Weighted Moving Average Indicator MT4 | MT5

The WMA Indicator on MetaTrader 4 is a trend-following indicator that gives weight to recent price data, allowing traders to respond to market changes more quickly compared to the simple moving average.

In addition, on MT5 as well, this indicator is particularly useful for trend identification, acting as a dynamic support and resistance level, helping traders identify key entry and exit points.

The VMA can be applied to various timeframes, making it suitable for both short-term scalping and long-term trading strategies. Here below its formula that shows how the indicator combines both price and volume :

• VMA =  ( P1*W1 + P2*W2 +..+ Pn*Wn ) / ( W1 + W2 +..+ Wn )

Where;

• Pi: is the price of the specific period i
• Wi: is the weight of Pi

In the CHFJPY chart on metatrader 4, at the start of the uptrend, the WMA line changes color, signaling a buying opportunity. As the price rises and reaches its peak, the VMA line moves closer to it then crosses it and turns red, indicating a reversal. This marks the beginning of a downtrend, giving a short opportunity to the trader.

In the EURUSD chart on metatrader 5, at the beginning of the downtrend, there is a change of color of the WMA line that signals a short opportunity. The price continues to decline until it reaches the bottom, where the line moves closer, crosses the price, and turns lime. This signals a reversal, making the start of an uptrend, and presenting a buy opportunity.

To enhance accuracy in market predictions, traders should use the VMA indicator in combination with other technical analysis indicators, such as RSI or MACD.