{"id":7572,"date":"2023-12-08T06:22:34","date_gmt":"2023-12-08T11:22:34","guid":{"rendered":"http:\/\/aky.pbv.mybluehost.me\/?p=7572"},"modified":"2023-12-08T06:22:39","modified_gmt":"2023-12-08T11:22:39","slug":"weighted-moving-average","status":"publish","type":"post","link":"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/","title":{"rendered":"Weighted Moving Average (WMA) \u2013 What Is It and How to Calculate It?"},"content":{"rendered":"\n<p class=\"\">Most traders will agree that technical indicators are at the heart of any trading strategy. Traders use them to analyze past price trends and patterns, as well as forecast future market movements in order to make informed trades. While there are many different kinds of indicators available to traders today, the weighted moving average (WMA) remains one of the most popular. That&#8217;s thanks to its straightforward formula and its ability to measure market momentum. In this article, we&#8217;ll discuss what the weighted moving average is. We&#8217;ll also explain how to calculate it and take a look at some detailed examples.<\/p>\n\n\n\n\n\n<div class=\"earn2-ads_pt1_desktop\" id=\"earn2-2465867919\"><div id=\"earn2-3868183512\" style=\"margin-left: auto;margin-right: auto;text-align: center;\"><a href=\"https:\/\/www.earn2trade.com\/trader-career-path?a_pid=E2TLLC&#038;chan=code330&#038;utm_source=Affiliate_track&#038;utm_medium=Top_Banner&#038;utm_campaign=Affiliate_blog&#038;utm_id=TCP_English\" target=\"_blank\" aria-label=\"910x300_earn2trade_ad\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/04\/910x300-Dark-II_EN.png\" alt=\"910x300_earn2trade_ad\"  srcset=\"https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/04\/910x300-Dark-II_EN.png 910w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/04\/910x300-Dark-II_EN-300x99.png 300w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/04\/910x300-Dark-II_EN-150x49.png 150w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/04\/910x300-Dark-II_EN-768x253.png 768w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/04\/910x300-Dark-II_EN-770x254.png 770w\" sizes=\"(max-width: 910px) 100vw, 910px\" class=\"no-lazyload\" width=\"910\" height=\"300\"  style=\"display: inline-block;\" \/><\/a><\/div><\/div><h2 class=\"wp-block-heading\" id=\"what-is\"><strong>What is the Weighted Moving Average?<\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"782\" src=\"http:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/05\/wma-1-EN.png\" alt=\"10-day WMA and SMA lines plotted on a Finamark chart\" class=\"wp-image-7642\" srcset=\"https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/05\/wma-1-EN.png 1200w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/05\/wma-1-EN-300x196.png 300w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/05\/wma-1-EN-1024x667.png 1024w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/05\/wma-1-EN-150x98.png 150w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/05\/wma-1-EN-768x500.png 768w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/05\/wma-1-EN-770x502.png 770w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><figcaption class=\"wp-element-caption\"><em>The WMA and SMA plotted on a chart | Source: <a href=\"https:\/\/trade.finamarksys.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Finamark<\/a><\/em><\/figcaption><\/figure>\n\n\n\n<p class=\"\"><\/p>\n\n\n\n<p class=\"\">The weighted moving average is a technical indicator that determines trend direction. It generates trade signals by assigning a greater weight to recent data points and less weight to past data points. The data points are usually asset close prices. It is a step further and more accurate than the simple moving average (SMA), which determines market movement by assigning identical weights to all the numbers in a given data set.&nbsp;<\/p>\n\n\n\n<p class=\"\">The WMA essentially computes the average of given input values over specified time periods by giving greater weight to more recent data. This is done by multiplying a weighting factor by each bar\u2019s price in a given set and then summing up the resulting values. It is then used to smooth the data series to help filter market noise and make it easier for traders to identify data trends.&nbsp;<\/p>\n\n\n\n<p class=\"\">For instance, when the price moves towards or goes above the WMA line on the chart, it could signal that a price drop in the short-term is imminent. Therefore traders should exit the trade. However, if the price dips near or just below the WMA line, it could mean that the price may soon go up. Therefore it&#8217;s a favourable time to enter the trade.<\/p>\n\n\n<figure class=\"wp-block-embed-youtube wp-block-embed is-type-video is-provider-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"lyte-wrapper\" title=\"Weighted Moving Average Explained - Calculation, Formula and Tips for Traders\" style=\"width:853px;max-width:100%;margin:5px auto;\"><div class=\"lyMe\" id=\"WYL_lBBVatoav1s\" itemprop=\"video\" itemscope itemtype=\"https:\/\/schema.org\/VideoObject\"><div><meta itemprop=\"thumbnailUrl\" content=\"https:\/\/i.ytimg.com\/vi\/lBBVatoav1s\/hqdefault.jpg\" \/><meta itemprop=\"embedURL\" content=\"https:\/\/www.youtube.com\/embed\/lBBVatoav1s\" \/><meta itemprop=\"duration\" content=\"PT13M27S\" \/><meta itemprop=\"uploadDate\" content=\"2020-06-01T20:59:45Z\" \/><\/div><meta itemprop=\"accessibilityFeature\" content=\"captions\" \/><div id=\"lyte_lBBVatoav1s\" data-src=\"https:\/\/i.ytimg.com\/vi\/lBBVatoav1s\/hqdefault.jpg\" class=\"pL\"><div class=\"tC\"><div class=\"tT\" itemprop=\"name\">Weighted Moving Average Explained - Calculation, Formula and Tips for Traders<\/div><\/div><div class=\"play\"><\/div><div class=\"ctrl\"><div class=\"Lctrl\"><\/div><div class=\"Rctrl\"><\/div><\/div><\/div><noscript><a href=\"https:\/\/youtu.be\/lBBVatoav1s\" rel=\"nofollow\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/i.ytimg.com\/vi\/lBBVatoav1s\/0.jpg\" alt=\"Weighted Moving Average Explained - Calculation, Formula and Tips for Traders\" width=\"853\" height=\"460\" \/><br \/>Watch this video on YouTube<\/a><\/noscript><meta itemprop=\"description\" content=\"The weighted moving average is a technical indicator that determines trend direction. It generates trade signals by assigning a greater weight to recent data points and less weight to past data points. The data points are usually asset close prices. It is a step further and more accurate than the simple moving average (SMA), which determines market movement by assigning identical weights to all the numbers in a given data set. The WMA essentially computes the average of given input values over specified time periods by giving greater weight to more recent data. This is done by multiplying a weighting factor by each bar\u2019s price in a given set and then summing up the resulting values. It is then used to smooth the data series to help filter market noise and make it easier for traders to identify data trends. For instance, when the price moves towards or goes above the WMA line on the chart, it could signal that a price drop in the short-term is imminent. Therefore, traders should exit the trade. However, if the price dips near or just below the WMA line, it could mean that the price may soon go up. Therefore, it\u2019s a favorable time to enter the trade. Whether you want to know more about the Weighted Moving Average or any other topics, Earn2Trade has you covered! ----------------------------------------------------------------------------------------------------------------------------------------------------- Read more about it here: https:\/\/e2t.to\/2BnP5g0 Get Funded With Earn2Trade! Challenge The Gauntlet Mini\u2122, our intraday futures trading evaluation. The Gauntlet Mini\u2122: https:\/\/e2t.to\/2BnP5g0 0:00 Music Intro 0:26 Intro 2:00 The history of the WMA 3:23 WMA in detail 4:57 Compared to an SMA 6:01 The formula 6:28 The calculation 8:12 Example math 9:30 Value behind the WMA 12:50 Conclusion\"><\/div><\/div><div class=\"lL\" style=\"max-width:100%;width:853px;margin:5px auto;\"><\/div><figcaption><\/figcaption><\/figure>\n\n\n<p class=\"\"><strong>You might also enjoy:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"\"><a href=\"http:\/\/aky.pbv.mybluehost.me\/relative-strength-index-rsi\/\" target=\"_blank\" rel=\"noreferrer noopener\">Relative Strength Index (RSI) &#8211; What is it and how to calculate it?<\/a><\/li>\n\n\n\n<li class=\"\"><a href=\"http:\/\/aky.pbv.mybluehost.me\/fundamental-analysis\/\" target=\"_blank\" rel=\"noreferrer noopener\">Fundamental Analysis &#8211; A Complete Guide from Basic to Advanced<\/a><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">A Brief History of The Moving Average<\/h3>\n\n\n\n<p class=\"\">Traders, technical analysts, and statisticians have been using moving averages for many years. They are often categorized under a group of tools that deal with \u201cTime Series Analysis\u201d. Other tools in that group include the Arithmetic Mean, Covariance, Correlation Coefficient, and Variance. The development and use of moving averages is believed to date as far back as 1901. It wasn\u2019t until a few years later that the name was associated with the technique for smoothing data points over a given period.&nbsp;<\/p>\n\n\n\n<p class=\"\"><a href=\"https:\/\/www.investopedia.com\/terms\/h\/haurlanindex.asp\" target=\"_blank\" rel=\"noreferrer noopener\"><u>According to Investopedia<\/u><\/a>, P. N. Haurlan was the first to use moving averages (exponential smoothing) to track stock prices. At the time, he referred to them as Trend Values and measured data and trend direction by their smoothing constants. Later, it became known as exponentially weighted moving averages (EWMAs). What we call the 19-day exponential moving average (EMA) today is what he called the 10% Trend. Over the years, moving averages have evolved in use across the financial markets as more and more traders turned to their many variations to make informed trading decisions.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how-to-calculate\">How to Calculate the Weighted Moving Average<\/h2>\n\n\n\n<p class=\"\">Calculating the weighted moving average involves taking recent data points and assigning a greater weighting compared to past data points. When summed up, the total value of the weights should be equal to 100% or 1.<\/p>\n\n\n\n<p class=\"\">As previously mentioned, the calculation for the weighted moving average is different from that of the simple moving average, where all data points are assigned an equal weighting. To calculate the SMA, you simply add up all the data points within a given period and then divide the value by the number of periods. On the other hand, the WMA considers the importance of each data point, which is reflected in the \u2018weight\u2019 assigned to it.<\/p>\n\n\n\n<p class=\"\">For this reason, the WMA is more descriptive and ultimately more detailed than the SMA. Additionally, it is more responsive to price action.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"566\" src=\"http:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/05\/wma-2-EN.png\" alt=\"A WMA and an SMA plotted on a Finamark chart, with the WMA following the price more closely than the SMA\" class=\"wp-image-7651\" srcset=\"https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/05\/wma-2-EN.png 1200w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/05\/wma-2-EN-300x142.png 300w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/05\/wma-2-EN-1024x483.png 1024w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/05\/wma-2-EN-150x71.png 150w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/05\/wma-2-EN-768x362.png 768w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2020\/05\/wma-2-EN-770x363.png 770w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><figcaption class=\"wp-element-caption\"><em>WMA vs SMA | Source: <a href=\"https:\/\/trade.finamarksys.com\/\" target=\"_blank\" rel=\"noreferrer noopener\">Finamark<\/a><\/em><\/figcaption><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\">Weighted Moving Average Formula<\/h3>\n\n\n\n<p class=\"\">The WMA formula is expressed as follows:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"529\" src=\"https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2023\/12\/formula-1024x529.png\" alt=\"The WMA formula\" class=\"wp-image-47581\" srcset=\"https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2023\/12\/formula-1024x529.png 1024w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2023\/12\/formula-300x155.png 300w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2023\/12\/formula-150x77.png 150w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2023\/12\/formula-768x397.png 768w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2023\/12\/formula-770x398.png 770w, https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2023\/12\/formula.png 1400w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\"><strong>M = Average value<br>V = Actual value<br>W = Weighting factor<br>n = Number of periods in the weighting group<\/strong><\/figcaption><\/figure>\n\n\n\n<p class=\"\"><em>Source: <a href=\"https:\/\/help.sap.com\/viewer\/35e81b2f0fd44ba4bcafe2682fa7038c\/7.0.1\/en-US\/5da2ca53f1a1214be10000000a174cb4.html\" target=\"_blank\" rel=\"noreferrer noopener\"><\/a><a href=\"https:\/\/help.sap.com\/viewer\/35e81b2f0fd44ba4bcafe2682fa7038c\/7.0.1\/en-US\/5da2ca53f1a1214be10000000a174cb4.html\" target=\"_blank\" rel=\"noreferrer noopener\"><u>help.sap.com<\/u><\/a><\/em><\/p>\n\n\n\n<p class=\"\">A bit confusing? Let\u2019s use it in a few examples to give you a clearer picture of how to use this formula to calculate the weighted moving average.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Example 1<\/strong><\/h4>\n\n\n\n<p class=\"\">Suppose the closing prices of XYZ stock for the past 3 days have been $50, $45, and $60. Calculate the weighted moving average.&nbsp;<\/p>\n\n\n\n<p class=\"\"><strong>Step 1 &#8211; Identify the numbers to average<\/strong><\/p>\n\n\n\n<p class=\"\">So here we have the three numbers provided &#8212; $50, $45, and $60, which were recorded over a three-day period.&nbsp;<\/p>\n\n\n\n<p class=\"\"><strong>Step 2 &#8211; Assign the weights to each number<\/strong><\/p>\n\n\n\n<p class=\"\">Since there are 3 periods, the most recent day ($60) gets the largest weight of 3, the second recent day ($45) receives a weight of 2, and the last day ($50) receives a weight of just 1. Of course, this is only a simplistic representation. We\u2019ll cover a more detailed weight assignment in the next example.&nbsp;<\/p>\n\n\n\n<p class=\"\"><strong>Step 3 &#8211; Multiply each price by the assigned weighting factor and sum them<\/strong><\/p>\n\n\n\n<p class=\"\">Using the WMA formula, the calculation will go as follows: [(3 x $60) + (2 x $45) + (1 x $50)] = 320.&nbsp;<\/p>\n\n\n\n<p class=\"\"><strong>Step 4 &#8211; Divide the resulting value by the sum of the periods to the WMA<\/strong><\/p>\n\n\n\n<p class=\"\">The sum of the periods is 1+2+3 = 6. So we have (180 + 90 + 50) \/ 6 = <strong>53.33<\/strong> as a three-period weighted average. The WMA value of 53.33 compares to the SMA calculation of 51.67. The division by 6 in this step is what brought the weightings sum to 6 \/ 6 = 1.<\/p>\n\n\n\n<p class=\"\">Let\u2019s look at another example with a proper look at the weighted factor. Remember, they should add up to 100% or 1.&nbsp;<\/p>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>Example 2<\/strong><\/h4>\n\n\n\n<p class=\"\">Assume that we want to calculate the weighted moving average of five stock prices over a 7-day period. The prices are $50.25, $56.39, $58.91, $61.52, $59.32, 55.43, and 54.65, with the last price being the most recent. Now we have the numbers that we want to average so the next step is to assign the weighting to each number based on how recent they are and the given period.&nbsp;<\/p>\n\n\n\n<figure class=\"is-style-regular wp-block-table\"><table class=\"table-design-1\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>&nbsp;Day<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>Closing Price<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>Weighting Factor<\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>1<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">$50.25<\/td><td class=\"has-text-align-center\" data-align=\"center\">1\/28<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>2<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">$56.39<\/td><td class=\"has-text-align-center\" data-align=\"center\">2\/28<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>3<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">$58.91<\/td><td class=\"has-text-align-center\" data-align=\"center\">3\/28<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>4<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">$61.52<\/td><td class=\"has-text-align-center\" data-align=\"center\">4\/28<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>5<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">$59.32<\/td><td class=\"has-text-align-center\" data-align=\"center\">5\/28<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>6<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">$55.43<\/td><td class=\"has-text-align-center\" data-align=\"center\">6\/28<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>7<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">$54.65<\/td><td class=\"has-text-align-center\" data-align=\"center\">7\/28<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"\">Next, we multiply each of the five closing prices by their corresponding weighting factor to find the weighted average.&nbsp;<\/p>\n\n\n\n<figure class=\"is-style-regular wp-block-table\"><table class=\"table-design-1\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>&nbsp;Day<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>Closing Price<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>Weighting Factor<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>Weighted Average<\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>1<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">$50.25<\/td><td class=\"has-text-align-center\" data-align=\"center\">1\/28<\/td><td class=\"has-text-align-center\" data-align=\"center\">$1.79<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>2<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">$56.39<\/td><td class=\"has-text-align-center\" data-align=\"center\">2\/28<\/td><td class=\"has-text-align-center\" data-align=\"center\">$4.03<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>3<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">$58.91<\/td><td class=\"has-text-align-center\" data-align=\"center\">3\/28<\/td><td class=\"has-text-align-center\" data-align=\"center\">$6.31<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>4<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">$61.52<\/td><td class=\"has-text-align-center\" data-align=\"center\">4\/28<\/td><td class=\"has-text-align-center\" data-align=\"center\">$8.79<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>5<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">$59.32<\/td><td class=\"has-text-align-center\" data-align=\"center\">5\/28<\/td><td class=\"has-text-align-center\" data-align=\"center\">$10.59<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>6<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">$55.43<\/td><td class=\"has-text-align-center\" data-align=\"center\">6\/28<\/td><td class=\"has-text-align-center\" data-align=\"center\">$11.88<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>7<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">$54.65<\/td><td class=\"has-text-align-center\" data-align=\"center\">7\/28<\/td><td class=\"has-text-align-center\" data-align=\"center\">$13.66<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>SUM<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\">&#8211;<\/td><td class=\"has-text-align-center\" data-align=\"center\">1<\/td><td class=\"has-text-align-center\" data-align=\"center\">$57.05<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p class=\"\">Then you add up all of the weighted average individual values to arrive at the WMA. The WMA for the five stock prices over the 7-day period is $57.05.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how-it-works\">How The Weighted Moving Average Works<\/h2>\n\n\n\n<p class=\"\">Now that you know how to calculate the weighted moving average of a given set of values, let\u2019s look at how you can use this indicator for your trades:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li class=\"\"><strong>To help determine trend direction<\/strong> &#8211; When the price is above its weighted MA line, it\u2019s usually a signal that on average, the asset is trading higher than it has over the period being analyzed. This in turn confirms an uptrend. Alternatively, when the price is below the WMA line, then it confirms a downtrend.<\/li>\n\n\n\n<li class=\"\"><strong>To indicate support and resistance areas<\/strong> &#8211;&nbsp; A rising weighted MA can indicate support for price action. While a falling WMA can indicate resistance to price action over a given period. Traders tend to use this as a strategy to place buy orders when the price is near the rising WMA or place sell orders when the price is near the falling weighted MA.<\/li>\n\n\n\n<li class=\"\"><strong>To validate price strength and market momentum<\/strong> &#8211; Price action above its moving average shows that the market is getting stronger relative to where it was in the past since the most recent prices now sit higher than the average. On the flip side, price action below its moving average shows that the market is getting weaker relative to where it was in the past.<\/li>\n\n\n\n<li class=\"\"><strong>To measure price movement<\/strong> &#8211; The weighted moving average is generally more sensitive to price movement making it a better measure as well as identifying trends sooner than the SMA. However, this can be a double-edged sword as the WMA is likely to experience more volatility than its corresponding SMA.<\/li>\n\n\n\n<li class=\"\"><strong>To provide trade signals <\/strong>&#8211; The WMA can be incorporated with other technical&nbsp; indicators like <a href=\"https:\/\/www.earn2trade.com\/blog\/keltner-channels-indicator\/\" target=\"_blank\" rel=\"noreferrer noopener\"><u>Keltner Channels<\/u><\/a> to spot ideal trade signals. Traders can enter the market near the WMA during an uptrend and there is a price pullback from the top of the Keltner Channel.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"conclusion\">Conclusion<\/h2>\n\n\n\n<p class=\"\">Knowing how to use the weighted moving average in conjunction with other technical indicators is an important skill to have as a trader. That being said, one type of moving average isn&#8217;t necessarily better than others as they simply have different calculation methods for average prices. As such, your trading strategy will ultimately determine what type of MA works best. Additionally, consider adjusting your settings slightly for each market; you may find that a 50-period WMA may provide great signals on one stock, but may not work so well on another. Like any other tool, the key is to know how to use and interpret the WMA to give you the best possible outcomes on your trades.&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Most traders will agree that technical indicators are at the heart of any trading strategy. Traders use them to analyze past price trends and patterns, as well as forecast future market movements in order to make informed trades. While there are many different kinds of indicators available to traders today, the weighted moving average (WMA) [&hellip;]<\/p>\n","protected":false},"author":24,"featured_media":47570,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[117,12540],"tags":[],"class_list":["post-7572","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy-finance","category-technical-analysis"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.0 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Weighted Moving Average (WMA) \u2013 What Is It and How to Calculate It?<\/title>\n<meta name=\"description\" content=\"Traders use many different indicators, but the weighted moving average remains one of the most popular. In this article we&#039;ll discuss what it is.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Weighted Moving Average (WMA) \u2013 What Is It and How to Calculate It? - Earn2Trade Blog\" \/>\n<meta property=\"og:description\" content=\"Traders use many different indicators, but the weighted moving average remains one of the most popular. In this article we&#039;ll discuss what it is.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/\" \/>\n<meta property=\"og:site_name\" content=\"Earn2Trade Blog\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/earn2trade\/\" \/>\n<meta property=\"article:published_time\" content=\"2023-12-08T11:22:34+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-12-08T11:22:39+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2023\/12\/Blog-026.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1400\" \/>\n\t<meta property=\"og:image:height\" content=\"620\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Kiril Nikolaev\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@earn2trade\" \/>\n<meta name=\"twitter:site\" content=\"@earn2trade\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Kiril Nikolaev\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"8 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/\"},\"author\":{\"name\":\"Kiril Nikolaev\",\"@id\":\"https:\/\/earn2trade.com\/blog\/es\/#\/schema\/person\/741bbc437734abdab5ee093a58f15991\"},\"headline\":\"Weighted Moving Average (WMA) \u2013 What Is It and How to Calculate It?\",\"datePublished\":\"2023-12-08T11:22:34+00:00\",\"dateModified\":\"2023-12-08T11:22:39+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/\"},\"wordCount\":1534,\"commentCount\":0,\"publisher\":{\"@id\":\"https:\/\/earn2trade.com\/blog\/es\/#organization\"},\"image\":{\"@id\":\"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2023\/12\/Blog-026.png\",\"articleSection\":[\"Economy &amp; Finance\",\"Technical Analysis\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/\",\"url\":\"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/\",\"name\":\"Weighted Moving Average (WMA) \u2013 What Is It and How to Calculate It?\",\"isPartOf\":{\"@id\":\"https:\/\/earn2trade.com\/blog\/es\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2023\/12\/Blog-026.png\",\"datePublished\":\"2023-12-08T11:22:34+00:00\",\"dateModified\":\"2023-12-08T11:22:39+00:00\",\"description\":\"Traders use many different indicators, but the weighted moving average remains one of the most popular. In this article we'll discuss what it is.\",\"breadcrumb\":{\"@id\":\"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/#primaryimage\",\"url\":\"https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2023\/12\/Blog-026.png\",\"contentUrl\":\"https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2023\/12\/Blog-026.png\",\"width\":1400,\"height\":620,\"caption\":\"Christmas Special\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/aky.pbv.mybluehost.me\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Weighted Moving Average (WMA) \u2013 What Is It and How to Calculate It?\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/earn2trade.com\/blog\/es\/#website\",\"url\":\"https:\/\/earn2trade.com\/blog\/es\/\",\"name\":\"Earn2Trade Blog\",\"description\":\"Official Blog of Earn2Trade\",\"publisher\":{\"@id\":\"https:\/\/earn2trade.com\/blog\/es\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/earn2trade.com\/blog\/es\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/earn2trade.com\/blog\/es\/#organization\",\"name\":\"Earn2Trade\",\"url\":\"https:\/\/earn2trade.com\/blog\/es\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/earn2trade.com\/blog\/es\/#\/schema\/logo\/image\/\",\"url\":\"http:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2018\/02\/logo.png\",\"contentUrl\":\"http:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2018\/02\/logo.png\",\"width\":611,\"height\":126,\"caption\":\"Earn2Trade\"},\"image\":{\"@id\":\"https:\/\/earn2trade.com\/blog\/es\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/earn2trade\/\",\"https:\/\/x.com\/earn2trade\",\"https:\/\/www.instagram.com\/earn2trade\/\",\"https:\/\/www.linkedin.com\/company\/earn2trade\/\",\"https:\/\/www.youtube.com\/channel\/UCjC2G_Aa125YZHZTkN_vZYw\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/earn2trade.com\/blog\/es\/#\/schema\/person\/741bbc437734abdab5ee093a58f15991\",\"name\":\"Kiril Nikolaev\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/secure.gravatar.com\/avatar\/406e8126ae64500bc9a6632b9f5d384ff7e8d7c02a2255cc95a9a20d9e5286fb?s=96&d=mm&r=g\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/406e8126ae64500bc9a6632b9f5d384ff7e8d7c02a2255cc95a9a20d9e5286fb?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/406e8126ae64500bc9a6632b9f5d384ff7e8d7c02a2255cc95a9a20d9e5286fb?s=96&d=mm&r=g\",\"caption\":\"Kiril Nikolaev\"},\"description\":\"Kiril Nikolaev studied Business with a major in Finance at York University, and worked as a financial analyst at BMO Nesbitt Burns. Kiril has been writing financial and investment-related content for over 5 years and has been featured many financial websites. Kiril is a CFA charterholder with over 10 years of investing experience.\",\"url\":\"https:\/\/aky.pbv.mybluehost.me\/author\/kiril\/\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Weighted Moving Average (WMA) \u2013 What Is It and How to Calculate It?","description":"Traders use many different indicators, but the weighted moving average remains one of the most popular. In this article we'll discuss what it is.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/","og_locale":"en_US","og_type":"article","og_title":"Weighted Moving Average (WMA) \u2013 What Is It and How to Calculate It? - Earn2Trade Blog","og_description":"Traders use many different indicators, but the weighted moving average remains one of the most popular. In this article we'll discuss what it is.","og_url":"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/","og_site_name":"Earn2Trade Blog","article_publisher":"https:\/\/www.facebook.com\/earn2trade\/","article_published_time":"2023-12-08T11:22:34+00:00","article_modified_time":"2023-12-08T11:22:39+00:00","og_image":[{"width":1400,"height":620,"url":"https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2023\/12\/Blog-026.png","type":"image\/png"}],"author":"Kiril Nikolaev","twitter_card":"summary_large_image","twitter_creator":"@earn2trade","twitter_site":"@earn2trade","twitter_misc":{"Written by":"Kiril Nikolaev","Est. reading time":"8 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/#article","isPartOf":{"@id":"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/"},"author":{"name":"Kiril Nikolaev","@id":"https:\/\/earn2trade.com\/blog\/es\/#\/schema\/person\/741bbc437734abdab5ee093a58f15991"},"headline":"Weighted Moving Average (WMA) \u2013 What Is It and How to Calculate It?","datePublished":"2023-12-08T11:22:34+00:00","dateModified":"2023-12-08T11:22:39+00:00","mainEntityOfPage":{"@id":"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/"},"wordCount":1534,"commentCount":0,"publisher":{"@id":"https:\/\/earn2trade.com\/blog\/es\/#organization"},"image":{"@id":"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/#primaryimage"},"thumbnailUrl":"https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2023\/12\/Blog-026.png","articleSection":["Economy &amp; Finance","Technical Analysis"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/","url":"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/","name":"Weighted Moving Average (WMA) \u2013 What Is It and How to Calculate It?","isPartOf":{"@id":"https:\/\/earn2trade.com\/blog\/es\/#website"},"primaryImageOfPage":{"@id":"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/#primaryimage"},"image":{"@id":"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/#primaryimage"},"thumbnailUrl":"https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2023\/12\/Blog-026.png","datePublished":"2023-12-08T11:22:34+00:00","dateModified":"2023-12-08T11:22:39+00:00","description":"Traders use many different indicators, but the weighted moving average remains one of the most popular. In this article we'll discuss what it is.","breadcrumb":{"@id":"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/#primaryimage","url":"https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2023\/12\/Blog-026.png","contentUrl":"https:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2023\/12\/Blog-026.png","width":1400,"height":620,"caption":"Christmas Special"},{"@type":"BreadcrumbList","@id":"https:\/\/aky.pbv.mybluehost.me\/weighted-moving-average\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/aky.pbv.mybluehost.me\/"},{"@type":"ListItem","position":2,"name":"Weighted Moving Average (WMA) \u2013 What Is It and How to Calculate It?"}]},{"@type":"WebSite","@id":"https:\/\/earn2trade.com\/blog\/es\/#website","url":"https:\/\/earn2trade.com\/blog\/es\/","name":"Earn2Trade Blog","description":"Official Blog of Earn2Trade","publisher":{"@id":"https:\/\/earn2trade.com\/blog\/es\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/earn2trade.com\/blog\/es\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/earn2trade.com\/blog\/es\/#organization","name":"Earn2Trade","url":"https:\/\/earn2trade.com\/blog\/es\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/earn2trade.com\/blog\/es\/#\/schema\/logo\/image\/","url":"http:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2018\/02\/logo.png","contentUrl":"http:\/\/aky.pbv.mybluehost.me\/wp-content\/uploads\/2018\/02\/logo.png","width":611,"height":126,"caption":"Earn2Trade"},"image":{"@id":"https:\/\/earn2trade.com\/blog\/es\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/earn2trade\/","https:\/\/x.com\/earn2trade","https:\/\/www.instagram.com\/earn2trade\/","https:\/\/www.linkedin.com\/company\/earn2trade\/","https:\/\/www.youtube.com\/channel\/UCjC2G_Aa125YZHZTkN_vZYw"]},{"@type":"Person","@id":"https:\/\/earn2trade.com\/blog\/es\/#\/schema\/person\/741bbc437734abdab5ee093a58f15991","name":"Kiril Nikolaev","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/406e8126ae64500bc9a6632b9f5d384ff7e8d7c02a2255cc95a9a20d9e5286fb?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/406e8126ae64500bc9a6632b9f5d384ff7e8d7c02a2255cc95a9a20d9e5286fb?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/406e8126ae64500bc9a6632b9f5d384ff7e8d7c02a2255cc95a9a20d9e5286fb?s=96&d=mm&r=g","caption":"Kiril Nikolaev"},"description":"Kiril Nikolaev studied Business with a major in Finance at York University, and worked as a financial analyst at BMO Nesbitt Burns. Kiril has been writing financial and investment-related content for over 5 years and has been featured many financial websites. Kiril is a CFA charterholder with over 10 years of investing experience.","url":"https:\/\/aky.pbv.mybluehost.me\/author\/kiril\/"}]}},"_links":{"self":[{"href":"https:\/\/aky.pbv.mybluehost.me\/wp-json\/wp\/v2\/posts\/7572","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/aky.pbv.mybluehost.me\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/aky.pbv.mybluehost.me\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/aky.pbv.mybluehost.me\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/aky.pbv.mybluehost.me\/wp-json\/wp\/v2\/comments?post=7572"}],"version-history":[{"count":5,"href":"https:\/\/aky.pbv.mybluehost.me\/wp-json\/wp\/v2\/posts\/7572\/revisions"}],"predecessor-version":[{"id":47586,"href":"https:\/\/aky.pbv.mybluehost.me\/wp-json\/wp\/v2\/posts\/7572\/revisions\/47586"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/aky.pbv.mybluehost.me\/wp-json\/wp\/v2\/media\/47570"}],"wp:attachment":[{"href":"https:\/\/aky.pbv.mybluehost.me\/wp-json\/wp\/v2\/media?parent=7572"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/aky.pbv.mybluehost.me\/wp-json\/wp\/v2\/categories?post=7572"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/aky.pbv.mybluehost.me\/wp-json\/wp\/v2\/tags?post=7572"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}