What is the Full Form of DMA in the Share Market?

The DMA full form in the share market is Displaced Moving Average. This is an important indicator that helps traders assess the price patterns in the stock market. It helps to determine the average price of the stock over a given period. DMA also gives them a clear insight into the market pattern and helps them explore new trading opportunities.

How does DMA work?

DMA works by moving the price of the stock back by a few bars from its present price by calculating the average price of the stock over a given period of time. This displacement helps traders to predict stock trends and also to assess the market turning points. A DMA below the current price indicates an uptrend in the stock movement, whereas a DMA above the current price of the stock indicates a decline in stock value. This also educates traders on possible stock buying and selling opportunities.

What are the precautions to take while using DMA in the share market?

The displaced Moving Average metric in the share market works at its best in trending markets, but it has to be used under extreme caution in volatile markets. It is important to try different displacement intervals before ascertaining what works best for one’s trading strategy. DMA has to be combined with other technical indicators to understand the market better. It should also be tested against historical data to determine its effectiveness and to make relevant changes.