McGinley Dynamic Technical Indicator
Developed by John McGinley
The McGinley Dynamic technical indicator aims to overcome the lag of the traditional simple and exponential moving averages, the indicator automatically adjusting itself relative to the speed of the Forex market. Thus its name, dynamic indicator.
The indicator follows price movements closely in both a fast and a slow moving Forex market.
McGinley Dynamic Indicator
Technical Analysis of McGinley Dynamic Indicator
This Indicator is better at avoiding whipsaws compared to the original moving average.
This McGinley Dynamic indicator is calculated using the formula:
Dynamic = D1 + (Price - D1) / (N * (Price/D1)^4)
D1 = previous value of Dynamic indicator
N = smoothing factor (of price periods)
^ = Power of
Bullish, Buy Signals and Bearish, Sell Signals
McGinley indicator should be combined with moving averages to form a Forex trading system. This indicator should be used as the smoothing mechanisms where the moving average is choppy or ranging.
- Bullish, Buy Signal- A buy signal is generated when price is crosses above the indicator.
- Bearish, Sell Signal- A sell signal is generated when price is crosses below the indicator.