Weighted Moving Average (WMA)
Description
WMA, Weighted Moving Average is a moving average that gives more weight to recent price data and less weight to older data.
WMA determines the number of periods to include in the average (for instance a 10-period WMA would include the last 10 price points). You then multiply each price by a weighting factor, with the most recent price receiving the highest weight and the oldest price receiving the lowest weight. The result is then summed and divided by the total weighting factor to calculate the WMA.
WMA can be used to identify trends and make trading decisions. If the price is above the WMA, it may indicate an uptrend, while if the price is below the WMA, it may indicate a downtrend. Use the WMA in combination with our other tools to make informed decisions.
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