As a result of this calculation, the Dynamic Line increases its speed during bear trends, as it follows prices, while it moves more slowly during bull trends. In the formula above the difference between the Dynamic and the price is divided by N times the ratio of the two to the 4th power. This 4th power adds an adjustment factor to the calculation, which mcginley dynamic forex charts more suddenly, as the difference between the Dynamic and the current data becomes larger.
On the chart below the difference between the Dynamic and the 20-period Exponential Moving Average can be seen. Founded in 2013, Binary Tribune aims at providing its readers accurate and actual financial news coverage. Trading forex, stocks and commodities on margin carries a high level of risk and may not be suitable for all investors. My latest experiment was on the Mcginley dynamic. It is also supposed to minimizes price separation, price whipsaws and hugs prices much more closely. And it does this automatically as there is a factor of the formula.
Because of the calculation, the Dynamic Line speeds up in down markets as it follows prices yet moves more slowly in up markets. The numerator difference gives us a sign, up or down, and the denominator keeps us percentage-wise within bounds defined by N. The 4th power gives the calculation an adjustment factor which increases more sharply the greater the difference between the Dynamic and the current data. Personally I do not find this indicator very useful. Maybe it is better as a tool to gauge the market instead of a regular indicator.