HullMovingAverageMr

Hull Moving Average (HMA)

Overview

Developed by Alan Hull in 2005, the Hull Moving Average (HMA) is a high-performance trend-following technical indicator designed to solve the age-old dilemma of moving averages: the trade-off between Lag and Smoothness.

Traditional Simple Moving Averages (SMA) and Exponential Moving Averages (EMA) reduce price noise but introduce a significant delay before identifying a trend change. Conversely, shortening the period reduces lag but triggers excessive false signals (whipsaws). HMA overcomes this limitation by utilizing Weighted Moving Averages (WMA) combined with a square-root scaling technique, delivering ultra-low lag while maintaining a smooth curve.

Key Features

  • Near-Zero Lag: Reacts rapidly to price action and momentum shifts compared to standard SMAs and EMAs.

  • Exceptional Smoothness: Filters out choppy price noise effectively without compromising reaction speed.

  • Versatile Application: Works efficiently across all financial markets (Forex, Crypto, Indices, Commodities) and timeframes (M1 to Monthly).

  • Customizable Inputs: Supports flexible lookback periods and multiple applied price options.

Calculation Logic & Algorithm

The HMA calculation is unique and follows a three-step mathematical pipeline:

  1. Dual WMA Calculation: Computes a WMA with half the period ($\text{WMA}_{n/2}$) and a WMA with the full period ($\text{WMA}_{n}$) using the selected applied price.

  2. Difference Scaling: Doubles the half-period WMA and subtracts the full-period WMA:

    $$\text{Raw HMA} = (2 \times \text{WMA}_{n/2}) - \text{WMA}_{n}$$
  3. Final Smoothing: Applies another WMA with a period equal to the square root of the primary period ($\sqrt{n}$) to the raw result, producing a smooth, responsive indicator curve.

Input Parameters

  • HMA Period ( InpPeriod ): Defines the lookback window for the indicator (Default: 14 ). Smaller values increase sensitivity, while larger values provide broader trend stability.

  • Applied Price ( InpAppliedPrice ): Selects the price type used for calculations. Available options include:

    • Close (Default)

    • Open

    • High

    • Low

    • Median Price $(High + Low) / 2$

    • Typical Price $(High + Low + Close) / 3$

    • Weighted Price $(High + Low + Close + Close) / 4$

How to Use in Trading Strategies

1. Trend Direction via Slope

  • Bullish Trend: When the HMA line is sloping upward (current bar value > previous bar value), market momentum is positive. Traders look for buying opportunities.

  • Bearish Trend: When the HMA line is sloping downward (current bar value < previous bar value), market momentum is negative. Traders look for selling opportunities.

2. Dual HMA Crossover System

  • Combine a fast HMA (e.g., Period 9) with a slow HMA (e.g., Period 21).

  • Buy Signal: Fast HMA crosses above the slow HMA.

  • Sell Signal: Fast HMA crosses below the slow HMA.

3. Dynamic Support & Resistance / Trailing Stop

  • Due to its rapid reaction speed, HMA acts as an effective dynamic trailing stop loss line during strong trending phases, helping traders lock in profits as momentum continues.


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