Weighted Moving Average (20)
The Weighted Moving Average (20) is a moving averages indicator used in Skyrexio Strategy Builder for trend following and dynamic support/resistance.
Introduction
Assigns different weights to data points, with more recent prices receiving higher weights. More responsive than SMA but less smooth than EMA.
How Weighted Moving Average (20) Works
The Weighted Moving Average (WMA) assigns different weights to each price point, with the most recent price receiving the highest weight. The weight decreases linearly for older prices. Calculation: WMA = (P1×n + P2×(n-1) + ... + Pn×1) / (n + (n-1) + ... + 1).
In crypto strategy building, WMA is used for:
• Balanced responsiveness - More responsive than SMA but smoother than some EMAs • Trend following - Good for medium-term trend identification • Support/Resistance levels - Provides dynamic levels that adjust to recent price action • Crossover strategies - Similar to SMA but with faster signals
WMA gives more importance to recent data while still considering historical prices, making it useful when you want responsiveness without excessive noise.
Key Characteristics
Category: Moving Averages
Type: Technical Indicator
Application: Trend Following And Dynamic Support/Resistance
Timeframe: All timeframes supported (1m to 1M)
Using Weighted Moving Average (20) in Skyrexio Strategy Builder
Base Order Entry Conditions
Example Configuration:
First Condition: Close Price
Timeframe: 1H
Operator: Cross Above
Second Condition: Weighted Moving Average (20)This creates a signal based on the Weighted Moving Average (20) meeting the specified criteria.
Practical Applications
Entry Signal
Weighted Moving Average (20) meets threshold
Trending markets
Confirmation
Combine with volume
All conditions
Exit Signal
Weighted Moving Average (20) reversal
Profit taking
Risk Management
Weighted Moving Average (20) extreme values
Risk assessment
Advanced Applications
Multi-Timeframe Analysis
Combine different timeframes for robust signals:
Rule 1: Weighted Moving Average (20) (4H) meets condition
AND
Rule 2: Weighted Moving Average (20) (1H) confirms signalIndicator Combinations
Effective Combinations:
Weighted Moving Average (20) + Volume indicators (confirmation)
Weighted Moving Average (20) + Moving averages (trend context)
Weighted Moving Average (20) + Other momentum indicators (signal validation)
Take Profit and Stop Loss Applications
Take Profit Strategies
Multiple Rules Example:
Rule 1: Exit condition - Price reaches weighted resistance level
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: Weighted Moving Average (20)
Value: 1.06
OR
Rule 2: Exit condition - TRIX momentum decline
First Condition: TRIX (30)
Timeframe: 1H
Operator: Cross Below
Second Condition: Value
Value: 0.02
OR
Rule 3: Exit condition - Volume confirming trend exhaustion
First Condition: Volume
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Value: 0.7Stop Loss Applications
Multiple Rules Example:
Rule 1: Stop loss - Price breaks WMA weighted support
First Condition: Close Price
Timeframe: 1H
Operator: Cross Below
Second Condition: Weighted Moving Average (20)
OR
Rule 2: Stop loss - Stochastic RSI %K oversold
First Condition: Stochastic RSI %K
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 0.12
OR
Rule 3: Stop loss - CCI extreme reading
First Condition: CCI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: -180Weighted Moving Average (20) Strategy Bot
Configuration:
Base Order: Weighted Moving Average (20) condition as defined above
Additional Entries: Price Change mode, 2% intervals
Take Profit: 5% and 10% levels
Stop Loss: Indicator reversal OR 3% loss
Risk Management
Position Sizing
Use Weighted Moving Average (20) to assess market conditions:
Strong Signals: Full position size
Weak Signals: Reduced position size
Conflicting Signals: Avoid trading
Market Adaptation
Adjust Weighted Moving Average (20) parameters based on:
Current market volatility
Timeframe being traded
Historical performance
Skyrexio-Specific Features
AI Integration
The "Suggest with AI" button provides recommendations for:
Optimal Weighted Moving Average (20) parameters for current conditions
Best timeframes for Weighted Moving Average (20) analysis
Complementary indicators to use with Weighted Moving Average (20)
Real-Time Execution
Continuous Monitoring: 24/7 tracking across all timeframes
Instant Signals: Immediate order execution when conditions are met
Multi-Exchange: Consistent calculation across all supported exchanges
Best Practices
Entry Timing
Once per bar close: Recommended trigger type for Weighted Moving Average (20)
Confirmation: Always combine with other technical factors
Volume: Validate signals with volume analysis
Common Mistakes to Avoid
Over-optimization: Don't curve-fit parameters to historical data
Isolation: Never use Weighted Moving Average (20) as the only decision factor
Ignoring Context: Consider broader market conditions
Performance Optimization
Backtesting Guidelines
Test Weighted Moving Average (20) across different market conditions
Validate on multiple cryptocurrency pairs
Account for transaction costs and slippage
Use realistic execution assumptions
Market Conditions
Trending
High
Follow signals with trend
Ranging
Medium
Use mean reversion approach
Volatile
Variable
Reduce position sizes
Low Volume
Low
Wait for volume confirmation
Technical Considerations
Calculation Method
Weighted Moving Average (20) is calculated using:
Standard mathematical formulas
Consistent methodology across timeframes
Real-time updates with each new price tick
Parameter Optimization
Consider adjusting parameters for:
Different cryptocurrency pairs
Varying market conditions
Your risk tolerance and trading style
Conclusion
The Weighted Moving Average (20) is a valuable tool in the Skyrexio Strategy Builder arsenal for trend following and dynamic support/resistance. When used correctly with proper risk management and confirmation signals, it can significantly enhance trading performance. However, like all technical indicators, Weighted Moving Average (20) should be part of a comprehensive trading strategy that includes multiple confirmation factors.
The key to success with Weighted Moving Average (20) is understanding its strengths and limitations, combining it with other analysis techniques, and maintaining disciplined risk management. Skyrexio's AI-powered suggestions can help optimize Weighted Moving Average (20) parameters for current market conditions and your specific trading objectives.
Remember that no single indicator guarantees profitable trades. The most successful strategies combine multiple indicators, proper risk management, and sound trading psychology. Use Weighted Moving Average (20) as part of a well-rounded approach to cryptocurrency trading.
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