LEARN GUPPY MULTIPLE MOVING AVERAGE（Guppy-MMA）IN 3 MINUTES – BLOCKCHAIN 101

INTRODUCTION

In the complex waves of the financial market, investors are always looking for tools that can capture market trends more comprehensively and accurately, and Guppy Multiple Moving Average (hereinafter referred to as Guppy MMA), as an outstanding achievement of technical analysis, is a powerful force in this trend. In this article, we will discuss the construction of Guppy MMA, signal interpretation and its application in the market, and bring you into a deeper investment perspective.

Fundamentals of Guppy MMA

Guppy Multiple Moving Average, often shortened to Guppy MMA, was developed in the 1980s by Australian trader Daryl Guppy, who is known for his contributions to the field of technical analysis, not only as a successful trader, but also as a best-selling author and financial commentator.

The Guppy MMA was proposed to overcome the limitations of traditional moving averages in capturing market trends.Daryl Guppy believed that the use of multiple moving averages, in combination with different time periods, would allow for a more comprehensive approach to capturing multi-level trends in the market.

The basic construction of the Guppy MMA consists of two sets of moving averages

The Guppy Multiple Moving Average (Guppy MMA) calculation involves multiple moving averages for the short, medium and long term. The following are the basic formulas for calculating the Guppy MMA:

1. Short-Term Group:

Short-Term Fast MA: SMMA short = sum of short-term closing prices / number of short-term days

Short-Term Slow MA: SMMA short = sum of short-term closing prices / number of short-term days.

2. Medium-Term Group:

Medium-Term Fast MA: SMMA short = sum of closing prices in the medium term / number of days in the medium term

Medium-Term Slow MA: SMMA short = sum of closing prices in the medium term / number of days in the medium term

3. Long-Term Group:

Long-Term Fast MA: SMMA short = sum of closing prices in the long term/number of days in the long term

Long-Term Slow MA: SMMA short = sum of closing prices in the long term/number of days in the long term

The moving average calculation method used here is the Smoothed Moving Average (SMMA), which is a smoothing of prices.

Signal generation for Guppy MMAs usually involves crossovers between these moving averages, such as the golden and dead crosses of the short-term fast MA with the slow MA. These crossovers provide investors with useful information about market trends to help make buy or sell decisions. Different alignments and crossovers can produce different signals and investors need to analyze them in the context of the market.

Signal Interpretation of Guppy MMA

The signals of the Guppy MMA are relatively intuitive and include the following:

Golden Crosses and Dead Crosses: The moving averages of the short-term and long-term groups cross to form golden crosses (the short-term line crosses the long-term line from below) and dead crosses (the short-term line crosses the long-term line from above). A golden cross is often seen as a buy signal, while a dead cross is seen as a sell signal.

Combination Alignments: The power of the Guppy MMA lies in the combination of moving averages of different periods. For example, an uptrend in the short-term group and a downtrend in the long-term group may indicate a short-term uptrend but a long-term downtrend in the market, which should be treated with caution.

Cloud Chart Effect: A dense arrangement of moving averages creates a “cloud chart” effect, which indicates that the market may be in a sideways movement and investors should wait and see.

Guppy MMA application areas:

Guppy Multiple Moving Average (Guppy MMA) is widely used in a variety of financial markets to provide investors with multi-level, comprehensive market analysis. The following are the main application areas of Guppy MMA:

Trend Following: Guppy MMA has a strong trend following ability in trending markets. By observing the alignment and crossover of moving averages of different periods, investors can more accurately determine the current trend of the market. A golden cross (short term MA crossing the long term MA from below) may be a buy signal, while a dead cross (short term MA crossing the long term MA from above) may be a sell signal.

Oscillatory Markets: Guppy MMA is also suitable for oscillatory markets as it captures price movements over different time periods. In an oscillator market, investors can time their trades by observing the alignment and combination of moving averages to guard against possible risks.

Risk Management: The Guppy MMA’s multi-level analysis helps investors gain a more comprehensive understanding of the market and therefore allows for more effective risk management. By looking at trends over multiple time periods, investors can develop smarter stop-loss strategies and minimize unnecessary losses.

Portfolio Management: For long-term investors and fund managers, Guppy MMA can be one of the tools for portfolio optimization. By monitoring the Guppy MMA of different assets, investors can make better asset allocation and improve the overall portfolio return-to-risk ratio.

Trading Decision Support: Guppy MMA provides investors with more information about market dynamics as a decision support tool. When making trading decisions, investors can use Guppy MMA’s signals in conjunction with other technical indicators to increase the reliability of their decisions.

Overall, Guppy MMA has a wide range of applications for a variety of financial instruments and trading cycles. Investors can flexibly use Guppy MMA to guide their decision-making and increase the probability of trading success according to their investment style and market conditions.

Advantages and Considerations of Guppy MMA

The advantage of Guppy MMA is that it provides a more comprehensive picture of market trends over different time periods, helping investors to understand market conditions more fully. However, there are some issues to be aware of:

Lag: Like other moving averages, Guppy MMA signals have a lag and should be used with caution.

Adaptability: The adaptability of the Guppy MMA may vary under different market conditions and needs to be adjusted according to the actual situation.

Conclusion: The Multiple Wisdom of Guppy MMA

Guppy MMA is popular among investors for its multiple intelligence. In this complex and ever-changing market, Guppy MMA provides investors with a more diverse and comprehensive perspective. By learning and understanding Guppy MMA, investors are able to gain a deeper insight into the pulse of the market and go further and further.