The Weighted Moving Average emphasizes recent price action, helping commodity traders spot trend changes and smoother entry or exit signals faster than a simple average.
What Is the Weighted Moving Average?
The weighted moving average (WMA) places more importance on recent price moves. Therefore, the WMA reacts more quickly to price changes than the regular simple moving average.
How to Calculate WMA
Here is a basic example (three-period) of how the weighted moving average is calculated:
- Prices for the past three days have been $5, $4, and $8.
- Since there are three periods, the most recent day ($8) gets a weight of 3, the second most recent day ($4) receives a weight of 2, and the first day ($5) receives a weight of just 1.
- The calculation is as follows: [(3 x $8) + (2 x $4) + (1 x $5)] / 6 = $6.17
Now compare the weighted moving average value of 6.17 to the simple moving average calculation of 5.67. Note how the large price increase that occurred on the most recent day was better reflected in the weighted moving average calculation.
WMA Chart Example
This chart of Wal-Mart stock illustrates the visual difference between a 10-day weighted moving average and a 10-day simple moving average.
Potential buy and sell signals for the weighted moving average indicator are discussed in-depth on the simple moving average indicator page.
Where to Trade Commodities Using Technical Analysis
Further Reading on Trend Indicators
These trend tools complement Weighted Moving Average: Andrew’s Pitchfork, Gann Fans, and Triangular Moving Average.
FAQ
What Does Weighted Moving Average Forecast?
The weighted moving average (WMA) measures market momentum by assigning more weight to recent data than to past data.
This is done by giving each data point a different weighting factor based on its recency. The resultant moving average follows prices more closely than a simple moving average for the same period.
Technical analysis is most widely used in CFD and forex trading. If you’re ready to apply these techniques, browse our vetted CFD brokers or forex brokers.
Update history
This page was revised 5 times between August 2020 and April 2026.
Added promotional content linking to broker listings in the forecast section.
Removed introductory definition and broker comparison section, consolidated Further Reading into a focused trend indicators resource.
Added introductory overview, table of contents, broker comparison table, expanded FAQ section with new answer, restructured Further Reading with cross-links to related indicators, and refined existing explanations for consistency and clarity.
Added call-to-action alert component before the Further Reading section.
Corrected spelling of "occured" to "occurred" and reorganized example formatting for better readability.
The Commodity Briefing
The stories behind the prices. Surprising, useful, occasionally weird - in your inbox every weekday.
- Price moves
- Supply shocks
- Macro drivers
Before you go
Get The Commodity Briefing - free, 2 minutes.