Mcginley Dynamic - Indicator Formula

A market technician named John R. Mcginley developed the Mcginley Dynamic, which is a moving average the was designed to follow the market more precisely than existing moving averages. His goal was to reduce the lag time between the indicator and the market by adjusting for shifts in market speed. It takes account of speed changes in the market to show a smoother moving average line The indicator helps reduce price separation and volatile whipsaws so it can reflect price action more accurately.

Calculation:

MD( t ) = MD( t - 1 ) + Price( t ) – MD( t - 1 ) / N * ( Price( t ) / MD( t - 1 ) )4

Where:

MD( t ) = McGinley Dynamic Indicator's current value

MD( t - 1 ) = MD value of the preceding period

Price( t ) = Security's current price

N = number of periods