DWMA

Delta Weighted Moving Average

Click here to read about Moving Averages.

 

Similar to the Simple Moving Average. The way in which the DWMA differs is that it is weighted according to the size of the price difference, at any point. Similar to the Adaptive Moving Average, this provides a moving average which is slow during periods of inactivity, but responds exceptionally quickly to substantial changes in price. The 'Exponent' parameter changes the sensitivity of the moving average. For example, if the exponent is high, then the moving average will only adjust when there is a large change in the price(s). Conversely, if the exponent is low, then the moving average will be sensitive to any change, and will follow the price line more closely. The period of the moving average can also be changed under "edit".

 

Parameters: Period & Exponent.

For additional help on what the different parameters mean, that isn't included on this page, click here.


Delta Weighted Moving Average

Delta Weighted Moving Average

Here is an example of a Delta Weighted Moving Average chart study (on a London Stock Exchange graph)


Reading the study:

The DWMA gives signals in much the same way as the Weighted Moving Average, but should be much faster in identifying the end of a trend. A buy signal is generated when the price goes higher than the DWMA, while a sell signal is generated when the price stays, or moves, below the DWMA.


The Delta Weighted Moving Average is an ADVFN exclusive study (-hyperlink-).


DWMA Crossings

DWMA Crossings

Here is an example of a DWMA crossing the price line (of the London Stock Exchange), and what it may indicate




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