Direct Answer
Weighted close averages a bar's high, low and close with the close counted twice. It tilts the summary of the bar toward where trading finished. It sits closer to the close than typical price does, while still reflecting the bar's high and low.
Weighted Close: Formula, Meaning, Signals, Examples and How to Use It
How Is Weighted Close Calculated?
Weighted close averages a bar's high, low and close with the close counted twice. It tilts the summary of the bar toward where trading finished.
Formula: Weighted close = (high + low + 2 x close) / 4
Inputs:
- High
- Low
- Close of each bar
Worked example. A bar with a high of 105, low of 97 and close of 100 has a weighted close of 100.50. The inputs are illustrative numbers, not market data.
Reading it. It sits closer to the close than typical price does, while still reflecting the bar's high and low. It is used as a smoothed price input in place of the close.
Limits. The double weighting on the close is a convention rather than a measured property of markets. It ignores the open and volume.
What is Weighted Close?
Weighted close averages a bar's high, low and close with the close counted twice. It tilts the summary of the bar toward where trading finished.
How to use Weighted Close
It sits closer to the close than typical price does, while still reflecting the bar's high and low. It is used as a smoothed price input in place of the close. A reading alone is never a buy or sell signal; it needs context from price structure, volume, volatility and the broader market regime.
Strengths
- Counting the close twice makes the value follow the settlement price more closely while still bounding it by the bar's high and low.
- The formula always lies between the bar's low and high, so it never produces a value outside the traded range.
- Reproducible when the formula and data convention are fixed.
Weaknesses and limitations
- A bar that spikes at the close, such as one at an auction, has that print counted at half weight, which magnifies any closing distortion.
- When a bar closes at its midpoint the formula returns that midpoint, the same as median and typical price, so it adds nothing there.
- Correlated indicators can create false confidence by repeating the same underlying information.
Editorial and risk note
This page is educational content, not individualized investment advice. It should not imply guaranteed prediction, accuracy or outperformance.
Frequently Asked Questions
Is Weighted Close a buy or sell signal?
No. It sits closer to the close than typical price does, while still reflecting the bar's high and low. The double weighting on the close is a convention rather than a measured property of markets. A trade built on it still needs a trigger, an invalidation rule, a position size and realistic execution assumptions.
What is the best setting for Weighted Close?
Weighted Close takes these inputs: high; low; close of each bar. There is no universal best setting for the tunable ones, so test them across instruments, regimes and out-of-sample periods and favor stable parameter regions over one historical winner.
Can Weighted Close be used by itself?
The double weighting on the close is a convention rather than a measured property of markets. It ignores the open and volume. For that reason it is read next to measures of direction, participation, valuation, liquidity and risk, not alone.
Does Weighted Close work on every timeframe?
The calculation (Weighted close = (high + low + 2 x close) / 4) can be run on any bar size, but behavior is not portable: a reading on a five-minute chart describes a very different market window from the same reading on a daily chart. Validate the exact timeframe before relying on it.
Why does Weighted Close give false signals?
A bar that spikes at the close, such as one at an auction, has that print counted at half weight, which magnifies any closing distortion. When a bar closes at its midpoint the formula returns that midpoint, the same as median and typical price, so it adds nothing there. Lag, noise and regime changes add to this, because market participants react to new information after the reading is calculated.
How should Weighted Close be backtested?
Rebuild Weighted Close from high using point-in-time data, write the rules before testing, include delisted securities where relevant, model realistic fills and costs, reserve a validation sample and compare with a simpler baseline.