WMA 20 50 200 Stack (Trend)
Buys when the 20/50/200 weighted moving averages stack bullishly — fast above mid above slow — and sells when the fast average drops back below the mid.
How It Works
- Compute three weighted moving averages over 20, 50 and 200 bars.
- Buy when they stack bullishly — fast above mid above slow. With a 200-bar anchor this is the slowest confirmation of the three stack strategies: fewer signals, but only in established trends.
- Sell when the fast average drops back below the mid.
Worked example. WMA20 = 105 crosses above WMA50 = 104.2 while both already sit above WMA200 = 98 — the stack aligns, so buy. When WMA20 later dips back under WMA50, the position closes.
The Math Behind The Indicators
Everything runs on closing prices of the traded timeframe: P is a close, Pt 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.