Weighted Moving Average is calculated by multiplying the first datapoint by 1, the second by 2, the third by 3, etc. The final result is then divided by the sum of the weights. More recent data is thus moreheavily weighted, and contributes more to thefinal WMA value.

The rule for interpreting WMA is slightly different than that for SMA, because it is a more sensitive indicator. When WMA changes direction this is a warning of a change in trend.