McGinley Dynamic

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.

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.

• 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.

Trend direction

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

Trend strength

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

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

| 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 |

• 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.