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Analyzing the Battle Between Investors and Traders
A moving average can help us determine short, medium and long term trend direction and trend reversals. However, we can also use multiple moving averages in order to help us with trend analysis. The use of multiple moving averages will allow us to see trend information for different timeframes and different types of market participants.
Australian trader and analyst Daryl Guppy developed the Guppy Multiple Moving Average (GMMA). This indicator consists of twelve moving averages with the six fastest moving averages representing traders and the six slowest moving averages representing investors. The relationship of these moving average groups can be used to help us understand what long term investors are seeing and how shorter term traders can use that information to their advantage.
Technical Analysis Topic: Moving Averages
Smoothing Price Noise with Moving Averages - Moving Averages are used by traders in order to help reduce noise in data. This is also known as “smoothing” data. The advantage of smoothing data is that it makes it easier to see price trends and trend reversals.
However, if you smooth the data with a moving average, you are creating a lag in the information provided. The longer the calculation used for the moving average, the more lag in the info. Some traders will choose to use moving averages that apply more weight to the current data. These types of moving averages include Exponential Moving Averages, Triangular Moving Averages, Zero Lag Moving Averages, etc. While these moving averages apply more weight to recent data, it’s important to remember that you are still looking at lagging information
Stocks To Watch with: GMMA 2.0
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Understanding Moving Average Ribbons
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How Traders Profit Off of Investors
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Seeing Trend Changes with the GMMA
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What is Market Pulse Dot Live (MPL)?
MPL is complementary content about trading the current market with some technical analysis education too.
A typical show covers the following topics:
- Overview of Today's Broad Market
- Summary of Groups on the Move
- Technical Analysis Lesson
- Stocks to Watch
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Join us every Monday and Wednesday at 5:30pm EST.
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Nirvana Systems has been creating Trading software since the 1990's. Nirvana was founded on the concept of automated trading, our CEO, Ed Downs, fell in love with the potential profits offered by the markets but quickly realized that emotions were getting in the way of success and it was too difficult to find good candidates. Nirvana Systems has been creating software that automates Trading ever since.
In our experience, traders using chart analysis are often looking for short-term profits, a Snapback move, andrelish tools that determine when these Snapback moves can occur.
