Weighted Moving Average (WMA): Giving Recent Prices More Weight
The Weighted Moving Average assigns a linearly decreasing weight to older prices. Learn the WMA formula, how it differs from the EMA, and when it shines.
Weighted Moving Average (WMA): Giving Recent Prices More Weight
Between the equal-weight SMA and the exponential EMA sits a third option: the linearly weighted moving average.
The Weighted Moving Average (WMA) assigns a linearly decreasing weight to each price, so the most recent close matters most and the oldest matters least. It reacts faster than the SMA but in a more predictable, linear way than the EMA.
The WMA formula
Each period gets a weight equal to its position in the sequence. For an N-period WMA, the most recent price gets weight N, the next N−1, and so on down to 1.
WMA = (P1×1 + P2×2 + ... + PN×N) / (1 + 2 + ... + N)
The denominator is the sum of the first N integers:
Sum = N × (N + 1) / 2
Worked example — a 5-period WMA with closes $20, $21, $19, $22, $23 (oldest to newest):
Numerator = 20×1 + 21×2 + 19×3 + 22×4 + 23×5
= 20 + 42 + 57 + 88 + 115 = 322
Denominator = 5 × 6 / 2 = 15
WMA = 322 / 15 ≈ $21.47
Compare that with the plain SMA of $21 — the WMA is pulled higher because the largest recent close ($23) carries the most weight.
WMA vs SMA vs EMA
| Feature | SMA | WMA | EMA |
|---|---|---|---|
| Weighting | Equal | Linear decrease | Exponential decay |
| Responsiveness | Slowest | Middle | Fastest |
| Smoothness | Smoothest | Middle | Least smooth |
| Calculation | Simple | Moderate | Recursive |
When the WMA shines
- Custom weighting needs — some platforms only expose the WMA, not the EMA
- Hybrid traders — those who want faster reaction than SMA without the EMA's recursive compounding
- Hull Moving Average — the popular Hull MA is built from two WMAs; it's smoother and lags less than either the SMA or EMA alone
Popular WMA settings
- 10 WMA — short-term momentum
- 20 WMA — swing-trading dynamic support
- 50 WMA — medium-term trend filter
How to read it
- Price above a rising WMA — bullish bias
- Price below a falling WMA — bearish bias
- Crossovers — a fast WMA crossing a slow WMA is a classic signal, but confirm with trend strength before acting
Common mistakes
- Confusing WMA with EMA — both weight recent prices, but the WMA's weights are linear and stop after N periods, while the EMA's decay continues forever
- Over-trading crossovers in a flat market
- Ignoring the slope — a flat WMA means no trend
How to start
- Add a 20 WMA alongside a 50 SMA for a balanced view
- Use the WMA for entries, the SMA for trend context
- Pair every signal with a pre-set stop using the stop loss calculator
- Size positions before entry with the position size calculator
Summary
The WMA is the middle child of moving averages — more responsive than the SMA, more linear than the EMA. It's a solid choice on platforms where you want recent-price emphasis without exponential weighting, and it's the building block of the popular Hull Moving Average.