Moving averages are one of the most popularÂ tools used by active traders to measure momentum. The primary difference between the simple moving average and the weighted moving average is the formulaÂ used to create them. For a simple moving average, the formula is the sum ofÂ the data points over a given period divided by the number of periods. For example, the closing prices of Apple IncÂ (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 areÂ not weighted any differently than data points nearÂ the beginning of the dataÂ 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 weightedÂ moving averages is to use a higher weighting for recent values. (For more information, check out the Moving Average Tutorial)
Â

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 >> 
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 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 >> 
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 >> 
How do you calculate the proper weights of different costs of capital?
Understand how to calculate the weights of the difference costs of capital and how this calculation is used to determine ... Read Answer >> 
What is the weighted average of outstanding shares? How is it calculated?
The weighted average of outstanding shares is a calculation that incorporates any changes in the amount of outstanding shares ... Read Answer >>

Trading
Weighted Moving Averages: The Basics
We take a closer look at the linearly weighted moving average and the exponentially smoothed moving average. 
Investing
S&P 500 ETFs: Market Weight Vs. Equal Weight (RSP, SPY)
Both S&P 500 and S&P 500 EWI indexes include the same set of stocks, but different weighting strategies give them separate individual properties. 
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. 
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
How To Use A Moving Average To Buy Stocks
The Moving Average indicator is one of the most useful tools for trading and analyzing financial markets. 
Investing
The Weighted Average Of Outstanding Shares
The quantity of a companyâ€™s outstanding shares changes when it issues new shares, repurchases or retires existing ones, or converts others.

Weighted
A mathematical process by which figures and/or components are ... 
Linearly Weighted Moving Average
A type of moving average that assigns a higher weighting to recent ... 
Portfolio Weight
The percentage composition of a particular holding in a portfolio. ... 
Weighted Alpha
A weighted measure of how much a stock has risen or fallen over ... 
Weighted Average Credit Rating
The weighted average of all the bond credit ratings in a bond ... 
CapitalizationWeighted Index
A type of market index whose individual components are weighted ...