Forex Indicator - Weighted Moving Average (WMA)
Weighted Moving Average (WMA) forex indicator is an average value times with weighted factors that different to data points. In term of analysis technical WMA have their special intention which the weighted experienced an arithmetic contraction. At any n-th day, the latest n-weight and the value of n2-weight is n-1 until its reached zero value.
Simple calculation can be described here:
Totaltoday = Totalyesterday + p1 ? pn + 1
Numeratortoday = Numeratoryesterday + np1 ? Totalyesterday
Recommended Setting
For forex indicator WMA setting, 3 types of setting has been used i.e. WMA5, WMA20, and WMA 100. To display the forex indicator WMA as shown above the step must be follow:
Forex Indicator - WMA5 (Red)
Step1 - Display the Box
Open metatrader forex trading platform and click on Insert > Indicator > Trend > Moving Average. The following box will appear and make setting as shown in the picture below:
Step2 - Parameter
Step3 - Visualization
Forex Indicator - WMA20 (Green)
Step1 - Display the Box
Open metatrader trading platform and click on Insert > Indicator > Trend > Moving Average. The following box will appear and make setting as shown in the picture below:
Step2 - Parameter
Step3 - Visualization
Forex Indicator - WMA100 (Blue)
Step1 - Display the Box
Open metatrader trading platform and click on Insert > Indicator > Trend > Moving Average. The following box will appear and make setting as shown in the picture below:
Step2 - Parameter
Step3 - Visualization
How To Use It?
Open Buy Position:
- Before any BUY position can be open in forex, make sure that WMA5 (Red) crossed WMA20 (Green).
- If WMA5 (Red) & WMA20 (Green) has crossed each other AND closed to WMA100 (Blue) for another crossed, then BUY position can be hold. The reason was when WMA5 (Red) & WMA20 (Green) crossed at WMA100 (Blue), the value or bullish rate will increasing from current value.
- By using WMA Method, we will facing the problem to set the maximum pip unless we refer to another forex indicator as guide to closed BUY position.
- Though, if BUY position has been made (you now have opened BUY position), when WMA5 (Red) crossed with WMA20 (Green) then close opened position after the crossed happen. That means when WMA20 (Green) crossing with WMA5 (Red) any opened BUY position must be CLOSED.
Open Sell Position:
- Before any SELL position can be open in forex, make sure that WMA20 (Green) crossed with WMA5 (Red).
- If WMA20 (Green) & WMA5 (Red) has crossed each other and moving closed to WMA100 (Blue) for futher crossing, SELL position can be hold. The reason was when WMA20 (Green) & WMA5 (Red) crossing at WMA100 (Blue) the value or bearish rate will increasing from current value.
- By using WMA Method, we will facing the problem to set the maximum pip unless we refer to another forex indicator as guide to closed SELL position.
- Though, if SELL position has been made (you now have opened SELL position), when WMA20 (Green) crossed with WMA5 (Red) then close opened position after the crossed happen. That means when WMA5 (Red) crossing with WMA20 (Green) any opened SELL position must be CLOSED.
Important Thing About WMA
It is not suitable to use forex indicator WMA5, WMA20 and WMA100 ‘alone’. The reason was forex indicator WMA5, WMA20 and WMA100 were not consistent in term of trend. Too many FALSE SIGNAL can be generate by this forex indicator. The FALSE SIGNAL generated more frequently if small TIMEFRAME was used i.e. M1,M5,M15 & M30. So another forex indicator must be used together with WMA as FILTER to avoid the false signal.
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