Trends/Moving averages

Weighted moving average

A moving average where the newest close counts the most and each older close counts a little less, in a straight line down.

Moving averagesBest on 3M, 6M, 1YAlso called WMA, linearly weighted average

Illustration of the weighted moving average shape. It is a sketch, not real price data.

What it shows

In a weighted moving average (WMA) each of the last N closes is multiplied by a weight. The newest gets weight N, the next gets N − 1, and so on to 1. The total is divided by the sum of the weights.

It sits between the SMA and the EMA in speed.

How we find it

The same code that draws it on your chart follows these steps, with the same result every time.

Choose N.
Give the newest close weight N, the one before N − 1, down to 1.
Multiply each close by its weight and add them up.
Divide by the sum of the weights, N × (N + 1) ÷ 2.

Starting values: N 20. These are proposed and will be tuned on real price data before launch.

How to read it

The line follows price a little more closely than an SMA.
Price above the line means the last close is above its weighted average.
A sudden big close affects the line more than in an SMA.

Status labels you may see

Label	What it means
Above the average	The last close is above the WMA.
Below the average	The last close is below the WMA.
Crossing	Price crossed the WMA in the last 3 bars.

What cancels it

Nothing cancels it.

What traders check next

How it compares with the SMA of the same length.
The slope of the line.
How far price is from the line.

Limits

Still lags price.
The weights are a choice.
Less common than SMA and EMA.

Try it in forecastviz

Open any ticker and choose Moving averages → Weighted moving average in the left menu.
Switch between 3M, 6M, 1Y to see how the picture changes.
Compare with Simple moving average and Exponential moving average on the same chart.

Open on a ticker

Questions

How is it different from EMA?

The weights fall in a straight line and drop to zero after N bars. An EMA never drops them fully.

Where is it used?

It is the building block of the Hull moving average.