Extra indicators
McGinley Dynamic
A self-adjusting moving average that speeds up when the price runs away from it and slows down when it is close.
The idea in plain words
Fixed-speed averages are too slow in fast markets and too nervous in calm ones. McGinley's line changes its speed with the distance between price and line, so it rarely gets left behind.
How it is calculated
Each candle, the line moves towards the close by the gap divided by N × (close ÷ line)⁴. A big gap makes the factor smaller, so the line moves faster.
MD = MD₋₁ + (close − MD₋₁) ÷ (N × (close ÷ MD₋₁)⁴)How to use it
- As a trend filter and dynamic support or resistance.
- Instead of an EMA where you want fewer whipsaws.
Drawing conclusions
- Price above a rising McGinley line: uptrend; below a falling one: downtrend.
Example
US500 daily: after a sharp sell-off the McGinley line catches up with the price within a few days, while a 14-day SMA is still far above.
Prices in examples are illustrative.
Watch out for
- The line is smooth, not predictive: wait for the price to confirm a break.
A little history
Created by John R. McGinley, a market technician, and published in 1990.
Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.