Trading by Moving Average Offset DMA

Displaced forward moving averages (DMA) in most cases are used to move a stop order to exit a trading position. The use of shifted moving averages is completely similar to the use of trading Parabolic SAR indicator.

What is a biased moving average?

DMA(NxM) или displaced moving averages = SMA(N) — это обычная простая скользящая средняя, которая сдвинута на какое-то кол-во (M) временных периодов вперед.

To install DMA on the chart of the Metatrader 4 trading terminal, выбираем Индикатор Moving Average, задаем период и значение M в графе «Сдвиг».

According to the theory of Joe DiNapoli (Joe DiNapoli), to hold a trading position and measure the trend makes sense to use the following combinations of DMA, as:

3x3, 7x5, 25x5.

The specific choice of the shifted moving average depends on the volatility of the trading asset, as well as the scale used, as well as the time period.

На примере рассмотрена 2 средние — смещенная и несмещенная 15-тидневная простая скользящая средняя для поднимающихся цен на акции РАО ЕЭС. В данном примере кривая DMA is shifted slightly to the right by a parallel shift to the Five Trading Periods.

A Buy trade position is held as long as the closing prices are above the displaced moving average DMA (15, 5). In case this target would be used for SMA(15) instead of DMA(15, 5), then this position would have been closed much earlier by 5 bars. Displaced moving average DMA allows us to continue to stay in the trend for a longer period of time, while closing the trading position in time at the very reversal of the trend.