Weighted Moving Average is one of the most widely used trading indicators that you can easily use to find an upcoming trends and reversals. In this article, I will share everything about Weighted Moving Average and how you can this indicator to place high-quality trades.
Learn how to set Weighted Moving Average on Quotex
To add the WMA indicator to a chart on Quotex, follow these steps:
- Firstly, log in to your Quotex account. In case, you don’t have one click here.
- Click on the “Indicators” button and search for the Weighted moving average indicator in the list.
- Select “Weighted Moving Average” from the list of available indicators.
- Now, Adjust the configuration of the indicator, including the number of periods, the colour of the indicator line, and more.
- Once you are done. click “Apply” to add the indicator on the chart.
About Weighted Moving Average
Weighted Moving Average is one of the family members of moving averages. This indicator is one of the most widely used indicators and is considered one of the most accurate indicators. You can use this indicator to identify the possible trends and reversals in the financial market of a security.
This indicator is very much similar to a Simple moving average in simple moving average you need to calculate the average price of an asset over a certain period of time however, the weighted moving average assigns weight to the most recent price data in the calculation therefore, most traders prefer weighted moving average over the simple moving average because of its accuracy.
The formula for the Weighted moving average can be:
WMA = (Pn x n) + (Pn-1 x (n-1)) + (Pn-2 x (n-2)) + … + (P1 x 1) / (n + (n-1) + (n-2) + … + 1)
Pn is the most recent price
n is the number of periods in the WMA
How to trade with Weighted Moving Average on Quotex?
There are two ways of trading with Weighted Moving Average on the Quotex trading platform.
- Single Weighted Moving Average: Single Weighted Moving Average (SWMA) is the basic way of using this indicator. here, you need to focus on the intersection of the price and the indicator line. when the price intersects above the indicator line consider a bullish trend vice versa when the price intersects below the indicator line consider a bearish trend.
- Double Weighted Moving Average: Double Weighted Moving Average (DWMA) is an advanced way of using this indicator. here, you need to focus on the intersection of two lines i.e short period moving average line and a long moving average line. when the short-period moving average line intersects above the long-period moving average line consider a bullish trend and vice versa when the short-period moving average line intersects below the long-period moving average line consider a bearish trend.
Single Weighted Moving Average
Trading with a single weighted moving average is very easy. Firstly, click on the indicator button and select the moving average indicator from the menu next set the type to WMA and change the colour and period of the same.
When the WMA line is moving below the price it points toward an upcoming bearish trend and here you can place a sell trade.
Similarly, when the WMA line is moving above the price it points toward an upcoming bullish trend and here you can place a buy trade.
Double Weighted Moving Average
Now, talking about the double Weighted Moving Average. firstly you need to set the two Weighted Moving averages with periods 15 and 31.
Firstly, click on the indicator button and select the moving average from the list. now, change the periods of two moving averages to 15 and 31 and select the type as weighted and choose two different colours for better visibility.
Trading with the combination of two weighted moving averages is very easy. you just need to focus on the intersection of two lines.
When the two lines intersect each other and line 15 is moving below line 31. It signals a bearish trend and here you can place sell trade.
Similarly, When the two lines intersect each other and line 15 is moving above line 31. It signals a bullish trend and here you can place a buy trade.
So, I have done my job and I hope you must have understood the concept of Weighted Moving Average. Trading with the indicator is easy. You just need to focus on intersection. I will highly suggest you try this trading strategy on the Quotex demo account. Sign up using this link and you will get $10000 on demo account with up to a 50% welcome bonus.