IWMA - DolphinTradeBot

24. März

1️⃣WHAT IS IT ?

▪️ The Inverted Weighted Moving Average (IWMA) is the reversed version of WMA, where older prices receive higher weights, while recent prices receive lower weights. As a result, IWMA focuses more on past price movements while reducing sensitivity to new prices.

2️⃣HOW IS IT WORK ?

🔍 To understand the IWMA(Inverted Weighted Moving Average) indicator, let's first look at how WMA (Weighted Moving Average) is calculated.

LET’S SAY WE SELECTED A LENGTH OF 5, AND OUR CURRENT CLOSING VALUES ARE [10, 12, 21, 24, 38].

▪️WMA Calculation Method
When calculating WMA, the most recent price gets the highest weight, while the oldest price gets the lowest weight.

The Calculation is ;
(10×1)+(12×2)+(21×3)+(24×4)+(38×5) = 10+24+63+96+190 = 383
1+2+3+4+5 = 15
WMA = 383/15 ≈ 25.53
WMA = ta.wma(close,5) = 25.53

▪️IWMA Calculation Method
The Inverted Weighted Moving Average (IWMA) is the reversed version of WMA, where older prices receive higher weights, while recent prices receive lower weights. As a result, IWMA focuses more on past price movements while reducing sensitivity to new prices.

The Calculation is ;
(10×5)+(12×4)+(21×3)+(24×2)+(38×1) = 50+48+63+48+38 = 247
1+2+3+4+5 = 15
IWMA = 247/15 ≈ 16.46
IWMA = iwma(close,5) = 16.46

3️⃣SETTINGS

in the indicator's settings, you can change the length and source used for calculation.

With the default settings, when you first add the indicator, only the iwma will be visible. However, to observe how much it differs from the normal wma calculation, you can enable the "show wma" option to see both indicators with the same settings or you can enable the Show Signals to see IWMA and WMA crossover signals .

4️⃣ 💡 SOME IDEAS

You can use the indicator for support and resistance level analysis or trend analysis and reversal detection with short and long moving averages like regular moving averages.

Another option is to consider whether the iwma is above or below the normal wma or to evaluate the crossovers between wma and iwma.

24. März

Versionshinweise

src changed