AlgoCorner McGinley Dynamic

18/10/2025
24
Desktop

McGinley Dynamic is one of those underrated technical tools that actually came from a very practical observation about moving averages.
It was created by John R. McGinley, CMT, and its main purpose is to solve the common problems of traditional moving averages — namely, lag and whipsaw caused by market speed fluctuations.
Here’s what it tries to address specifically:
🧩 1. Lag in moving averages
- Regular moving averages (SMA, EMA) lag behind price because they’re based on fixed lookback periods.
- The McGinley Dynamic automatically adapts its smoothing based on market speed.
When the market moves quickly, it speeds up its adjustment; when the market slows, it smooths more gently.
👉 Result: it tracks price more closely without overreacting.
🌪️ 2. Whipsaws during volatile periods
- Traditional MAs can give false signals in choppy markets.
- McGinley introduced a dynamic denominator that adjusts in proportion to how fast the market is moving.
This helps reduce noise and avoid unnecessary crossover signals.
⚙️ 3. Smoother, self-correcting behavior
- It acts almost like an auto-adjusting moving average, meaning you don’t need to fine-tune the period as much.
- This makes it less sensitive to user input and market volatility — kind of a “smart” moving average.
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