Weighted Moving Average
Weighted moving averages are difficult to construct but more reliable than the simple moving averages, where the average has a tendency to "bark twice": once at the start of the moving average period and again at the end of the period.
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A Weighted moving average (WMA) attaches greater weight to the most recent data. The weighting is calculated from the sum of days.
Example: For a 5-day weighted moving average the Sum of Days is 1+2+3+4+5 = 15
The weighting is shown below:
|5 Day WMA||15.07|
Weighted values are calculated by multiplying today's price by 5/15, yesterday by 4/15, and so on. The weighted moving average is the sum of the 5 weighted values.