Question 1

What is the McGinley Dynamic?

Accepted Answer

The McGinley Dynamic, developed by John R. McGinley, is a self-adjusting moving average that automatically adapts its speed to market velocity. Unlike traditional MAs with fixed smoothing factors, McGinley Dynamic tightens during fast moves and loosens during slow ones, producing a line that hugs price more consistently.

Question 2

How it works

Accepted Answer

``` MD = MD_prev + (Close - MD_prev) / (N × (Close / MD_prev)^4) ``` The `(Close / MD_prev)^4` term is the key innovation: - When price moves quickly away from MD, the ratio deviates from 1 and MD accelerates. - When price is near MD, the ratio is close to 1 and MD moves slowly.

Question 3

Key features

Accepted Answer

- **Self-adjusting speed** — no need to switch periods for fast vs. slow markets. - **Reduced whipsaws** — adapts smoothness automatically, unlike fixed EMA/SMA. - **Stays on the correct side of price** — designed to minimize crossover noise.

Question 4

Trend direction

Accepted Answer

- Price above McGinley Dynamic — bullish. - Price below McGinley Dynamic — bearish.

Question 5

Trend strength

Accepted Answer

- Large gap between price and MD — strong trend momentum. - Price hugging MD closely — trend may be weakening or market is consolidating.

Question 6

Parameters

Accepted Answer

| Parameter | Default | Description | |-----------|---------|-------------| | Period | 14 | Base smoothing period |

Question 7

Example conditions

Accepted Answer

| Condition | Meaning | |-----------|---------| | `close > MCGINLEY(14)` | Price above McGinley Dynamic — bullish | | `close cross_over MCGINLEY(14)` | Price reclaims MD — potential reversal up | | `close cross_under MCGINLEY(14)` | Price breaks below MD — bearish |

Question 8

Tips

Accepted Answer

- McGinley Dynamic is excellent as a trend filter on higher timeframes. - Pair with momentum oscillators (RSI, Stochastic) for entry timing. - MD rarely produces false crossovers in trending markets — more reliable than SMA/EMA for trend direction. - Consider using MD instead of SMA(200) on daily charts for a more adaptive long-term trend indicator.