Displaced Moving Average

Displaced Moving Average is a moving average that has been time-shifted either forward or backward. It is often used in conjunction with a non-shifted moving average for trend or cross-over type stock strategies. 

Displaced Moving Average

Displaced Moving Average is a moving average that has been time-shifted either forward or backward. It is often used in conjunction with a non-shifted moving average for trend or cross-over type stock strategies. 


Displaced Moving Average Calculation

Displaced moving averages are constructed by taking the moving average and shifting it by a number of intervals, either positive or negative.

If the number is positive, the displaced moving average will lag the original moving average.

 

Displaced Moving Average shifted backward in time

If the number is negative, the displaced moving average will lag the original moving average.

 

Displaced Moving Average Interpretation

The Displaced Moving Average is typically used in two different application:

  1. The moving average is delayed (lagged).  Traders consider the stock to be bullish when the price is above the lagged moving average. Likewise, the stock is considered to be bearish when the stock price is below the indicator.
  2. A moving average crossover system using the original moving average and the delayed version.

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