Linearly Weighted Moving Average (LWMA) is a moving average calculation that more heavily weights recent price data, with the most recent price having highest weight and each prior price having progressively less weight. The weights drop in a linear fashion. By this action, the LWMA reacts much faster than the simple moving averages (SMA) and exponential moving averages (EMA). Additionally, it has a long-term advantage of being more accurate at detecting short-term trends than its counterparts.Diagram of Linearly Weighted Moving Average (LWMA): -In the above chart the Linearly Weighted Moving Average (LWMA) are shown.Linearly weighted moving averages have become increasingly popular over the last decade. Linearly weighted moving averages (LWMA) are a type of moving average calculation that weights recent price data more heavily than older price data. The weights drop linearly and are based on a simple formula. LWMAs react slower to price changes than simple moving averages (SMA) and exponential moving averages (EMA). This can make LWMAs valuable tools to use in stock market trading or in capital budgeting purposes.A linearly weighted moving average (LWMA) is a type of moving average calculation with an exponential smoothing filter. The difference between an LWMAs weighting and other similar types of filters is that the results are faster to react to price changes than simple moving averages (SMA) and exponentially weighted moving averages (EWMA).
