Jurik Moving Average Indicator: How it Works & How to Trade

Key takeaways

The Jurik moving average (JMA) is a dynamic averaging indicator developed by Mark Jurik that reduces lag without making the line jittery.
The JMA operates with three parameters – length, phase, and power – which control its sensitivity.
The length setting of 14 and phase setting of 0 make for a reasonable starting point for the daily charts of Nifty 50 and Bank Nifty.
The JMA reacts quicker than the corresponding EMA to real trends, though it may send out more false positives in the case of range-bound stocks.
Use the JMA together with the volume/momentum indicator instead of using the direction of the JMA alone.

No matter who you are, each trader faces a similar dilemma sooner or later. There will always be a trade-off between the smoothness of the moving average, which removes noise, and its responsiveness to a new trend.

This trade-off has been around since chartists began manually averaging closing prices. The solution to it was proposed decades later by a mathematician named Mark Jurik. The JMA is designed specifically to resolve this issue.

The adaptive approach replaces the conventional approach, which uses a constant smoothing coefficient. Below is an explanation of the indicator and the process of implementation.

What is the Jurik Moving Average (JMA)?

The Jurik Moving Average, or JMA in short, is a technical indicator meant to track the price with a delay less than that of a regular moving average. JMA was invented by a mathematician, Mark Jurik, specifically for reducing lag and noise.

Almost all moving averages have this trade-off. The 50-day simple average smooths the price quite well but shows old information. A 5-day average reacts promptly but jumps on every minor move. JMA aims at solving both issues by maximising the smoothness and minimising lag at the same time.

Since the original formula is not publicly available and remains under commercial license, most charting platforms use a reverse-engineered approximation.

How does Jurik Moving Average work?

The JMA goes through a series of three stages of smoothing. Each of them filters the output of the previous stage, which is the reason why the final line is smooth even if the underlying price is choppy.

The engine behind this process has a factor that automatically adapts to the current volatility. For example, when the price of Reliance Industries or HDFC Bank is trending hard, this factor will change in order to make JMA follow the price closely. If the stock is choppily moving sideways for several bars, then the factor will again adapt and make JMA flatten the line, ignoring the noise.

Calculations are done behind the scenes on every charting platform that supports JMA. In practice, there are only three settings that you can adjust: length, phase, and power.

JMA vs. SMA vs. EMA

Simple Moving Average considers every price in the range the same way, giving equal weight to each one. For instance, the 20-day SMA on Nifty 50 treats the price from three weeks ago the same way it treats today's price.

Exponential Moving Average has a different treatment of each price. It considers the recent ones more important. But the EMA lag remains fixed for the given length. So the 20-period EMA lags price by 10 bars on average, regardless of market conditions.

JMA does not have this fixed relation. It can turn only a bar or two after price at genuine trend changes, resembling the behaviour of a much shorter EMA, whereas it becomes smoother during calm periods.

The trade-off is in complexity. JMA requires proper parameter selection to work properly. Moreover, the indicator acts differently on each stock. That is why the settings that work well for Bank Nifty Futures may become inappropriate for some mid-cap stocks with lower liquidity.

Parameter selection for Jurik Moving Average

Length specifies the number of candles to be used in the calculation. The length of 7 makes the line react fast and is good for intraday charts. The 14-21 range is suitable for daily swing trading in large cap stocks.

Phase varies between -100 and 100. And this setting is where most beginners usually make a mistake. By setting the phase to a positive value, such as 50, you reduce the indicator's lag but also allow it to overshoot during sharp price reversals. A negative phase, e.g., -50, makes the line smoother but also causes it to react later. Zero phase is a good start to experiment with until you test several settings on the stock you know well.

Power determines the aggressiveness of the smoothing engine and can range from 0.1 to 0.9, with the default value close to 0.45 on some charting platforms.

For the daily chart template of Nifty 50 and Bank Nifty, use length 14, phase 0, and the default value of power. Increase the length of the line until it is still choppy, and touch the phase only when you feel comfortable with the baseline.

How to trade with the Jurik Moving Average

The easiest way to use JMA is to regard it as a trend filter. Price closing above a rising JMA line means buyers have the upper hand in the short term. Closing below a declining JMA line means sellers are gaining an edge.

Most platforms provide colour versions that show the line green for an ascending JMA line and red for a descending one. That means traders use the slope change rather than crossovers more often as the main signal.

One good way to enter is to wait for two consecutive closes to be on one side of JMA rather than opening a position on the first crossover candle.

Combine JMA with a volume indicator. Crossovers on rising volumes will be more valuable for your trade than the ones that occur on quiet days with low turnover.

You may also use JMA as an exit strategy. Instead of making assumptions about the end of the trend, many traders close their positions on the price candle that closes on the opposite side of the JMA line.

Limitations you should know before you use it

JMA doesn't repaint. Once a bar closes, the JMA value for this bar becomes constant and doesn't change. This is a big advantage compared to several other adaptive indicators.

Nevertheless, fast speed is JMA's weakness. This indicator reacts faster than an EMA and therefore changes its direction more frequently when the market is range-bound.

This creates many false signals that would not appear if the trader used a slow-moving average.

JMA also shows poor results on short-term charts. In the timeframe under 15 minutes, price fluctuations start to dominate the indicator's adaptive engine, and the behaviour of the indicator becomes unpredictable.

Remember also that JMA is still a lagging indicator despite all its features. It confirms the move after the move starts. So treat JMA as confirmation, alongside price action and volume, not as a predictive tool.

Conclusion

The Jurik moving average deserves its reputation because it addresses a real issue: traders have to choose between the speed and the smoothness of the traditional moving averages. JMA manages to reduce this contradiction using an adaptive engine that most traders don't even realise exists – just its results.

If you apply JMA with the proper length, a carefully selected phase, and a volume filter, it may help you better understand trend changes in Nifty, Bank Nifty, and individual blue chips. If you use it blindly, it will be nothing but another line that occasionally gives you false signals.

Start simply. Set the length to 14 and the phase to 0, and see how it works on a well-known stock.

FAQs

Is the Jurik moving average free to use?

Most charting platforms provide a reverse-engineered version of JMA for free. The original formula created by Mark Jurik is not publicly known, and it is commercially licensed.

What is the best JMA setting for Nifty 50?

Length 14 and phase 0 is a good starting point for daily Nifty 50 charts, though some traders prefer to test a length of 7 for intraday strategies.

Does the Jurik moving average repaint?

No. The value of JMA for each closed bar doesn't change, unlike several other adaptive indicators.

Can JMA completely replace a simple or exponential moving average?

Not necessarily. JMA reacts faster to the trend, but it generates many more false signals in a sideways market. Many traders use JMA along with EMA rather than in place of EMA.

What does the phase setting in JMA actually control?

The phase from -100 to 100 controls the balance between lag and smoothness. The positive phase reduces lag but can cause the indicator to overshoot. The negative phase makes the line smoother but causes it to react more slowly.