Question 1

What is WMA?

Accepted Answer

The Weighted Moving Average (WMA) assigns linearly decreasing weights to each price in the lookback window. The most recent price gets the highest weight (N), the second most recent gets (N-1), and so on down to 1. This makes WMA more responsive to recent prices than SMA while using a simple, transparent weighting scheme.

Question 2

How it works

Accepted Answer

``` WMA(N) = (N × Close_1 + (N-1) × Close_2 + ... + 1 × Close_N) / (N × (N+1) / 2) ``` The denominator is the sum of weights: N + (N-1) + ... + 1 = N(N+1)/2.

Question 3

Key features

Accepted Answer

- **Linear weighting** — newest bar weight = N, oldest = 1. Easy to understand and interpret. - **Between SMA and EMA** in responsiveness — faster than SMA, comparable to EMA. - **No exponential decay** — older bars still have meaningful weight, unlike EMA where weight drops exponentially. - **Used in HMA** — the Hull Moving Average is built from WMA combinations.

Question 4

Trend direction

Accepted Answer

- Price above WMA — bullish. - Price below WMA — bearish.

Question 5

Crossovers

Accepted Answer

- Short WMA crossing above long WMA — bullish signal. - Short WMA crossing below long WMA — bearish signal.

Question 6

Parameters

Accepted Answer

| Parameter | Default | Description | |-----------|---------|-------------| | Period | 20 | Number of candles |

Question 7

Example conditions

Accepted Answer

| Condition | Meaning | |-----------|---------| | `close > WMA(20)` | Price above 20-period WMA | | `WMA(10) cross_over WMA(30)` | Fast WMA crosses above slow — bullish | | `close cross_under WMA(50)` | Price breaks below WMA — bearish |

Question 8

Tips

Accepted Answer

- WMA is a good middle ground if SMA is too slow but EMA feels too twitchy. - Compare WMA to EMA of the same period — in trending markets they give similar signals; in choppy markets WMA may produce fewer whipsaws. - WMA is a building block for HMA — consider HMA if you want even lower lag. - Standard periods: 10, 20, 50 for short/medium/long-term trend identification.