Hull Moving Average indicator. Modification non-delayed of the moving average algorithm
Moving averages are rightfully considered the most effective and informative indicators, but they have a significant drawback - they all lag behind the real trend. The Hull Moving Average indicator is devoid of this drawback, so it can be used to minimize the negative consequences of delays.
In fact, the Hull Moving Average is nothing more than another incarnation of the moving average, so the skepticism of some critics is quite appropriate and natural.
In terms of the speed of signal detection, HMA is significantly ahead of its main competitors. This effect is manifested through the use of a complex mathematical formula consisting of several actions.
In particular, at the first stage, the Hull Moving Average calculates the simple average price for the period (n) specified by the user, i.e., calculates SMA (n).
Then the period algorithmically (i.e., here the trader can no longer influence the result through the settings) is halved, after which the average price formed over the last n/2 candles is calculated.
Next, the difference between SMA (n) and SMA (n / 2) is calculated.
And at the last stage, the value just obtained is added to SMA (n / 2). As a result, the average price will be located much closer to the actual quotes than the classic SMA.
The Hull Moving Average works great on small and medium periods; the most stable results are given by periods over 20. For medium-term and quieter trades with minimal risks, experts recommend the following settings: HM_Period = 55; HMA_Method = 3.Then the trend change points will appear much less frequently.
In general, the average Hull price is no different from the classic MA, i.e., most often, it helps to recognize the prevailing trend.
In particular, if it is colored red - the market is in a bearish phase (it is reasonable to sell the pair), if it is green - bullish sentiments prevail (it's time to open a position to increase the price).
The current values of the moving average, calculated over long periods of time, are often viewed by the market as an equilibrium point where the interests of buyers and sellers are equally met. Alexander Elder wrote about this phenomenon in detail in his books, although a similar interpretation of market processes can be found in older textbooks, written back in the days when Forex did not exist.
Thus, the Hull Moving Average indicator is a good alternative to standard moving averages, since its signals are formed much earlier, while their quality does not deteriorate.
It should also be noted that due to the specificity of the formula, the amplitude of the indicator line fluctuations sometimes turns out to be too large. This does not affect the signals in any way, but a beginner, when analyzing the historical counting, may get the impression that the Hull Moving Average is working ahead.
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Do you need help with installing this indicator into MT4 for Windows or Mac OS? Our guide HERE will help you.