Hull Moving Average

Notes:

These indicators and concepts are specifically designed for TradingView.com

Overview

The Hull Moving Average (HMA) is a type of moving average that is designed to reduce lag and provide a smoother moving average line than traditional moving averages.

How to Trade

The Hull Moving Average is used in a variety of trading strategies, including trend following and crossover trading systems. Here are some ways to trade using the HMA:

1. Trend following: Traders can use the HMA to identify the direction of the trend. If the HMA is rising, it suggests that there is a bullish trend, while a falling HMA suggests a bearish trend. Traders can then use other technical indicators, such as support and resistance levels or oscillators, to confirm the trend and enter trades in the direction of the trend.
2. Crossover trading: Traders can use the HMA to generate buy and sell signals. One common strategy is to wait for the HMA to cross above or below the price line. A crossover above the price line is a bullish signal, while a crossover below the price line is a bearish signal. Traders can then use other technical indicators, such as moving average crossovers or oscillators, to confirm the signal and enter trades in the direction of the crossover.
3. Stop loss placement: Traders can use the HMA to determine where to place their stop loss orders. Because the HMA is designed to reduce lag and provide a smoother moving average line, it can help filter out some of the noise in the price movement and provide a more reliable level for stop loss placement.

How to Calculate

It was developed by Alan Hull and is calculated using the following formula:

HMA = WMA(2*WMA(n/2) - WMA(n)), sqrt(n)

Where:

• WMA = weighted moving average
• n = the number of periods

Here is an example of how to calculate a 10-period HMA:

1. Calculate the weighted moving average (WMA) of the first n/2 periods:WMA(5) = (1Price1 + 2Price2 + 3Price3 + 2Price4 + 1*Price5) / (1+2+3+2+1) = 2.90
2. Calculate the weighted moving average (WMA) of the next n/2 periods:WMA(5) = (1Price6 + 2Price7 + 3Price8 + 2Price9 + 1*Price10) / (1+2+3+2+1) = 3.25
3. Calculate the WMA of the difference between the two WMAs:WMA(5) = (2.90 - 3.25) / 2 = -0.175
4. Calculate the square root of n:sqrt(10) = 3.16
5. Multiply the result from step 3 by the result from step 4:HMA(10) = -0.175 * 3.16 = -0.55
6. Add the result from step 5 to the current price to get the HMA value:HMA(10) = Current price - 0.55