📉 Weighted Moving Average (WMA)

The WMA is a technical indicator that traders use to generate trading direction and make buy or sell decisions. It assigns greater weight to recent data and less weight to past data, resulting similar to the exponential moving average but with a different calculation method.

To calculate the WMA, one starts by choosing the number of periods and the weighting factor. Each value is multiplied by its factor, dividing the result by the total number of periods. Adding all the results gives the value of the WMA.

Formula: WMA = (P1 * FP1)/N + (P2*FP2)/N + … + (Pn * FPn)/N

Where: P1 is the first price considered; FP1 is the first weighting factor; N is the number of values in the average; P2, …, Pn are the subsequent prices; FP2, …, FPn are the subsequent weighting factors.