, and am very inexperienced). As for time frames, well I run my own business, so I'm not going to be staring at my computer screen all day tracking my trades! I'm thinking maybe check on things once or twice a day. I prefer to keep things simple, so as you say, I had better learn some programming skills so I can test a few ideas and see what works best for me.
Thanks again for your input
I have Metastock but am still working out how to get the most out of it (I have only just started really, and am very inexperienced). As for time frames, well I run my own business, so I'm not going to be staring at my computer screen all day tracking my trades! I'm thinking maybe check on things once or twice a day. I prefer to keep things simple, so as you say, I had better learn some programming skills so I can test a few ideas and see what works best for me.
Thanks again for your input
Anyone have any ideas for developing a scan for Guppy setups. In his book he describes a setup where the trend has been established and the averages pull back (together) before continuing the trend and separating again.
I would like to create a scan to identify this type of setup.
Any ideas how to accomplish this?
I would like to create a scan to identify this type of setup.
Any ideas how to accomplish this?
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Yes, you can scan for convergence of MMA's. When they're really tightly packed together and moving upwards, you often get a very strong and continued move. Suggest using a low lag MA; there are some available on the net. Then write yourself a program to find setups where the differences between them are small.
I have experimented with the Guppy Multiple Moving Averages in the past.
I liked to apply it to trending stocks. It helped me think about the volatility of the trend i.e. the more volatile, the more opportunity to trade in and out of an established trend.
These days I look at the price action without indicators. The price action is enough to tell me how volatile the trend is.
I found Guppy’s explanation of the GMMA to be very comprehensive and revealing.
I might be wrong but I thought in his book called “Trend Trading” he started with a visual scan.
I liked to apply it to trending stocks. It helped me think about the volatility of the trend i.e. the more volatile, the more opportunity to trade in and out of an established trend.
These days I look at the price action without indicators. The price action is enough to tell me how volatile the trend is.
I found Guppy’s explanation of the GMMA to be very comprehensive and revealing.
I might be wrong but I thought in his book called “Trend Trading” he started with a visual scan.
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