A:

The McGinley Dynamic is a little known technical indicator developed by John McGinley in 1990. The indicator attempts to solve a problem inherent in moving averages which use fixed time lengths (ie. a 10 or 21 period moving averages), a problem that causes those moving averages to be outrun in fast markets. The speed of the market is not consistent; it frequently speeds up and slows down. Traditional moving averages fail to account for this market characteristic. The McGinley Dynamic solves this problem by incorporating an automatic adjustment factor into its formula which speeds or slows the indicator in trending or trading markets.

The main benefits of using the McGinley Dynamic are that; (1) it can rise in the face of falling data, (2) it does not get whipsawed as frequently as traditional moving averages, (3) it is capable of "hugging" the index as closely as desired, and (4) when the Index speeds up, the average speeds up as well, and vice versa.

(For more, see our Technical Analysis Tutorial)

This question was answered by Lovey Grewal.

RELATED FAQS

  1. What are the best technical indicators to complement the McGinley Dynamic Indicator?

    Read about the strengths and weaknesses of the McGinley dynamic indicator, and find out which technical indicators are best ...
  2. What debt to equity ratio is common for a bank?

    Take a look at the important debt-to-equity ratio, a key metric of financial leverage, and learn what the average debt/equity ...
  3. What is the average profit margin for a company in the banking sector?

    Learn what the average profit margin is for companies in the banking sector, along with other evaluation metrics often used ...
  4. What is the average price-to-book ratio for companies in the drugs sector?

    Find out more about the price-to-book ratio and what the average P/B ratio is for companies in the drug manufacturers - major ...
RELATED TERMS
  1. Fintech

    Fintech is a portmanteau of financial technology that describes ...
  2. Indicator

    Indicators are statistics used to measure current conditions ...
  3. Intraday Momentum Index (IMI)

    A technical indicator that combines aspects of candlestick analysis ...
  4. Appraised Equity Capital

    The excess of the market value of an asset over its book value. ...
  5. Asset Valuation Review (AVR)

    A process that establishes an estimate of the value of a failed ...
  6. Derived Investment Value (DIV)

    A valuation methodology used to calculate the present value of ...

You May Also Like

Related Articles
  1. Technical Indicators

    What are the best technical indicators ...

  2. Technical Indicators

    Will These High-Flying Stocks Stay Hot ...

  3. Chart Advisor

    These REITs Are Looking Good Right Now

  4. Chart Advisor

    Commodity Traders are Watching These ...

  5. Trading Strategies

    Analyzing The Market With Trend Mirrors

Trading Center