McGinley Dynamic: Original and Modified Moving Average Forms

Summary

The document discusses the McGinley Dynamic as a price-following average and distinguishes an original calculation from a later modified version. It challenges common descriptions that portray the indicator as inherently faster or better at tracking market speed. According to the document, the original form can lag more than the simple and exponential moving averages used for comparison, while the modified form brings its values closer to an exponential moving average.

The indicator is intended to be applied to price like other moving averages. The document also highlights a mathematical limitation: the original formula can fail to produce meaningful values when the input series contains zero. It recommends restricting use to data that do not contain zeros. No formula details, chart evidence beyond referenced comparisons, or trading performance tests are included, so the claims about relative lag and tracking should be evaluated on the instrument and timeframe of interest.

Key ideas

• The document distinguishes the original McGinley Dynamic calculation from a modified version.
• It characterizes the original form as slower than commonly compared simple and exponential moving averages.
• The modified form is described as producing values closer to an exponential moving average.
• The indicator is applied to price as a moving average would be.
• The original calculation may give unusable output when its input data include zero values.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.