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Ztrader – Moving Average (1) 港股博弈

http://clcheung.wordpress.com/2013/10/15/ztrader-moving-average-1/

The Guppy Multiple Moving Average (GMMA), using two groups of EMA lines to help visually identify the trend and trading opportunities:

 

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The green lines are groups of shorter period EMA lines, and the red lines are groups of longer period EMA lines. When the stock is on a clear uptrend (or downtrend), these lines will be aligned in order and go in parallel. When the trend changes or the stock price consolidates, these lines will be merged or crossed.

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It looks nice. However, GMMA itself does not give extra information more than a group of EMA lines. It is also not useful for setting up automatic trading rules. It is only a nice visual tool to help making trading decisions. e.g. jump on a strong stock when the GMMA lines merged at price consolidation, ride on a stock when GMMA lines aligned and goes parallel.

Ztrader Moving Average 港股 博弈
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Ztrader – Moving Average (2) 港股博弈

http://clcheung.wordpress.com/2013/10/17/ztrader-moving-average-2/

While Moving Average is a very good tool, it suffers when market situation changes. If the price is changed rapidly with a lot of noises, the MA may generate wrong trading signals.

Many adaptive methods had been created, it tried to vary the length of the moving average to better cope with the market situation. Kaufman’s moving average, KAMA, is based on the concept that a noisy market requires a slower trend than one with less noise.

Look at this stock with 10day SMA:

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20 day SMA:

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30 day SMA:

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50 day SMA

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KAMA:

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KAMA seems able to follow the trend closely but less affected by the minor noises. It seems as smooth as a 50 day SMA at the same time follow the major price trend more timely.

It needs more verification on actual trading performance. It looks better than it performs, from my observations.

Ztrader Moving Average 港股 博弈
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