May 27, 2010

Using GMMA


The GMMA indicator develops four main trading rules, but
remember, it is not a stand-alone indicator. It is most useful as a confirming entry signal, although it can assist with timing exits. The direction of the move should be confirmed with the results of other indicators and price plots. The trading rules for the GMMA are:

1 When the bands from both groups begin to narrow down and converge, prepare for price action as the agreement on valuation collapses.

2 Trade in the direction of the crossover. Go long if the crossover is on the upside and short or exit long positions with downside crossovers.

3 The long-term averages confirm the trend direction.

4 The bubbles created by the short-term group of averages show the favorable exit points. Judging the top is difficult, so look for the leading two or three averages to converge or come together. Confirm this early signal with other indicator readings.

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