Difference between Weighted Moving Average and Money Flow Index

Difference between Weighted Moving Average and Money Flow Index

Posted on Posted in Stock Market

It is usually said that in the stock market. You need to either shape up or ship out of the situation. If traders want to earn good returns, they must invest strategically. There are several strategies and indicators defined for stock trading activities. This article will explain Moving Average. This is evaluated by adding the number of closing prices and then the results are divided by the number of prices.

Rolling mean and moving mean are other names of moving average. Variations are in form of simple, cumulative and weighted forms. Short-term averages are quick in response as compare to the long-term averages. Long-term averages are slow to react. In other words, simply can be explained as an average of stock prices over the certain period, equal weighting is given to daily price. It is the simplest type of moving average in technical analysis of stocks that is used to generate accurate stock market tips.

All About Weighted Moving Average

Every trader wishes to earn profit from trading but it is not that easy as it looks. There is a number of technical indicators, strategies and charts implemented to find the unique opportunity as well as accurate stock trading tips and stock future tips. One of the often-used technical indicators is weighted moving average. In the year 1957, Robert Goodell invented the weighted moving average. This technical indicator gives more importance to the recent prices than the older prices. The data of the stock is then multiplied by the weight over each period. Here the weight is calculated by the number of periods selected. The technical analysts of Money Classic Research make use of this formula to calculate the weighted moving average.

All about Money Flow Index

Money Flow Index is an oscillator, which use both price and volume to measure the pressure of buying and selling the stock. Gene Quong and Avrum Soudack, both together invented this indicator. Technical analysts also called Money Flow Index as volume-weighted Relative Strength Index. Money Flow Index begins with the typical price of the stock at every period. It represents the positive value when the typical price of the stocks rises, thus indicating technical analysts about the buying pressure.

Money flow index represents the negative value when the typical price of the stocks decreases and indicates the selling pressure. The ratio of the positive and negative value of money flow is then inserted into the RSI formula to form an oscillator. The money flow index oscillates between the value zero and hundred. The money flow index is appropriate and well suited to determine reversals and price extremes with no. of signals.

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