Wilder Moving Average Calculator

Wilder Moving Average Calculator

The Wilder Moving Average, also known as the Wilder’s Moving Average or the Wilder’s Smoothed Moving Average, is a technical indicator used in financial markets to analyze price data and identify trends. It was developed by J. Welles Wilder, the same person who created other popular technical indicators like the Relative Strength Index (RSI) and the Average True Range (ATR).

The Wilder Moving Average is a variation of the simple moving average (SMA). While the SMA gives equal weight to all data points, the Wilder Moving Average assigns different weights to data points, placing more emphasis on recent prices. This makes it a smoother and more responsive indicator.

Here’s how you can calculate the Wilder Moving Average:

  1. Choose a period (the number of data points) for which you want to calculate the moving average.

  2. Start with the first data point in your series as the initial Wilder Moving Average value.

  3. For each subsequent data point, calculate the Wilder Smoothing factor, which is usually 1 divided by the chosen period.

  4. Then, calculate the Wilder Moving Average for the current data point using the formula:

    New Wilder Moving Average = Previous Wilder Moving Average + Smoothing Factor * (Current Price – Previous Wilder Moving Average)

  5. Repeat this process for all data points in the series to calculate the Wilder Moving Average for each one.

The Wilder Moving Average is a valuable tool for traders and analysts because it reduces the impact of noisy or erratic price movements, providing a smoother representation of the underlying trend. It can help identify support and resistance levels, as well as potential entry and exit points for trading.

Keep in mind that there are many other types of moving averages, including the Simple Moving Average (SMA), Exponential Moving Average (EMA), and more, each with its own characteristics and applications. The choice of which moving average to use depends on your specific trading strategy and objectives.

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