Hull Moving Average – HMA Indicator for MT5

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Hull Moving Average - HMA Indicator for MT5

Introduction to the Hull Moving Average – HMA Indicator

Traditional moving average lines such as the Simple Moving Average (SMA) often have a couple of weaknesses. They are either too lagging or too erratic. Traders try to compensate for these weaknesses by adjusting the number of bars which the moving average line would calculate for. However, adjusting the number of bars used only moves the characteristics of the moving average line along a spectrum of being too lagging or too erratic. The Hull Moving Average was developed to address these weaknesses.

What is the Hull Moving Average – HMA Indicator?

The Hull Moving Average or HMA Indicator is a trend following technical indicator which is based on a modified version of a moving average line.

The Hull Moving Average uses a formula that reduces the lag that is prevalent in most moving average lines. At the same time it also plots a relatively smooth moving average line. This creates a moving average line which is responsive and reliable at the same time.

This version of the HMA Indicator plots a line which changes color. It plots a purple line to indicate a bullish trend direction and a red line to indicate a bearish trend direction.

Hull Moving Average - HMA Indicator for MT5

How the Hull Moving Average – HMA Indicator Works?

The Hull Moving Average uses a couple of Weighted Moving Averages (WMA) within its formula. One has a specified number of periods used in its calculation while the other has half of the number of periods of the first WMA. The first WMA is then multiplied by two, then the second WMA is subtracted from the product.

HMA = WMA (2 x WMA(n/2) − WMA(n)), sqrt(n))

The color of the HMA line is dependent on the slope of the line. It plots a purple line if the HMA line slopes up and a red HMA line if the line slopes down.

How to use the Hull Moving Average – HMA Indicator for MT5

The HMA Indicator has a couple of variables which can be adjusted within its indicator settings.

How to use the Hull Moving Average - HMA Indicator for MT5

“Moving average period” refers to the number of periods the HMA Indicator would use for its formula.

“Horizontal shift of the average in bars” allows users to shift the moving average line forward or back.

The HMA Indicator can be used as a trend reversal entry signal. However, it should be in confluence with other technical analysis indications.

Buy Trade Setup

When to Enter?

Open a buy order if the HMA line changes to purple coming from a support area.

When to Exit?

Set the take profit target at a logical resistance level.

How to use the Hull Moving Average - HMA Indicator for MT5 - Buy Trade

Sell Trade Setup

When to Enter?

Open a sell order if the HMA line changes to red coming from a resistance area.

When to Exit?

Set the take profit target at a logical support level.

How to use the Hull Moving Average - HMA Indicator for MT5 - Sell Trade

Conclusion

The HMA Indicator is one of the most effective trend following indicators which is based on a modified moving average line. It can be effectively used as a trend reversal signal or a trend direction filter. However, it is best used in confluence with other technical analysis indications as it is not accurate enough to be used as a standalone signal indicator.

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Hull Moving Average – HMA Indicator for MT5

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