Hull Moving Average MT4
Hello again! Last time we posted a waddah attar explosion article. Today we are going to show the hull moving average mt4 indicator. In Technical analysis of Forex Trading, there exist numerous types of moving averages with Simple Moving Average (SMA) being one of the primary examples. Among the family of Moving Averages, the SMA is the most lagging in price. Moving Averages such as Exponential as well as Weighted Moving Averages were created to fix the issue of lag by putting more emphasis on the latest swift alterations in price movement. The Hull Moving Average MT4 (HMA), customized for MT4 was developed by Alan Hull and is observed to function as a smooth moving Average and is tremendously fast. Hull Moving Average, HMA eradicated lag almost totally and manages to perk up smoothing at the same time. Today we can discover if this one makes our TOP 10 MT4 Indicators page.
HMA is quite an improvement on Moving averages.
With regards to tightly following the market price, ratings of Moving Averages are in the following order:
1. Hull Moving Average MT4, HMA
2. Exponential Moving Average, EMA
3. Simple Moving Average, SMA
Never forget that all indicators lag as a result of the nature of the computations.
Nevertheless, you can see the Hull Moving Average follows market price in a much cleaner manner than the other two (2) moving averages.
It is this feature that gives it the edge as lag is reduced to the barest minimum.
How Hull Moving Average MT4 works
An extended timeframe HMA might be used to detect a trend. When the HMA rises, the prevailing trend rises as well, indicating it could be safer to take long (buy) positions. On the other hand, when the HMA falls, the prevailing trend also falls, indicating it could be safer to take short (sell) positions.
Also, a smaller period HMA might be of use for entry signals in the course of the prevailing trend. Long entry signal, if the prevailing trend rises, happens when the HMA faces up and a short (sell) entry signal, if the prevailing trend falls, happens when the HMA faces down. TIP: You can combine this indicator with a premium gold indicator MT4 also.
It is done in the following way:
1: Calculate the Weighted Moving Average with a period n / 2 and then multiply it by 2
2: Afterwards, calculate the Weighted Moving Average for a period n and deduct if from step 1
3: Lastly, calculate the Weighted Moving Average with period square root, sqrt (n) using the figures from step 2.
As we know in Mathematics, the square root truncates figures; we must choose an n which comes as a perfect square, such as 9, 16, 36 etc.
The derived formula for calculation is:
HMA= WMA(2*WMA(n/2) − WMA(n)),sqrt(n))
Can also be written thus:
HMA= WMA(2*WMA(n/2) − WMA(n)),√(n))
HMA(n) = WMA(2*WMA(n/2) – WMA(n)), sqrt(n))
Can also be written thus:
HMA(n) = WMA(2*WMA(n/2) – WMA(n)), √(n))
The Indicator software packages compute the formula above automatically and instantly, so a trader doesn’t need to rack his brain on how to calculate it.
Smoothing and Lag Elimination
To understand how the Hull moving Average MT4 can significantly eliminate lag and smoothen the curve, we should consider an easy-to-understand frame of reference.
Hereunder is a chart containing a 16-week Simple Moving Average SMA, with a poor smoothness and regularly lagging the price activity.
Moving Average Chart
The first step, resolving the problem of smoothing of a Chart curve, can be achieved by finding the average of the average.
That is 16 period Simple Moving Average, SMA(16-period SMA(Price))
Unfortunately, it causes a massive increase in lag, as shown in the chart below:
Moving Average Chart
This problem of lag can be solved with an explanation with figures instead of charts. Let us use a sequence of 10 figures from ‘0’ to ‘9’ inclusive and picture that they are sequential price points on a chart when 9 is the most current price point on the right side leading edge.
If the 10-period simple average of these figures is taken, then, not unexpectedly, we will arrive at the average (midpoint) of 4.5, which largely lags behind the most current price point of 9. This is the clever bit, first let us halve the average period to 5 and then apply it to the most current figures of 5, 6, 7, 8 and 9, with the outcome being the midpoint of 7.
Lastly, to get rid of the lag, take the 7-figure midpoint and add the difference between the two averages, which is equal to 2.5 (7 – 4.5). A resulting answer of 9.5 (7 + 2.5) is obtained, which is a minor overcompensation. However, the overcompensation is quite handy as it balances the lagging impact of the nested averaging.
Therefore, the outcome of combining these two techniques is an almost perfect balance between reduction in lag and curve smoothing. Hull Moving Average, succeeds in keeping up with swift changes in price activity while having greater smoothing over an SMA (Simple Moving Average) of the same period.
HMA makes use of Weighted Moving Averages and reduces the smoothing result (and subsequent lag) through using the square root of the market period rather than the real period itself, as shown below:
Hull Moving Average Chart
Using the Hull Moving Average
A trader can apply the Indicator in the Forex market in some ways.
It can be appended to the HMA to:
1. Close price
As well as any other techniques you can devise.
The Indicator can be set to any period also. Anyone who can use an SMA or another popular version can easily make use of HMA.
Using Hull Moving Average for Scalping
The Indicator can be a veritable scalping tool. Since other Moving averages can be used to scalp, so is HMA- a faster version of Moving Averages. With its unique features, it could redefine things.
Preferably, it can be used to capture price moves if the market’s breakout below and above the HMA to generate some pips profit.
Use of a demo account to try your hands on scalping would be of great benefit before going live with the Indicator.
This is the unique thing about Forex Trading; some techniques are fantastic for a trader while others don’t fit in.
Conclusion On Hull Moving Average MT4
Alan Hull created the Hull Moving Average MT4 (HMA) for the goal of reducing lag, vamping responsiveness while at the same time eradicating noise. Its calculation is elaborate and makes use of the Weighted Moving Average (WMA).
It highlights recent prices over older prices, producing a fast-acting as well as a smooth moving average which can be used to detect a prevailing market trend. The Indicator can also be useful as entry and exit signals.
Though the best among the Moving Averages, don’t use it alone, remember to employ other indicators and personalized techniques to maximize profits.
This platform contains other Trading tools and Indicators that any trader would welcome in his quest to maximize profits; hence, visit the link and take advantage.
Let us know your experience(s) in the comment section.