Daryl Guppy had the right idea in developing a technique that combined two groups of moving averages with differing time periods. But while I have no problem with his conceptualization, I question the methodology he used to come up with the particular moving averages in each set in that I think it was somewhat arbitrary, or at the very least, a bit subjective.

Guppy Multiple Moving Averages...

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It’s my understanding that one set of moving averages is meant to reflect the activity of traders, and was selected because three days is about half of the trading week, five days is one trading week, eight days is about a week and half, etc.

The other set is meant to track the activity of investors by starting at six weeks and increasing by one trading week until there is a jump of two weeks from 50 to 60 days in the final series due to the fact that Guppy originally used the 60-day average as a checkpoint benchmark for the long-term trend.

However, in the system I use, the indicators comprising a given set of moving averages were selected based on a STATISTICAL analysis of price action to verify the SPECIFIC options that came CLOSEST to painting a TRUE picture of the paths ACTUALLY taken by price.

And finally, it has been my experience that one is able to trade with much greater accuracy if an effort is made to MAXIMIZE the precision characterizing the environment in which one operates. Or in other words, I believe that applying the technique of using multiple moving averages when trading in time frames MUCH shorter than days, weeks and months VASTLY increases the percentage of trades one is able to execute successfully AND the frequency with which one does so.