Weighted Moving Average (also WMA) is a trend indicator used to average the price of financial instruments on trading platforms.
It is a member of the Moving Average family. And like all the other moving averages, it helps identify trend directions showing relevant trend reversal points.
would easily confuse it to SMA or EMA – especially if you are just seeing it for the first time.
Here’s the differential point:
Unlike all the other moving averages, WMA assigns a certain rating (a weight) for each price – adding significance to more recent data points. This makes it the best in the family for analyzing recent prices and for reacting quickly to changes in asset prices.
How to Activate the WMA Indicator in Olymp Trade.
If you already have a trading account, login and follow the instructions below to activate the indicator.
If you don’t have a trading account, register here to apply the strategy on a DEMO account.
- Now locate the indicator button on your chart to view all indicators.
- Scroll to WMA and click on it once to activate.
Maintain the indicator at period 14 and only change the colors/thickness if you need to.
The moving average period is the number of closing prices on which it is built.
Opening Quality Trades in Olymp Trade with the WMA Indicator.
There are a number of things which you need to ensure are in place before opening any directional trade with WMA.
The first thing which you need to confirm is if there is a clear trend on the asset you are trading. WMA is known to clearly show trends.
The second thing you need to be keen in is the intersection points between WMA and the chart.
- If the moving average crosses the chart from the top going down, consider that your signal to open a down trade.
- Similarly, if there is a bottom up intersection of the WMA to your chart, consider that a signal to open an UP trade.
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