⚙️ BUILT-IN
Weighted Moving Average (WMA)
A moving average that assigns linearly increasing weight to more recent prices, cutting lag versus a Simple Moving Average while staying easy to compute and interpret.
380KUses
21400Likes
0Comments
Live Demo — Weighted Moving Average (WMA) applied to NIFTY 50 (illustrative)
PriceEMA(9)EMA(21)SMA(20)
What is WMA?
The Weighted Moving Average assigns a linearly increasing weight to each price in the lookback window, with the most recent bar receiving the highest weight. It has long been a standard way to reduce SMA lag without exponential smoothing complexity.
Formula
WMA = (n*P1 + (n-1)*P2 + ... + 1*Pn) / (n+(n-1)+...+1)
Denominator = n(n+1)/2Parameters
| Parameter | Default | Description |
|---|---|---|
| Period (n) | 20 | Number of bars in the weighting window |
| Source | Close | Price field used |
Signal Interpretation
- Price above WMA suggests bullish short-term momentum; below suggests bearish.
- A rising WMA slope confirms an uptrend; flattening warns of weakening momentum.
- Two WMAs crossing generate classic fast/slow crossover signals.
- Reacts faster than an SMA of the same length, increasing whipsaws in choppy markets.
- Acts as dynamic support/resistance, like other moving averages.
Tips & Best Practices
- Shorter periods track price closely but generate more false signals.
- Pair with volume or a momentum oscillator to filter weak crossovers.
- WMA is the building block for more advanced averages like HMA.