Description

• This is a simple moving average created by Welles Wilder. It is quite easy to compute
• It is similar to Exponential Moving Average but carries a smaller percentage of historical data in its calculation. Wilder’s Smoothing Average is similar to (2n-1) EMA i.e. a 10 period Wilder’s Smoothing Average is similar to 19 period EMA
• This indicator is used as an input in other Wilder indicators (eg RSI, Wilder’s Swing Indicator, Wilder’s Volatility Indicator)

Interpretation

• The price line moving above the TMA indicates an uptrend suitable for Buy trades
• The price line moving below the TMA indicates an downtrend suitable for Sell trades
• But note that, this indicator than other averages

Default Parameters Used/Inputs

• Data line- Close line, High line, Open line, Low line or others
• Bars – number of bars

Returns/Output

Wilder’s Smoothing Average graph line with reduced historical data

Formula

Wilder’s Smoothing Average = (WSA(previous) * (n – 1) + Price)/n