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Displaced Moving Average (DMA)

A displaced moving average (DMA) is a technical indicator used in financial markets that shifts the moving average forward or backward in time. By moving the average to the right (forward), traders get a smoother view of price trends, while shifting it to the left (backward) may show earlier trend signals. DMAs are commonly used in stock, forex, and cryptocurrency trading to help identify trends, support, and resistance levels. Traders use DMAs to better align their buy and sell signals with price movements, allowing them to make more informed decisions.

Example

A 10-day DMA shifted forward by two days gives traders a smoother representation of price trends, helping them avoid reacting to short-term market fluctuations.

Key points

• Shifts moving averages forward or backward to analyze trends.

• Helps traders identify potential buy/sell signals.

• Commonly used in various financial markets.

Quick Answers to Curious Questions

Traders use displaced moving averages to adjust the timing of their buy or sell signals by shifting the average forward or backward in time.

DMAs help traders smooth out market noise and better align buy/sell signals with price movements.

Unlike a regular moving average, a DMA shifts the average forward or backward, offering a different view of price trends.
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