Weighted moving average
A weighted average is any average that has multiplying factors to give different weights to different data points. But in technical analysis a weighted moving average (WMA) has the specific meaning of weights which decrease arithmetically. In an n-day WMA the latest day has weight n, the second latest n-1, etc, down to zero.
The graph above shows how the weights decrease, from highest weight for the most recent data points, down to zero. It can be compared to the weights in the exponential moving average.
Notes and references
- http://en.wikipedia.org/wiki/Moving_average
See also
- Simple Moving Average
- Exponential Moving Average
- Bollinger Bands
- MACD
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