Hull Moving Average (HMA) – What It Is & How to Trade It

Hull Moving Average (HMA) – What It Is & How to Trade It

What is the Hull Moving Average (HMA)?

The Hull Moving Average (HMA) is a highly responsive moving average that minimizes lag while maintaining smooth price action. It was developed by Alan Hull to provide faster and more accurate trend signals than traditional moving averages like SMA or EMA.

HMA is calculated using a weighted moving average formula with a special smoothing technique:
HMA = WMA(2 × WMA(n/2) – WMA(n)), √n
Where:

• WMA(n/2) = Weighted Moving Average of half the period.
• WMA(n) = Weighted Moving Average of the full period.
• √n = Square root of the period for additional smoothing.

Key Features of HMA

• Faster than SMA and EMA while maintaining smooth price trends.
• Reduces lag, making it ideal for active traders.
• More accurate trend detection, helping traders avoid false signals.

How to Use HMA in Forex Trading

1. Trend Identification Strategy

HMA can quickly identify trend direction:

• If HMA is rising, the trend is bullish.
• If HMA is falling, the trend is bearish.

Recommended HMA Settings:

• Short-term traders: 10-period HMA for quick trend changes.
• Swing traders: 50-period HMA for medium-term trend tracking.
• Long-term traders: 100-period HMA to confirm major trends.

2. HMA Crossover Strategy

Traders can use multiple HMAs to confirm trend shifts:

• Buy Signal: When a short-term HMA (e.g., 10 HMA) crosses above a long-term HMA (e.g., 50 HMA).
• Sell Signal: When a short-term HMA crosses below a long-term HMA.

Best HMA Combinations:

• 9 HMA & 21 HMA: Short-term strategies.
• 20 HMA & 50 HMA: Swing trading confirmation.
• 50 HMA & 200 HMA: Long-term trend validation.

3. HMA with RSI Strategy

Combining HMA with Relative Strength Index (RSI) can refine entries:

• Buy when: HMA shows an uptrend & RSI is below 30 (oversold).
• Sell when: HMA shows a downtrend & RSI is above 70 (overbought).

Pros and Cons of Using HMA

✅ Pros:

• Faster trend signals than SMA and EMA.
• Reduces lag for more accurate trade entries.
• Smooths price action while staying responsive.

❌ Cons:

• Can be too reactive in ranging markets.
• Requires fine-tuning for optimal performance.

Final Thoughts

The Hull Moving Average (HMA) is an advanced moving average that improves trend accuracy while reducing lag. It’s an excellent tool for traders looking to refine their strategy.