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Weighted moving average

A moving average that assigns linearly decreasing weights to older bars, sitting between a simple and an exponential average in responsiveness.

A simple and an exponential moving average over the same pricesOne price line with two smoothed lines drawn through it; the exponential average bends away from the simple average as soon as price turns, and sits between price and the simple average all the way down.SAME PRICES, TWO AVERAGES (8 PERIODS)the EMA turns down firstand stays nearer to price8-day SMA8-day EMApriceIllustrative prices. Both averages smooth the same series over the same span.
Simple versus exponential averages. Both lines average the last eight prices, but the exponential version gives the newest prices the most weight while the simple version treats them all alike. That is why the exponential line bends first when price turns and then tracks it more closely.

In a 10-period weighted average the most recent bar is multiplied by 10, the one before by 9, and so on, with the total divided by the sum of the weights. Unlike an EMA, data outside the window is excluded entirely.

It is used less often on its own than as a building block. The hull-moving-average is constructed from weighted averages, and some volume-sensitive averages use the same weighting idea applied to volume instead of position.

Practically the differences between SMA, EMA and WMA at the same period are small and swamped by the choice of period itself. Traders often spend far more time choosing an average type than the decision warrants; the lookback-period matters much more.

Related: simple-moving-average, exponential-moving-average, hull-moving-average, lookback-period, volume-weighted-moving-average

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