The finest in trend trading

Beginner Questions
309

The matter of the close is clearly brought to attention in the following 30 min chart of USD/JPY with the GMMA. >>>

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The entry point of the trend is shown.

The trend goes nicely until the 3 exclamation marks.
Here the price action breaks right down into the long term, red averages.
It would seem that the trend is over.

After all, this sudden drop breaks a given trendline.

But, wait - we consider only the close of the candle!!

So when that low red candle has closed, we now look again at the long term, red averages.
And what do we see?

We see that the red averages continue to show a strong uptrend.
They point upwards and are widely spaced.

According to the rules for the GMMA, this means that the price action will continue to go up and the drop of one candle does not worry us.

This is the power of the GMMA - it allows us to see thro temporary price action and make an extremely high probability estimate of future price action.

Remember this post #292 (page 30) - it will become an important reference later on. :slight_smile:

310

I will now consider how we construct an entry and an exit for the GMMA (Direction) trends.

To do so we will construct a MMACD.

[B]What on earth is a MMACD? [/B] :confused: :confused:

MMACD stands for Multiple Moving Average Convergence Divergence indicator.

Hmmmm, that was a mouthful. :stuck_out_tongue:

[B]But what is it?[/B] :confused:

It is a MACD combined with a Multiple Moving Average.

[B]How can we get that?[/B]

We have to do some work with the GMMA first then put it into the MACD.

[B]Lets see how it is done…[/B]

311

First, lets see what a MACD is…

MACD = short average - long average. (simple as that).
signal line = ema of MACD. (9 periods)

But the GMMA has 12 averages - 6 long and 6 short!! :eek:

So what we do is take the 6 long ones and add them up to form a new long average.
And we do the same to the 6 short ones to form a new short average.

example (short)…(3 + 5 + 8 + 10 + 12 + 15)/6 = new short average.

Same for long.

We now have…

[B]MMACD = new short average - new long average.[/B]

We will use a blue line to represent this.

We will leave the signal line out for the moment (one piece of teaching at a time!!) :smiley: :smiley:

[B]I will show you the program later because the program also contains the signal line and I must explain all that first.[/B]

312

Here, on a 20 minute chart of the Cable is both the GMMA (Direction indicator) and the MMACD >>>

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You are already familiar with the GMMA, now look at the blue MMACD line below.
As you can see it crosses a zero line.

Note that the zero line crossings synchronise exactly with the GMMA crossovers.

Further, the MMACD line is above zero when the GMMA trend is up and below zero when the GMMA trend is down.

Note, very importantly, that the scares at A and B do not trouble the blue MMACD indicator.
As long as the line does not touch the zero line, we continue to stay in the trade!! :slight_smile:

The exact entry point is taken at the close of a candle.

This chart is zoomed right out and you cannot see that.
But in the next post I show you the entry clearly.

313

In this chart I have zoomed in on the previous chart just before the letter B.

>>>

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The pink line shows where the MMACD crosses the zero line upwards, telling us to go long.

The entry point is the first close after the pink line.

314

Here is the full trade - entry and exit >>>

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The entry is slightly after the pink line.
The exit is right on cue. (this happens sometimes).

Profit is 74 pips after 16 hours of being in the trade.

315

There are less posts today but the material has been fairly heavy going and, in order for readers to digest it properly, I need to take it slowly.

Besides, I need to trade myself!! :slight_smile: :slight_smile:

[B]More tomorrow.[/B] :slight_smile:

316

Great work Tymen, happy trading. Looking forward to next postings

317

I feel lucky! it as great as to attend the University of Oxford or Harvard

318

And cheaper :wink:

319

Dont we need to add two lines to MMACD indicator for sideway trading?

320

and then we can catch upper yellow candle at any timeframe chart, using MMACD at a higher timeframe chart ?

321

Hi RenaLa
your enthusiasm to embrace this method is commendable. Tymen is a great teacher and he knows that some of us need time to absorb this information. I am sure that all will be revealed as we progress, Tymen is very thorough in his methods
best regards

322

and free … I feel as the lessons goes from the bottom of tymen’s heart

323

Thanks a lot to tymen

I am watching his thread right from the beginning - fantastic thread

where is muthusai and DodgeV83 ?

anybody is having template for both macd and guppy (mt4)

324

see post #264 for guppy, mmacd has not been released yet

325

why have multiple moving averages? why not just have two MAs each one an average of the two sets? I tried that once and the results weren’t much different.

326

I think the amount of separation between the averages is going to be part of the method.

327

I did that also. as the sepparation is increasing or staying the same then stay in the trade. When the sepparation begins to decrease then exit the trade. I measured sepparation as vertical distance in pips. Angle of MAs can be useful also. Also it is useful to guage the angle at which price moves away from bollinger bands as the sepparation begins to decrease. But that’s straying to far from the thread.

328

The price of AUD/CHF has broken already all MAs of 30 min, 1H,2H timeframe uptrend charts. I dont know how long the price will fall?