Displaced Moving Averages – A New Application to A Proven Indicator

There are many types of moving averages ranging from simple (SMA) moving averages to exponential moving averages (EMA) to more complicated WVMA, volume weighted moving average but there is none as exciting and new as Displaced Moving Averages (DMA). Through the use of new complex computerized charting we now have a new trading resource.  A displaced moving average (DMA) is a moving average (MA) that has been adjusted forward or back in time in an attempt to better forecast trends or better fit the price movements of an asset.

Displacing a moving average is a practice used by traders to more accurately match the moving average with the price action. Furthermore, we all have experienced situations, where the price walks the trend line (as a support or resistance), but there are times where price will close slightly beyond the average.

Displacing a moving average involves shifting it to the left or right by a certain number of days. To displace a 10-day moving average by plus three days, you move the line representing the moving average to the right on the price graph by three days. A technical analyst uses displacement if, historically, the moving average has triggered buy or sell signals too early or too late. By visualizing where those same signals would have been generated if the analyst had used a displaced moving average, the accuracy of the analysis can be greatly enhanced.

John Roman 
John is an active trader and educator at Investors Trading Academy with an MBA in Finance from New York University.  He began trading in 1995 focusing mainly on commodities and options, then transformed into forex investment. His current specialization covers all aspects of forex trading utilizing fundamental and technical analysis, namely chart pattern analysis. Mr. Roman has conducted training seminars on all over the world from novice to innovative strategies.  He provides a solid, collaborative and extremely encouraging training atmosphere to assist Forex traders in locating and trading momentum moves, using confirmed patterns and methods.