Description:
Wilder’s Moving Average is a technical analysis tool used to identify trends and potential entry and exit points in the financial markets. Developed by J. Welles Wilder, Jr. the Wilder’s Moving Average places more emphasis on recent price movements than other moving averages. This makes it a more responsive tool for short-term traders who need to adapt quickly to changing market conditions.
Input Parameters:
- Length: Number of periods used in the calculation.
- Offset: The offset value is used to access the data of any candle or indicator concerning the current candle. For example, to access the current candle data it will use the offset value of "0", to access previous candle data "-1" offset value will be used, and access data of previous to previous "-2" will be used.
- Price Source: The specific data points (such as open, high, low, or close) from each candle in a financial chart that an indicator uses for mathematical computations, enabling the calculation of metrics like the average over a specified period.
Use Case:
- Swing Trading: WMA can be used to identify potential swings in the market, allowing traders to take positions at the beginning of these swings. Similar to trend-following strategies, traders can take profits and set stop-loss orders to manage their risk.
- Breakout Trading: WMA can be used to identify key support and resistance levels. When the price breaks out of these levels, traders can take positions in the direction of the breakout. As with other strategies, it is important to set Stop Loss and Take Profit orders to manage risk and maximize profits.
This feature can be used in:
- Market Scanner
- Strategy Tester
- Dynamic Alerts
- Multi-Factor Alerts
- Smart Checklist
Do you want to learn more? Check out our Learning Center Article.
May 16, 2024