Weighted Moving Average (WMA) Beginner's Guide
WMA is a moving average that gives greater importance to recent prices. It is used to smooth price data and help observe trends. It responds more quickly, but cannot by itself prove that a trend has formed and should not be regarded as trading advice.
WMA What Is
Weighted Moving Average (WMA) is a technical analysis tool. When calculating the average price, it assigns greater weight to more recent data, so it generally reflects new changes faster than methods that treat all data equally. Its main purpose is to reduce short-term price noise, making the direction of price movement over a period easier to observe.
Calculation Method
When calculating WMA, first assign weights to the prices within the selected period, with data closer to the present typically receiving higher weights; then multiply each price by its corresponding weight, add the results, and divide by the sum of the weights. When a new price is added, the earliest data point moves out of the calculation range, and the remaining weights are updated accordingly.
Periods and Uses
For shorter periods,WMA responds more quickly to recent volatility and is suitable for observing short-term price behavior; for longer periods,WMA is smoother and helps provide insight into the overall trend. Traders also compare the price with the position of WMA or observe potential support and resistance that may appear nearby, but these phenomena are not definitive signals.
Original Tutorial
https://www.binance.com/zh-CN/academy/glossary/weighted-moving-average-wma
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