WMA Indicator (weighted Moving Average)

Published:4 February 2019 Updated:4 January 2024

Description of the WMA indicator

Sliding is considered an important tool for a reason. All because it will allow, having secured its data, to get a number of significant advantages during work and make a correct conclusion about the trades. Of course, in this the indicator is more than a useful tool.

One of its types is. WMA (Weighted Moving Average) is a weighted moving average, which is a simple modification of the moving SMAIt can also help the player if he needs to filter out false signals and find among them the appropriate ones for investment. In its calculation, much attention is paid to the late price indicators. It is worth remembering that this is also an example of a trend indicator, capable of accurately determining the direction of the current trend, which is also of interest to investors, including beginners. The most important thing here is to set it up correctly for your particular trading style and instrument type.

His data is used by successful traders who care about quality signals, the reliability of the tools used. Note that EMA can also be considered to some extent weighted, since the increase in weight over time is maintained here. WMA, however, is more flexible in its settings; compared to it, a simple slider is a rather “clumsy tool,” inferior in many ways to a weighted one.

Here you can get the simplest signals, even just by studying the trend of the asset’s dynamics: if the instrument is going down, this is a downward mood, if, on the contrary, it is going upward, this is an upward trend. This tool allows the player to get rid of one of the drawbacks of moving averages, because they often pay attention to value indicators without paying attention to their remoteness from a specific value. The Weighted Moving Average is an optimized model of the system which distributes weight between prices and pays more attention here to their last indicators. As a conclusion, it is worth noting that WMA is a great tool and a reliable source of data that is easy to work with and will easily become the basis for creating new strategies.

Log in to your broker’s terminal, add the WMA indicator to the chart and see what happens

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Calculation formula

In this tool, as we have already said, a large weight is assigned to the latest data, and a smaller weight to the early indicators. It has the following form of calculation: all closing prices are multiplied by some weight coefficient:

LWMA = SUM (CLOSE (i) * i, N)/SUM (i, N), where:
SUM – amount;
CLOSE(i) – closing price;
SUM (i, N) – the sum of the weight coefficients;
N – period.

Such information will be more effective for the trader than data obtained due to the standard type of sliding, because here significant attention is paid to the latest value indicators. That’s why the tool is more detailed in displaying the current state of affairs.

Advantages of the indicator

WMA has its “fans”, investors who actively use its data. This is because the weighted moving average has a number of advantages that set it apart from other instruments. WMA can instantly react to market dynamics, which makes it more attractive than a slow-smoothed moving average. It will show the player both the trend and the value fluctuations at the same time, making the work more productive.

If the market is expected to have a sharp change in trend, price spikes – it will be the first source of such information. However, despite the fact that it reacts quickly to a trend change, it is still difficult to accurately determine the trend. By smoothing the graphs and displaying the data as averaged values you can get rid of unnecessary information, including false ones. This tool is good for fast trading that lasts a day or a few days. Its working principles are the same as for the other trend tools. It is a separate serious tool, which can be used even with minimal experience in trading on the market.

So, this tool is more accurate and detailed in displaying actual data. Like other indicators, it lags, but, unlike other similar tools, it is almost the fastest and it is worth using. No wonder it is so popular, it is part of complex trading techniques and robotswhere its data are used either as a filter or as the main source of information.

Due to the mathematical averaging of the data, it is advantageous to work with the indicator, which attracts the attention of players. This tool will allow you to find out not only information about trends, but also about their breaks, trade resistance/support levels. Using several of its lines at once (especially if you use round settings: 100, 200, 300), you can easily get a more powerful tool with advanced capabilities, enter trading with a minimum of losses and risks, which is also valuable for the trader.

How to add WMA to MetaTrader 4?

As traders know, MT4 contains a number of standard tools for work, which, once installed, are immediately available to players to analyze the dynamics of assets. The WMA we are considering in this material is also immediately available here for work and you can easily add it to the chart. Having opened the program, it is necessary to go to the department of trend tools, by going to the following path Indicators – Trending:

How to add WMA to MetaTrader 4: 1 step. Go to Trending Instruments

Then you have to choose Moving Average among the tools. By clicking on its name, you should go to the settings for selecting a specific type of MA, – WMA:

How to add WMA to MetaTrader 4: Step 2. Select Moving Average from the list

After making all the settings and pressing the “OK” button, you can add the tool to the main workspace and work with it. In this case, the graph looks like this:

How to add WMA to MetaTrader 4: Step 3. Make WMA settings

How to add WMA to MetaTrader 5?

The process of adding the indicator to the MT5 program looks exactly the same, preserving all the functionality of the previous solution, including the list of basic instruments, which has increased here. To add the WMA to the chart, here again you need to go to: Indicators – Trending:

How to add WMA to MetaTrader 5: 1 step. Go to Trending Instruments

Clicking on the name of the MA, you must go to its settings and select a specific type of it:

How to add WMA to MetaTrader 5: Step 2. Select Moving Average from the list

After all parameters of the slider are specified and it is ready for work, you can press the “OK” button. The tool is immediately added to the chart, which takes the following form:

How to add WMA to MetaTrader 5: Step 3. Make WMA settings

How to add WMA to the broker’s terminal?

  • Finmax

Among the tools of the platform of this brokerage company at the moment you can work with 4 indicators, MA is also presented here, moreover, only as SMA and choose another type of tool is not possible, which, of course, limits the possibilities of the trader here:

Finmax broker terminal

This brokerage company has a terminal offered to the client online there are many different tools to work with, including WMA. In order to add it to the trading chart, you need to click on the “Indicators” button, conveniently located immediately in the main workspace of the program. A list of indicators available here will open, where you can find the desired instrument and, by clicking on it, add it to the chart and perform its settings:

How to add WMA to the Olimp Trade terminal: 1. Open the list of indicators

The settings panel is located to the left of the main workspace and after changes, the tool immediately shows an update on the chart:

How to add WMA to the Olimp Trade terminal: 2. To set up an indicator

After making all the settings and minimizing this panel, you can immediately go to the main work:

How to add WMA to the Olympus Trade terminal: 3. Minimize Settings Panel

  • Binomo (bonus 100% to deposit by promo code REVIEWEEK100Activate).

At this brokerage organization, the terminal also contains many tools for work, including different types of sliding: SMA, EMA and the WMA we are considering. In order to add it to the chart for work, you need to click on the “Indicators” button, located at the very bottom of the platform on the left:

How to add WMA to the Bimono terminal: 1. Click on the "Indicators" button

Clicking on this button will open a menu of all the tools, among which you can find a slider and immediately select its type – WMA:

How to add WMA to the Bimono terminal: 2. Select an indicator

After making all the necessary settings here, you can add it to your workspace. To do this, it is worth using the “Build” button:

How to add WMA to the Bimono terminal: 3. Configure it

The indicator has been added to the chart. You can start working:

How to add WMA to the Bimono terminal: 4. Close settings window

How to install the indicator in the terminal?

Traders tend to place high demands on the performance of brokerage platforms and this is easy to explain – if such a program contains the maximum functionality, is easy to learn, if it works without crashes and freezes, then, of course, it is interesting to them. One of the options that appeal to them is the ability to add indicators to the platform. It will allow the player to implement any trading techniques and systems, improve their performance and just get a few more sources for finding signals. And yet, it is not such a common option in terminals. They usually have the MA tool. In case it is not present in any platform, you can install it if there is such an option. Thus, in the MT4 platform you can install various tools, robots and advisors on your own.

In order to add to this trading solution MA, you need to find its files on the Internet, you can download them for free from our website here. Now you can continue to work. It is necessary to enter the data directory, located at the top left and click the button “Open Data Directory”:

How to install an indicator in MT4? 1. Find indicator file

Now, in the folder that opens, find the “MQL4” folder, and then find the “Indicators” folder:

How to install an indicator in MT4? 2. Find the folder "Indicators"

It contains the tools that were previously installed in the program:

How to install an indicator in MT4? 3. Install the indicator in this folder

Here you just need to copy the indicator files. Everything, the tool is already in the terminal, you need to restart the program (that is, terminate the work and open it again), see if it is installed in the folder of custom indicators.

WMA trade signals

WMA Price Crossing:

  • If the value line breaks through the slider and goes up from the bottom, it is a good buying opportunity.
  • If it breaks through the slider and heads downward, it’s a selling opportunity.

Intersection of two WMAs:

His two lines allow the trader to get a more complete picture and make clear conclusions, guided by this logic:

  • When the “fast” moving average (red, 100) crosses the “slow” moving average (blue, 200) from the bottom to the top, it is a great buying opportunity.
  • If the lines move from top to bottom when crossed, it is an opportunity to sell.

Signals of support/resistance levels:

The WMA is a powerful tool that can be used as resistance/support levels, for example with settings of 100, 200 and 300. This will generate simple, yet profitable data on the state of the asset:

The signal for entry here can be that every subsequent decline and peak should be higher than the previous ones. In the opposite situation it is possible to sell. Here you should also pay attention to the fastest line, which, heading down, can cross the other two muwings.

WMA Signals in MetaTrader 4

  • Price crossing the WMA line

Buying Call Options:

WMA Signals in MT4: Buying a Koll Option

Buying PUT options:

WMA Signals in MT4: Buying a PUT option

  • Crossing two WMAs

Acquisition of KOLL contracts:

WMA Signals in MT4: Buying an Up Option

Acquisition of PUT contracts:

WMA Signals in MT4: Buy Option DOWN

  • Support/resistance level signals

Let’s add 3 WMAs to the chart with the following settings: WMA 100 (blue), WMA 200 (red) and WMA 300 (yellow). A signal for entry here could be that each successive dips and peaks should be higher than the previous ones:

Acquisition of KOLL contracts:

WMA Signals in MT4: Buying Koll Contracts

Acquisition of PUT contracts:

WMA Signals in MT4: Purchase of PUT Contracts

WMA Signals in MetaTrader 5

  • Price crossing the WMA line

Acquisition of an UP contract:

WMA Signals in MT5: Buying a Koll Option

Acquisition of a DOWN contract:

WMA Signals in MT5: Buying a PUT option

  • Crossing two WMAs

Opening a contract upwards:

WMA Signals in MT5: Buying an Up Option

Opening the contract DOWN:

WMA Signals in MT5: Buy Option DOWN

  • Support and resistance level signals

Contract UP:

WMA Signals in MT5: Buy Contract UP

Contract DOWN:

WMA Signals in MT5: Buy Contract DOWN

WMA Signals at Olimp Trade

  • Price crossing the WMA line

Acquisition of an UP contract:

WMA Signals at Olimp Trade: KOLL Options

Acquisition of a DOWN contract:

WMA Signals at Olimp Trade: PUT Options

  • Crossing two WMAs

Opening a contract upwards:

WMA Signals at Olimp Trade: Options UP

Opening the contract DOWN:

WMA Signals at Olimp Trade: Options DOWN

  • Support and resistance level signals

Contract UP:

WMA Signals at Olimp Trade: Koll Contracts

Contract DOWN:

WMA Signals at Olimp Trade: PUT Contracts

WMA Signals at Binomo

  • Price crossing the WMA line

Acquisition of an UP contract:

WMA Signals at Binomo: Koll Trades

Acquisition of a DOWN contract:

WMA Signals at Binomo: PUT deals

  • Crossing two WMAs

Opening a contract upwards:

WMA Signals at Binomo: Up trades

Opening the contract DOWN:

WMA Signals at Binomo: DOWN deals

  • Support and resistance level signals

Contract UP:

WMA Signals at Binomo: Koll Options

Contract DOWN:

WMA Signals at Binomo: PUT Options

Strategies for trading with WMA

This trading system is popular with forex players and, after optimization, with options traders. It is especially common among professionals, it is easily mastered by beginners as well. Its difference is that it is able to generate simple and clear signals based on the available tools, allows you to increase your capital daily up to 100%, which is certainly attractive. Simple and clear tools are used here: they are EMA (28 and 18) and WMA (8 and 5). Then you can start working by taking an UP position when the WMA lines break up the EMA lines. The opposite bet is made when the WMAs break down the EMAs.

Another technique that uses the WMA in its work and is able to solve the main problem of trading, which is to find trends. This is a universal system capable of generating up to 87% of positive contracts. Its advantage is that it uses simple tools understandable to a player of any experience: these are RSI, Alligator and 2 WMAs (125, 75). After adding them to the asset chart, you can start working: implement trades to the DOWN at the set of signals, according to which the RSI demonstrates a downward mood, the Alligator crosses both WMAs downwards, and they are crossed in the same direction; implement trades to the UP at the set of signals, according to which the RSI demonstrates an upward mood, the Alligator crosses up both WMAs, and they are crossed in the same direction.

With a trading methodology like “Chester”, trading will be a simple and effective activity, increasing your deposit by 87%. It is a versatile and highly profitable system that generates accurate data to work with, while building on simple tools: 3 WMA (50, 75 and 100), EMA (20, 30 and 40) and MACD (25, 50, 10). Further, it is possible to make bets: UP when the combination of signals of the instruments, according to which the EMA, showing the upward trend, crosses the WMA, while the MACD moving average crosses the technical scale upwards; and DOWN when the combination of signals of the instruments, according to which the EMA, showing the downward trend, crosses the WMA, while the MACD moving average crosses the technical scale downwards.

This approach to trading is also based on the readings of highly accurate and efficient instruments. Working with this strategy is safe and reliable, and you can make up to 86% of profit per account. To form a pattern you will need Bollinger Bands, MACD and 3 WMAs (5, 15 and 10). Now you can start looking for signals allowing you to make a Koll bet if the WMA, following the upward price sentiment, crosses the middle Bollinger muving, the MACD breaks up the midpoint of the scale; and PUT bets if the WMA, following the downward price sentiment, crosses the middle Bollinger muving, the MACD breaks down the midpoint of the scale.

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