TACTICS
• Join established trends at points of price weakness
• Join established trends breaking to new highs
• Trade breakouts using rally dips and rebounds
• Trade downtrend rallies as rallies rather than trend breaks
• Recognise trend breaks as they develop
RULES
• Degree and nature of separation in the long term group define trend strength and weakness
• Degree and nature of separation in the short term group define the nature of trading activity.
• Degree and nature of separation between the two groups of moving averages define the character of the trend.
• Compression shows agreement on price and value.
• Compression of both groups at the same time indicate major re-evaluation of stock and potential for a trend change
• Trade in the direction of the long term group of averages
• The relationships between the groups provide the necessary information about the nature and character of the trend.
• Do not use as a moving average crossover tool
ADVANTAGES
• Enables effective analysis of the trend environment
• Improves selection of the appropriate trading tactics
• Better understanding of trend strength
• Effective evaluation of unusual price movements, such as dips and spikes
• Effective understanding of trading activity and behaviour
DISADVANTAGES
• Not effectively applied to trend less stocks
• Cannot be applied to all trending stocks
• Do not use as a moving average crossover signal
See how some FX traders are using the GMMA
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