McGinley Dynamic

The McGinley Dynamic is a moving average that changes its own speed. Each bar it moves towards the close by an amount that depends on how far the close is from the line, and on which side. When price falls below the line it catches up quickly; when price rises above it, it follows more cautiously. The aim is a line that tracks price through a change of direction with fewer sudden separations than a fixed-speed average.

The McGinley Dynamic smooths price. It does not confirm trend strength or predict future prices, and its speed adjustment is not symmetrical, so it is not a neutral average of up and down moves.

• Price above or below the line. Price holding above the line is read as context for an uptrend, below it for a downtrend.
• The slope. A rising line means closes have been above it. Because the line follows rises more slowly, a steep rally can leave a wide gap between price and the line.
• Fast drops, slow climbs. In a sell-off the line closes in on price quickly; in a rally it lags further. Allow for that when comparing the gap on either side.
• Period length. Shorter moves the line more per bar; longer moves it less and smooths more.

These are ways to read the line, not entry signals on their own.

The indicator always uses the close. Adjust the length in the indicator settings.

The line starts from an exponential moving average of the close, which itself starts from the simple average of the first 14 closes. From then on each bar it moves towards the close by a step scaled by the length and by the ratio of the close to the line:

MD = previous MD + (close - previous MD) / (length * (close / previous MD)^4)

With the default length of 14:
close 10% above the line:  step = gap / (14 * 1.46) = gap / 20.5
close 10% below the line:  step = gap / (14 * 0.66) = gap / 9.2

The fourth power of the ratio is what makes the speed asymmetric. A close above the line makes the divisor larger, so the line moves a smaller share of the gap; a close below makes it smaller, so the line moves a larger share. A close equal to the line leaves it unchanged.

Because each value is built from the previous one, there is no fixed window. The first value appears on bar 14 with the default length, and every value after it depends on that starting point.

• It is asymmetric by design. The line catches up with falling prices faster than with rising ones, so its distance from price means different things on either side.
• It lags in strong rallies. The further price runs above the line, the smaller each step becomes, so a fast move up leaves the line well behind.
• Close only. The calculation always uses the close; there is no price source setting.
• It depends on timeframe and length. The same indicator gives a different line on 15m than on 1D.
• It is not a strategy. On its own it carries no risk management, sizing or exit.

• Exponential Moving Average (EMA). An average that weights recent bars more heavily, so it turns sooner than a simple average.
• Kaufman Adaptive Moving Average (KAMA). An average that speeds up when price moves cleanly in one direction and nearly stops when price chops sideways.
• Smoothed Moving Average (SMMA). Wilder's smoothing as a standalone line, an exponential-style average with a slower decay, started from a plain average.