1. What is Weighted Moving Average?

The Weighted Moving Average (WMA) is a technical indicator that assigns a heavier weighting to more recent data points. Unlike the Simple Moving Average (SMA) where all data points are weighted equally, the WMA makes recent prices more influential.

2. How Does the Calculator Work?

The calculator uses the WMA formula:

Where:

• \( Price_t \) — Price at time t (USD)
• \( Weight_t \) — Weight assigned to price at time t (unitless)
• \( \sum \) — Sum of all values in the series

Explanation: Each price in the series is multiplied by its corresponding weight, these products are summed, and then divided by the sum of the weights.

3. Importance of WMA Calculation

Details: WMAs are commonly used in technical analysis to identify trends and generate trading signals. They react more quickly to price changes than SMAs due to the emphasis on recent data.

4. Using the Calculator

Tips: Enter prices and corresponding weights as comma-separated values. Both lists must be of equal length. Weights can be any positive numbers (higher weights = more influence).

5. Frequently Asked Questions (FAQ)

Q1: How is WMA different from EMA?
A: While both give more weight to recent data, EMA uses an exponential weighting that decreases exponentially, while WMA uses linear weights you define.

Q2: What are typical weight values to use?
A: Common schemes use linear weights (1,2,3,...n) or triangular weights (1,2,3,...n...3,2,1). The weights depend on your analysis needs.

Q3: When should I use WMA vs SMA?
A: Use WMA when you want to emphasize recent price action more heavily. SMA is better when you want equal weighting of all periods.

Q4: How many periods should I include?
A: This depends on your trading timeframe. Shorter periods (5-20) are more sensitive, longer periods (50-200) show longer-term trends.

Q5: Can WMA be used for any time series data?
A: Yes, WMA can be applied to any time series data where you want to emphasize recent observations, not just financial data.