Weighted moving average
Assigns linearly increasing weight to more recent prices — the newest period counts most, the oldest counts least — landing between SMA and EMA in responsiveness.
What the numbers mean
The period sets both the lookback and the weighting ladder: in a 20-period WMA the most recent bar counts 20 units, the one before it 19, down to 1 for the oldest. Weight falls off in a straight line rather than a curve, which puts its responsiveness between an SMA and an EMA of the same length.
- 20 — the newest bar counts 20 units, the oldest 1; weight falls in a straight line
- 9 or 10 — fast version used for short-term crossovers
- 45 or 50 — slower version for intermediate trend
How it is used
Used where an SMA feels too slow but an EMA feels too jumpy, and inside other indicators — the Hull moving average is built from three WMAs.
- Used where an SMA reacts too slowly but an EMA reacts too eagerly
- Crossovers are read exactly as with SMAs — fast over slow is the bullish signal
How it relates to everything else
Rank the three common averages by responsiveness at the same period and you get SMA (slowest), WMA (middle), EMA (fastest). A trader who wants a crossover system to fire earlier without switching to exponential weighting swaps SMAs for WMAs. The Hull moving average is built from WMAs, so their behaviour carries through to it.
- SMA → WMA → EMA is the order from slowest to fastest at equal periods
- A WMA crossing an SMA of the same length → recent bars are outrunning the window's average
- Feeds the Hull moving average, which combines a half-length and a full-length WMA
What to watch for
Because the oldest bar still carries real weight, a single large print dropping out of the window can shift the line noticeably even on a quiet day.