Guppy Multiple Moving Average
Overview
The Guppy Multiple Moving Average tool was developed by Daryl Guppy and was introduced in his book, Trading Tactics. It is made up of two groups of exponential moving averages and is used to understand the strength and nature of the trend. This helps traders to select the most appropriate trading tactics.
The short-term group are 3-, 5-, 8-, 10-, 12- and 15-day exponential moving averages. This is a proxy for the behaviour of short-term traders and speculators in the market. The long-term group is made up of 30-, 35-, 40-, 45-, 50- and 60-day exponential moving averages. This is a proxy for the long-term investors in the market.
The relationship within each of these groups tells us when there is agreement on value - when they are close together - and when there is disagreement on value - when they are well spaced apart.
When we combine multiple moving averages, a short-term group and a long-term group, we can see when the market has reached an agreement about the value of the stock. This can be used to understand the strength of the trend. Sustained activity of the short-term averages above the long-term group confirms a strong trend. The short-term group will fluctuate, but while the long-term group is in a steady band it suggests long-term support.
Signs of a weakening of the trend are when both groups of averages begin to narrow down and fluctuate more than is normal given their past recent activity. If both groups converge towards a crossover, then a trend reversal is signalled. The relationship between the two groups tells the trader about the strength of the market action. A change in price direction that is well supported by both short and long-term investors signals a strong trading opportunity. The crossover of the two groups of moving averages is not as important as the relationship between them.
To add the tool to your chart, select the tool from the Averages tool group, and left-click on the chart or indicator on which you wish to add the tool. Optuma will then draw the tool using the default settings.
Scripting Function: GMA()
Actions & Properties
Actions
Copy Data to Clipboard: Will copy the tool’s values to the clipboard which can then be inserted into a spreadsheet, for example, allowing for further analysis.
Add Technical Alert: When selected, a Technical Alert will be created for the selected security.
Add to Toolbar: Adds the selected tool to your custom toolbar.
Apply Settings to All: When multiple Guppy Multiple Moving Average tools have been applied to a chart, page or workbook, this action can be used to apply the settings of the one selected to other instances of the tool. This is a great time saver if an adjustment is made to the tool - such as line colour - as this allows all the other Guppy Multiple Moving Average tools in the chart, page or entire workbook to be updated instantly.
Copy Tool: Allows you to copy the selected tool, which can then be pasted onto a different chart window.
Move to Back: If the tool is displaying in front of other tools or indicators clicking this action will move the tool view to the background.
Move to Front: If the tool is displaying behind other tools or indicators on the chart, clicking this action will bring the tool to the forefront.
Restore Default Settings: Click this action if you have adjusted the default settings of the tool, and wish to return to the standard properties originally installed with Optuma.
Save Settings as Default: If you have adjusted any of the tool’s properties (colour, for example) you can save the adjustments as your new default setting. Each time you apply a new Guppy Multiple Moving Average to a chart, the tool will display using the new settings.
Delete: Deletes the tool from the chart.
Properties
Tool Name: Allows you to adjust the name of the tool, as it’s displayed in the Structure Panel.
Calc Style: This option is used to set the type of moving average calculation for the Guppy Multiple Moving Average. The calculation options are Exponential, Simple, Weighted, Smoothed, Modified or McGinley. The default for Guppy Multiple Moving Average is Exponential.
Calc Using: This option is used to determine which components of the data are used in calculating the moving averages. Click in this field to reveal a drop down arrow. Click on this arrow for the calculation options.
Offset: This provides the option to offset the Guppy Multiple Moving Average from the chart, to adjust the offset value use the blue up and down arrows.
Group 1 Style: This option expands to show the following:
- Plot Style - Allows you to change how the Group 1 is displayed on your chart. There are 6 options available: Line, Dot, Histogram, Step, Shaded, Shaded Step.
- Line Style - The Line Style property allows you to adjust the type of the line displayed. There are 8 options available: Solid, Dots, Dash, Dash Dots, Long Dash, Long Dash Dot, Long Dash Dot Dot, Stippled.
- Line Width - Allows you to adjust the width of the line. Moving the slider bar to the right increases the thickness of the line.
- Line Colour - Allows you to select the colour of the line. Clicking on the drop down arrow will display a colour swatch. Locate the desired colour and left-click it once to select it.
- Fill Colour - When the Plot Style is changed to Shaded you are then able to alter the Fill Colour for the Group 1.
- Fill Transparency - When the Plot Style is changed to Shaded, you then are able to adjust the shading transparency. Moving the slider to the left will increase the transparency of the Group 1.
Group 2 Style: This option expands to show the properties of the Group 2 plot style. The properties are identical to those listed for Group 1.
Tool Transparency: Use this slider bar to adjust the transparency of the tool. Moving the slider to the left will increase the transparency of the tool.
Visible: Un-tick this checkbox to hide the tool from the chart.
Show in Price Scale: When selected the current Adaptive Moving Average value will be displayed in the Price Scale.