Moving averages are one of the most popular tools used by active traders to measure momentum. The primary difference between the simple moving average and the weighted moving average is the formula used to create them. For a simple moving average, the formula is the sum of the data points over a given period divided by the number of periods. For example, the closing prices of Apple Inc (AAPL) from June 2026, 2014 were as follows:
Date 
Closing Price of AAPL 
June 26 
$90.90 
June 25 
$90.36 
June 24 
$90.28 
June 23 
$90.83 
June 20 
$90.91 
A 5period moving average, based on the prices above, would be calculated using the following formula:
(P1+P2+P3+P4+P5)/5
P = Period
($90.90+$90.36+$90.28+$90.83+$90.91)/5 = $90.656
Based on the equation above, the average price over the period listed above was $90.66. Using moving averages is an effective method for eliminating strong price fluctuations. The key limitation is that data points from older data are not weighted any differently than data points near the beginning of the data set. This is where weighted moving averages come into play.
Weighted averages assign a heavier weighting to more current data points since they are more relevant than data points in the distant past. The sum of the weighting should add up to 1 (or 100%). In the case of the simple moving average, the weightings are equally distributed, which is why they are not shown in the table above.
For example:
Date 
Closing Price of AAPL 
Weighting 
June 26 
$90.90 
5/15 
June 25 
$90.36 
4/15 
June 24 
$90.28 
3/15 
June 23 
$90.83 
2/15 
June 20 
$90.91 
1/15 
The weighted average is calculate by multiplying the given price by its associated weighting and then summing the values. In the example above, the weighted 5day moving average would be $90.62.
Calculation
((90.9*(5/15))+(90.36*(4/15))+(90.28*(3/15))+(90.83*(2/15))+(90.91*(1/15)))
In this example, the recent data point was given the highest weighting out of an arbitrary 15 points. You can weigh the values out of any value you see fit. The lower value from the weighted average above relative to the simple average suggests the recent selling pressure could be more significant than some traders anticipate. For most traders, the most popular choice when using weighted moving averages is to use a higher weighting for recent values. (For more information, check out the Moving Average Tutorial)

What is the difference between Exponential Moving Average (EMA) and Weighted Moving ...
Read about the difference between exponential moving averages and weighted moving averages, two smoothing indicators that ... Read Answer >> 
What is the difference between a simple moving average and an exponential moving ...
The only difference between these two types of moving average is the sensitivity each one shows to changes in the data used ... Read Answer >> 
How do I use Excel to calculate a weighted average?
Learn about the calculation and interpretation of weighted averages, including how to compute a weighted average using Microsoft ... Read Answer >> 
What are the main advantages of using Moving Averages (MA)?
See why moving averages have proven to be advantageous for traders and analysts and useful when applied to price charts and ... Read Answer >> 
What is a common strategy traders implement when using the Weighted Alpha?
Learn how traders and investors use weighted alpha to identify momentum of a stock's price and whether prices will move higher ... Read Answer >> 
What are the main disadvantages of using Moving Averages (MA)?
Learn about some of the inherent limitations and possible misapplications of moving average analysis within technical stock ... Read Answer >>

Managing Wealth
Weighted Average Cost Of Capital (WACC)
Weighted average cost of capital may be hard to calculate, but it's a solid way to measure investment quality 
Investing
Weighted Average
Learn how to weigh the relative importances of data points in a calculated average. 
Trading
Simple Moving Averages Make Trends Stand Out
The moving average is easy to calculate and, once plotted on a chart, is a powerful visual trendspotting tool. 
Trading
Use Moving Averages to Buy Stocks
A moving average constantly updates a stock's average price, but it cannot predict a stock's performance. 
Investing
Choosing The Right ETF Index To Reach Your Goals
The key to choosing ETFs for your portfolio is understanding how they pick stocks and making sure their investment philosophy matches yours. 
Trading
The 7 Pitfalls Of Moving Averages
While moving averages can be a valuable tool, they are not without risk. Discover the pitalls and how to avoid them. 
Investing
Using Moving Averages to Buy ETFs
Learn how to use moving averages to enter and exit trades in ETFs, and understand some popular technical setups using moving averages.

Weighted
A mathematical process by which figures and/or components are ... 
Portfolio Weight
The percentage composition of a particular holding in a portfolio. ... 
Simple Moving Average  SMA
A simple, or arithmetic, moving average that is calculated by ... 
Weighted Average Market Capitalization
A stock market index weighted by the market capitalization of ... 
Equal Weight
A type of weighting that gives the same weight, or importance, ... 
Purchase Price
The price that an investor pays for a security. This price is ...