Hull Moving Average Indicator for MT4

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Hull Moving Average Indicator for MT4

Introduction to the Hull Moving Average Indicator

Most moving average lines tend to have a weakness of either being too lagging or too susceptible to false signals coming from price spikes.

Alan Hull developed the Hull Moving Average with the hope that this version of the moving average would address the weaknesses of moving averages mentioned above.

What is the Hull Moving Average Indicator?

The Hull Moving Average (HMA) is a modified version of the basic moving average line which smoothens out the moving average line which in effect tends to make it less susceptible to price spikes. The HMA is also a very fast moving average line which tends to eliminate lag.

As such, the HMA somehow provides the best of both worlds for moving average lines, a moving average with less lag yet is also less susceptible to false signals.

How the Hull Moving Average Indicator Works?

The HMA has a complex computation of moving averages which is mostly derived from the difference of an underlying pair of Linear Weighted Moving Average (LWMA) lines. It then somehow smoothens the difference between the LWMA lines by averaging it out using another LWMA based computation.

Given that LWMAs are in itself already smoothened out. This complex computation of LWMAs smoothens out the moving average further making the HMA line an extremely smooth yet fast moving average line.

Hull Moving Average Indicator for MT4

This version of the HMA also allows for further modifications of the HMA line. It allows the number of periods to be modified, which is basic. It also allows shifting of the line forward or back. It also allows the modification of using other moving average lines instead of the LWMA as its underlying computation basis, as well as the source of price data, which could be the close of price, typical price, median price, or more.

How the Hull Moving Average Indicator Works

How to use the Hull Moving Average Indicator for MT4

The Hull Moving Average can be used in a variety of ways. It can be used as a trend direction filter if the number of periods is modified to fit a longer-term trend.

It could also be used in tandem with another moving average line as a trend reversal signal indicator based on crossovers.

The curling of its slope as well as the crossing over of price action with the HMA line can also be used as a short-term trend or momentum reversal signal.

Buy Trade Setup

When to Enter?

Identify an uptrend market and allow price to retrace down during market contraction phases. Open a buy trade as soon as the HMA line starts to curl up. Set the stop loss on the support below the entry candle.

When to Exit?

Close the trade as soon as the HMA line starts to flatten out.

How to use the Hull Moving Average Indicator for MT4 - Buy Trade

Sell Trade Setup

When to Enter?

Identify a downtrend market and allow price to retrace up during market contraction phases. Open a sell trade as soon as the HMA line starts to curl down. Set the stop loss on the resistance above the entry candle.

When to Exit?

Close the trade as soon as the HMA line starts to flatten out.

How to use the Hull Moving Average Indicator for MT4 - Sell Trade

Conclusion

The Hull Moving Average is an effective tool that traders can use for trading with the trend. However, it is best used in confluence with long-term trend indicators or moving average lines.

 

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Hull Moving Average Indicator for MT4

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