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WMA indicator

  • #1
  • First Post: May 18, 2004 11:28am May 18, 2004 11:28am

Hi,

I've seen the WMA (5,20) indicator mentioned in several threads and I was wondering if someone could explain how it's used to signal a trade and what other indicator/filter should be used with it and which time frame to use. Please keep in mind that I don't subscribe to a charting program, I only have access to the free charts.

Thanks,
Correy

  • #2
  • May 18, 2004 11:48am May 18, 2004 11:48am
This is the one I started using http://www.moneytec.com/forums/_show...d58ef16f419428

seems to be working out pretty good, although I did get whipsawed a few times...but the gains from the other ones made up for it. Only been using it a week so I'm still tweaking it.
  • #3
  • May 18, 2004 11:52am May 18, 2004 11:52am
Quoting Correy

Hi,

I've seen the WMA (5,20) indicator mentioned in several threads and I was wondering if someone could explain how it's used to signal a trade and what other indicator/filter should be used with it and which time frame to use. Please keep in mind that I don't subscribe to a charting program, I only have access to the free charts.

Thanks,
Correy

Simple Moving Average
SMA = SUM(PRICE, n) / n
where n = Period

Weighted Moving Average
WMA = ( PRICE * n + PRICE(1) * n-1 + ... PRICE(n-1) * 1) / ( n * (n + 1) / 2 )
n = Period

Exponential Moving Average
EMA = EMA.1 + (PRICE - EMA.1 ) * K
or
EMA = K * PRICE + (1 - K) * EMA.1

where...
K = 2 / (n + 1)
n = Period

i am testing this simple strategy:

price above rising 200 EMA:
5wma crossing above 20wma-->Long
5wma crossing below 20wma-->No position
----------
price below declining 200 EMA:
5wma crossing above 20wma-->No position
5wma crossing below 20wma-->Short
+++++++++++++++
i am thinking about ADX as a filter
----------------------------------
you can find wma in many free charting programs
i am using metatrader and my broker's package
  • #4
  • May 18, 2004 12:02pm May 18, 2004 12:02pm
Quoting guitarsg1
This is the one I started using http://www.moneytec.com/forums/_show...d58ef16f419428

seems to be working out pretty good, although I did get whipsawed a few times...but the gains from the other ones made up for it. Only been using it a week so I'm still tweaking it.
Oh Yes
BG's strategy is good...but i am using 5 min charts & market order.

i didn't try bg's cross.How are your results with it?
  • #5
  • May 18, 2004 3:16pm May 18, 2004 3:16pm
Quoting Orion602
Oh Yes
BG's strategy is good...but i am using 5 min charts & market order.

i didn't try bg's cross.How are your results with it?
Well I have been focusing more on Beau's 5M system, so I haven't used the WMA one much...I did 2 trades using it, one got me 60 pips and one lost me 20...it seems as though most crosses occur in the AM eastern time, when I'm not awake, although the ones that I caught were both on Sunday night. I will be exploring this system more in the future and will let you know if I have good results. I have alerts sent to my cell phone every time the 5 and 20 cross, but so far there have been a lot of false signals (which is what the filter helps with) that I subjectively decide not to get in on.
  • #6
  • May 18, 2004 7:18pm May 18, 2004 7:18pm

Quote
This is the one I started using http://www.moneytec.com/forums/_sho...1d58ef16f419428

Is this more of a day trade method or could it be used for position trading?

  • #7
  • May 18, 2004 8:50pm May 18, 2004 8:50pm
Quoting Correy



Is this more of a day trade method or could it be used for position trading?

I'm actually not sure, the person who designed it said that she would get 1 or 2 good trades from the crosses per day on each currency, and it only applies to GBP/USD, USD/CHF, and EUR/USD. So I guess this would be considered daytrading, but I'm not up on all the terms so I honestly don't know.
  • #8
  • May 19, 2004 9:44am May 19, 2004 9:44am
Has anyone had any success trading this method "cross to cross"?
  • #9
  • Last Post: Oct 21, 2005 11:59pm Oct 21, 2005 11:59pm
Quoting Correy

Hi,


I've seen the WMA (5,20) indicator mentioned in several threads and I was wondering if someone could explain how it's used to signal a trade and what other indicator/filter should be used with it and which time frame to use. Please keep in mind that I don't subscribe to a charting program, I only have access to the free charts.

Thanks,
Correy

You must know that it's a moving average after all, so it's a trend following indicator. It will work perfectly with the right setup while the market is trending, and will kill you when the market is ranging, just as all other types of moving averages.

Signals is the same as how other types of moving averages are used. Double crosses, triple crosses, price break, and so on.

The best filter is any trend confirmation method. Some traders use ADX to confirm the trend, some use the channel breakouts, some use trendlines, some use their eyes to determine the existence of a trend, etc...In short, you must use what best fits you and what you feel more familiar with. Just use what you understand and like, and your probability of success will greatly increase


Thanks,

Nader
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