WMA 20 200 Crossover (Trend)

The golden cross on weighted averages: buys when the 20-bar weighted moving average crosses above the 200-bar and sells when it crosses back below.

How It Works

1. Compute two weighted moving averages of the close: a fast one over 20 bars and a slow one over 200.
2. Buy when the fast WMA crosses above the slow one — the same golden-cross idea as the 50/200 simple averages, but weighted, so both lines turn toward new prices sooner.
3. Sell when the fast WMA crosses back below the slow one. The 200-bar anchor makes this the slowest of the crossover pairs: few trades, each meant to last a whole trend.

Worked example. WMA20 climbs from 97.8 to 98.4 while WMA200 edges from 98.1 to 98.2 — the fast average has crossed above the slow one, so buy. Months later WMA20 slides back under WMA200 and the position is sold.

The Math Behind The Indicators

Everything runs on closing prices of the traded timeframe: P is a close, P_t today's close, and N counts bars — one bar is one candle of that timeframe, so 20 bars on a 1h chart is 20 hours.

Weighted Moving Average (WMA)

A moving average where newer prices count more: the latest close gets weight N, the one before N − 1, down to weight 1 for the oldest. That makes it react to a turn in price sooner than a plain average.

\[\mathrm{WMA}_N = \dfrac{N \cdot P_t + (N-1) \cdot P_{t-1} + \cdots + 1 \cdot P_{t-N+1}}{N + (N-1) + \cdots + 1}\]

Example: With N = 3 and closes 100, 102, 104 (oldest to newest): (1·100 + 2·102 + 3·104) / (1 + 2 + 3) = 616 / 6 ≈ 102.67 — pulled closer to the latest price than the plain average of 102.

Example Chart

Real Data58/ 100Composite score

Metrics Per Trade

Final Metrics

Scores

Resampled Data66/ 100Composite score

Metrics Per Trade

Final Metrics

Scores