Moving Average (MA) is a technical analysis tool used to analyze price trends in financial markets. It is calculated by averaging the prices of an asset over a specified time period and then plotting the resulting line on a price chart.
For example, a 10-day moving average would be calculated by taking the average closing price of the asset for the past 10 days. Each day, the oldest price is removed from the calculation, and the most recent price is added. This creates a moving average line that changes over time as new prices are added and old prices are dropped.
There are different types of moving averages like SMA, EMA, TMA & more.
In this article I will be discussing about WMA or you can call it Weighted Moving Average, this moving average is considered the most reliable moving average as it gives weight to the most recent price data of the security.
The WMA (Weighted Moving Average) indicator is a popular technical analysis tool used by traders to identify trends and potential buy or sell signals in the market. If you’re an intraday trader on IQ Option, the WMA indicator can be a useful tool to incorporate into your trading strategy.
How to configure and trade WMA on IQ option for Intraday traders?
In Intraday trading, you need to use a short-period chart like 10 min or 15 mins plus and the short-period WMA.
Firstly, log in to your IQ option account and click the indicator button. now click on the moving average and select type as WMA. lastly,, set the period to 7 and increase the width of the line for better visibility.
Again, select one more WMA and set the period to 15 and make sure to change the colour of the indicator line and increase the width of the same.
Now, you need to focus on the intersection of the above two lines. When the line 7 line is above line 15 after the intersection it signals an upcoming bullish trend. Similarly, and when line 7 is below line 15 after the intersection it signals an upcoming bearish trend.
How to configure and trade WMA on IQ option for Swing traders?
In Swing trading, you need to use a bit longer duration chart like 30 minutes or 1 hour and similarly long period WMA like 50 to 100.
Firstly, click on the indicator button and select WMA just like above. Now, set the timer of the first WMA to 100 and the other one to 200.
When these two intersect each other and line 100 is above line 200 it signals an upcoming bullish trend and here we can place a buy trade.
Similarly, when line 100 is below line 200 it signals an upcoming bearish trend and here we can place a sell trade with the accordance of chart frame.
Final words
So this is how you can trade with the WMA indicator. You can also change the periods of the above two moving averages line as per your experience. what you need to remember is just focus on the intersection of the two lines and when the short period WMA line is above place a buy trade and vice versa place a sell trade when the indicator line is below.
Try the above strategy on the IQ option demo account.
