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Hull Moving Average - HMA

by Mark Peterson, 1137 days ago
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The Hull Moving Average (HMA/HullMovingAvg) is a Moving Average/Study created by Allan Hull and described in his book Active Investing.

When adding the indicator to a chart, buy and sell signals are generated (represented by line color changes and buy/sell arrows) base upon a change in line slope (Positive Slope = UP = Green).

It is used to address the problem of lagging specific to Average studies. It applies Weighted Moving Average mechanism to smooth the data. The lagging effect is significantly reduced by a combination of two Weighted Moving Averages with different lengths: first one equal to period of HMA, second equal to the half-period. Smoothing effect is attained by applying WMA to the result, with length equal to square root of the period.

Due to its more timely nature, the Hull moving average is a useful indicator for pointing out turning points for entries and exit or as a filter for lending certainty to your next move.

HullMovingAvg's tendency to overshoot current prices can also be seen as a weakness so beware.Some say the Hull moving average should not be relied upon to generate crossover signals as this technique relies upon the very element the HMA seeks to eliminate-lag.

The Hull moving average has limitations, but it accomplishes what it sets out to do-improve curve smoothness while decreasing the problem of lag that haunts most moving averages.


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Type: Trading Indicator

Object ID: 1525


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Style:
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