Online Trading Blog

Median price, typical price and weighted close are indicators for reducing noise in a trading chart, and are widely used as filters of other moving average systems. These indicators, when used alone, do not provide any significant results other than smoothing the graph, but they are key ingredients of many other powerful and popular trend indicators.

Median Price (MP):
Medium price, as the name suggests, is simply the mid-point of a trading period. A line connecting MPs of continuous trading periods can be used to generate buy and sell signals.

Typical Price (TP):
Typical price is a widely used indicator which can give a more realistic result of the average price of a period as it includes information about the whole trading day. Typical price is used in commodity channel indicator or CCI and money flow index or MFI indicators. It can also be used in conjunction with other moving averages to generate signals.

Weighted Close (WC)
Weighted close is similar to typical price except that it gives more weight to a period’s closing price. Weighted close charts have an extra smoothing and simplicity of interpretation.

Most traders use all the above three with a running moving average like 21-day exponential moving average to generate signals. When the price crosses the MA from below, buy signals are generated and when the price crosses from above, sell signals are generated. This is a reliable strategy but a lagging one.

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