McGinley Dynamic: A Smarter Moving Average
Last updated
Last updated
In technical analysis, moving averages are some of the most commonly used tools to identify trends, smooth price action, and generate trading signals. However, many traders are unaware of one of the most advanced and adaptive moving averages available — the McGinley Dynamic.
Unlike traditional moving averages like the Simple Moving Average (SMA) or the Exponential Moving Average (EMA), the McGinley Dynamic adjusts automatically to changing market conditions. It reduces lag, smooths price fluctuations more efficiently, and tracks price more accurately — making it an essential tool for serious traders.
The McGinley Dynamic is a responsive moving average developed by John R. McGinley, a market technician and former editor of the Market Technicians Association journal. He created this tool to overcome the major limitations of traditional moving averages — primarily lag and sensitivity to volatility.
Unlike fixed-period MAs, the McGinley Dynamic includes an automatic adjustment factor that changes based on the speed of the market. This means it can track price more accurately without reacting excessively to short-term spikes or noise.
In short: ➡️ It follows price closely in fast markets ➡️ Smooths noise in slower markets ➡️ Reduces false signals compared to standard MAs
The formula for McGinley Dynamic is more complex than SMA or EMA, but here's the concept:
Where:
MD is the McGinley Dynamic
Price is the current closing price
k is a smoothing constant (usually 10 for daily charts)
This formula causes the moving average to adjust itself automatically based on the speed of price changes.
The key feature? It pulls itself closer to price when markets move quickly and slows down when prices stabilize.
This self-correction mechanism is what makes it so unique and powerful.
The McGinley Dynamic appears as a smooth, curved line on your price chart, just like a moving average. Here's how to interpret it:
Price Above McGinley → Bullish trend / upward momentum
Price Below McGinley → Bearish trend / downward momentum
Price Crossing McGinley → Potential shift in trend
Flat McGinley → Consolidation or sideways movement
Unlike other MAs, the McGinley is less prone to whipsaws, meaning fewer false signals in choppy markets.
There is no one-size-fits-all setting, but here are recommended defaults:
Short-term trading (scalping/intraday): Length = 10–14
Medium-term swing trading: Length = 20
Long-term trend following: Length = 50+
The McGinley Dynamic is not built into all platforms by default, but many allow for custom script input. On TradingView, for example, you can search for "McGinley Dynamic" in the indicator library or code it manually.
The McGinley Dynamic can be used in a variety of ways:
Use it to confirm the direction of the trend. If the price consistently stays above the McGinley line, consider long trades. If below, look for short opportunities.
Combine the McGinley with other indicators like RSI, MACD, or Volume to create powerful entry and exit strategies.
Example:
Wait for RSI > 50
Price is above McGinley Dynamic
Enter long when candle closes above line
Use McGinley as a dynamic support or resistance during pullbacks. Price touching the line during an uptrend can signal a continuation buy.
❌ Using it alone Although highly adaptive, the McGinley should not be used in isolation. Always combine it with other signals or indicators.
❌ Not understanding its purpose McGinley is not for predicting price — it’s a tool for following price accurately and reducing false noise.
❌ Treating it like a static MA This tool works differently than SMAs or EMAs. Its dynamic adjustment gives better accuracy, but traders must test and understand how it fits into their system.
The McGinley Dynamic is a sophisticated, often overlooked tool that offers traders a smarter way to track price.
Key benefits: ✅ Adjusts automatically to market speed ✅ Reduces lag better than EMA or SMA ✅ Filters noise in sideways markets ✅ Smooths price more naturally ✅ Provides more accurate trend tracking
It’s particularly useful for:
Trend followers
Swing traders
Anyone frustrated with false MA signals
While not as widely known as the Moving Average or Bollinger Bands, the McGinley Dynamic deserves a place in your trading toolkit.
Try it on your charts. Backtest it. Combine it with your current system — and you might just find it’s the missing piece you’ve been looking for.
