How to Trend Trade with Guppy Multiple Moving Average (GMMA)

Babypips Elementary - Grade 4

What is a moving average ribbon (MA ribbon)?

A series of multiple moving averages of different lengths (usually 6–16 or more) plotted on the same chart.

What is the main purpose of an MA ribbon?

To visualize trend direction, strength, and potential support or resistance by analyzing the alignment and spacing of multiple moving averages.

How can you adjust the responsiveness of an MA ribbon?

By changing the number of periods for each MA or switching between SMA and EMA.

What does a WIDE separation (expansion) of ribbon lines suggest?

The prevailing trend is strong but may be reaching an extreme and could soon end.

What does a NARROW separation (contraction) of ribbon lines suggest?

A potential trend change or the beginning of a new trend.

What does a PARALLEL ribbon with even spacing indicate?

A strong and steady trend; all MAs are in agreement.

Why monitor both crossover and spacing in an MA ribbon?

Crossovers show direction changes, while spacing indicates trend strength or weakness.

What is the Guppy Multiple Moving Average (GMMA)?

A specific type of moving average ribbon consisting of two groups of six exponential moving averages (EMAs) each.

What EMA periods are used in the short-term GMMA group?

3, 5, 8, 10, 12, and 15.

What EMA periods are used in the long-term GMMA group?

30, 35, 40, 45, 50, and 60.

What does it signal when the short-term GMMA group crosses ABOVE the long-term group?

A bullish crossover indicating a potential bullish trend or trend reversal (buy signal).

What does it signal when the short-term GMMA group crosses BELOW the long-term group?

A bearish crossover indicating a potential bearish trend or trend reversal (sell signal).

How does GMMA define trend strength?

By the degree of separation between the short‐term and long‐term EMA groups (wider = stronger trend, tighter = weaker).

When is there 'no trade' or 'no signal' using GMMA?

When both groups of EMAs are moving sideways and intertwined, indicating no clear trend.

What is the GMMA Compression Breakout strategy?

Look for a candle whose high–low pierces all twelve EMAs, then place stop orders above/below that candle for a breakout trade with the opposite stop as initial SL.

What is a major limitation of GMMA (and moving‐average ribbons in general)?

They are lagging indicators, causing delayed entries/exits and vulnerability to whipsaws.

Give two practical tips for trading with GMMA.

1) Trade in the direction of the long‐term EMA group. 2) Watch for compression of both EMA groups as a clue to possible trend chang