Displaced Moving Average (DMA) is one of forex technical indicator used in forex technical analysis by many traders. Displaced Moving Average (DMA) used for phasing, for re-directing the data, for cycle estimation or just as a moving average trading system. It takes the ongoing moving average and moves it backward (or forward) in time.

Displaced Moving Average (DMA) has been adjusted forward or back in time in order to forecast trends. 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 negative, the displaced moving average will lag the original moving average, and if the number is positive the displaced moving average will lead the original moving average.

By using this technique, you can quickly see how the displaced moving average study could be quite useful in locating and estimating cycles. For example, if the expected cycle is 28 periods, you specify a moving average length of 28. The displacement value is then one-half of that value or -14.

The aim behind displaced moving averages is to allow traders to center the moving average or make the displaced moving average fit better with the price movement, thereby removing some of the noise in the moving average. Some traders believe that displaced moving averages have more predictive power than basic moving averages such as simple and exponential.

The displaced moving average (dma) is created by shifting the moving averages forward or backwards in time by a specific time interval. The displaced moving average is used for two primary reasons:

• Shift the moving average backwards to contain the trend bettter, in order to stay in long-term positions
• Shift moving average forward in order to become a leading indicator, to get out of positions once counter rallies develop