GlossaryIntermediate
Weighted Moving Average (WMA)
A moving average that assigns linearly decreasing weight to older prices within its window, rather than equal or exponential weighting.
A Weighted Moving Average (WMA) assigns linearly decreasing weight to each price in its window, with the most recent price given the highest weight and each prior price weighted one increment less, down to the oldest price in the window.
This sits conceptually between an SMA (equal weighting) and an EMA (exponential weighting) — a WMA reacts faster than an SMA, but its weighting decreases in a straight line rather than the curved decay an EMA uses. See Kaavon's dedicated Weighted Moving Average article for the full calculation.
Examples
- In a 10-period WMA, the most recent price is weighted 10 times as heavily as it would be in an equally-weighted 10-period SMA.
- A WMA's linear weighting scheme is a middle ground between an SMA's equal weighting and an EMA's exponential weighting.