Weighted Moving Average

 

Introduction
A weighted moving average is designed to put more weight on recent data and less weight on past data. A weighted moving average is calculated by multiplying each of the previous day’s data by a weight. The following table shows the calculation of a 5-day weighted moving average.

5 Day Weighted Average

Day#

Weight

 

Price

Weighted

       

Average

1

1

*

25.00

=

25.00

       

2

2

*

26.00

=

32.00

       

3

3

*

28.00

=

84.00

       

4

4

*

25.00

=

100.00

       

5

5

*

29.00

=

145.00

       
Totals

15

*

133.00

=

406.00

/

15

=

27.067

Each of these moving averages can be shown against the existing candlestick graph or it can be plotted with each other