McGinley Dynamic indicator is a trend following indicator.
As a trend following indicator,McGinley Dynamic indicator was created by John McGinley with the main aim of solving the inherent problem of all moving average since it is a smooth mechanism indicator for prices .Therefore it is able to follow the market closely than any other moving average indicator.Just like in all moving average indicator, McGinley Dynamic indicator is also used to indicate the direction of the market. That is, whether the market is moving upwards or in a downwards direction.This makes it to be based on support and resistance.
According to John McGinley, the values of McGinley Dynamic is therefore calculated using the following formula;
MD= MD-1+(Price-MD-1)/(n*(price/MD-1)^4
Where as;
MD is the curent McGinley Dynamic value;
MD-1 is the previous McGinley Dynamic Value;
price is the price of the asset/security.
While n is the smoothing moving average.
Therefore, McGinley Dynamic can be used to further explain the bullish and bearish cryptocurrency market as follows;
- McGinley Dynamic bullish cryptocurrency market.
Since McGinley Dynamic indicator is a trend following indicator and is based on support and resistance , it therefore follows that when the price is in a downward trend the McGinley Dynamic indicator will also be moving downwards.When the price in the market falls below the McGinley Dynamic indicator when the movement is downwards, an upward market movement will take place over there for the two. This will signal the cryptocurrency trader of a support point over there thus signalling them to purchase a given amount of cryptocurrency with their USDT balance. The trader can either place a market buy order which will be processed immediately or a limit buy order which will be processed when the market reaches his limit buy order price. This is indicated as from below;
The above is the TRX market against USDT . Two points are being indicated. There is point A which is the McGinley Dynamic curve and point B which is the support point. Before point B, the market and the McGinley indicator were moving in a downwards direction. The price in the market then falls below the lowest point of McGinely Dynamic thus creating a support point over there. The cryptocurrency trader is being signalled to purchase a given amount of TRX at point B since the market and McGinley Dynamic is starting to move upwards. The trader can either place a market buy order which is being executed immediately or a limit buy order which is being executed when the market reaches his limit buy order price. When the order is being processed,the account of the trader will start increasing in value in terms of USDT.
- McGinley Dynamic bearish cryptocurrency market.
Since McGinley Dynamic indicator is a trend following indicator and is based on support and resistance , it therefore follows that when the price is in an upward trend the McGinley Dynamic indicator will also be moving upwards.When the price in the market rises above the McGinley Dynamic indicator when the movement is upward, a downward market movement will take place over there for the two. This will signal the cryptocurrency trader of a resistance point over there thus signalling them to sell a given amount of cryptocurrency which they had previously purchased and they are currently holding. The traders can either place a market sell order which will be processed immediately or a limit sell order which will be processed when the market reaches their limit sell order price. This is indicated as from below;
The above is the TRX market against USDT . Two points are being indicated. There is point A which is the McGinley Dynamic curve and point B which is the resistance point. Before point B, the market and the McGinley indicator were moving in an upward direction. The price in the market then rises above the highest point of McGinely Dynamic thus creating a resistance point over there. The cryptocurrency trader is being signalled to sell a given amount of TRX at point B since the market and McGinley Dynamic is starting to move downwards. The traders can either place a market sell order which is being executed immediately or a limit sell order which is being executed when the market reaches their limit sell order price. When the order is being processed,the account of the trader will have increased in value in terms of USDT.
cryptocurrency market is a highly volatile market. As a cryptocurrency trader,whenever you place a buy order,always make sure to apply risk management so that whenever your buy order goes against you, your account do not depreciate so much in value.
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