Weighted average is to multiply each value by the corresponding weight, and then add up to get the total value, and then divide it by the total number of units. The weighted average depends not only on the value (variable value) of each cell in the population, but also on the number of times (frequency) that each value appears. Because the number of occurrences of each value plays a role in weighing its influence in the average, it is called weight.

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Application in futures;

On the one hand, if the futures price is higher than the weighted average price, the latter is moving up slowly or quickly, which means that the market situation will easily rise, but it is difficult to fall or continue to improve. On the contrary, if the futures price is lower than the weighted average price, the latter will move down slowly or quickly, which means that the market situation will be easy to fall but difficult to rise or continue to fade.

On the other hand, if the futures price is higher than the weighted average efficiency, the latter runs in a narrow range or downwards. In other words, the market will slow down or turn around. On the contrary, if the futures price is lower than the weighted average price, the latter will run in a narrow range or upward, which means that the market situation will slow down the decline or turn around and pick up.

The reason is that futures prices cannot be supported by the same moving direction of the weighted average due to the upward trend or downward trend, and the space for restarting or falling again will become limited. It should be noted that the weighted average will pull the futures price and prevent it from expanding.

Therefore. At the same time, we should also pay attention to the change of the gap between the futures price and the weighted average, and observe the opportunities for entering and leaving when the gap is too narrow or too wide. If the market is still rising or falling, the narrow gap can provide a good opportunity to make the market better or worse.

On the other hand, even if the market situation is still rising or falling, the phenomenon of excessive gap can provide a good opportunity to take notes against the market trend. Finally, it must be remembered that you should not rush into the market against the trend to make it weaker or better just because of the huge cumulative increase or decrease of futures prices without calculating the upward or downward movement of the weighted average at the same time.

Baidu encyclopedia-weighted average