Weighted Moving Average

What is the Weighted Moving Average?

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The WMA is similar to the SMA but with one important twist: it gives a linearly increasing weight to each data point. The most recent price gets the highest weight, the second most recent gets a bit less, and so on. This makes the WMA react faster to recent price changes than the SMA — but in a more controlled way than the EMA. Think of it as the middle ground between the SMA's steadiness and the EMA's reactivity. The result is a smooth trend line that still respects what the market is doing right now.

How Does It Work?

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The bot computes the WMA on closing prices and watches its slope. When the WMA slope is positive (weighted average rising), it signals Buy — recent prices are pushing the average higher. When the slope turns negative, it signals Sell. The minimum window is 3 periods. The linear weighting provides a nice balance between responsiveness and stability.

Using It in BitThor

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Select Weighted Moving Average from the indicator list. The WMA works well standalone or alongside other moving averages. Some traders use WMA crossovers with the SMA: when the faster WMA crosses above a slower SMA, it signals a trend change. Adjust the decision rounds to control the lookback period.

Tips for Beginners

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• The WMA sits nicely between the steady SMA and the reactive EMA. Try all three and see which feels right for your trading style.

• WMA crossovers with the SMA are a reliable way to spot trend changes — worth experimenting with in simulation mode first.

• Shorter WMA periods suit scalping strategies; longer periods are better for swing trading approaches.

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Indicator by: BitThor | Learn more