Function - Hull Moving Average

The Function - Hull Moving Average tool provides a fast and smooth trend-following line designed to reduce lag while maintaining significant noise reduction for technical analysis.

Usage

The Usage section describes how the script can be used. Traders primarily use the Hull Moving Average (HMA) to identify trend direction and potential reversal points. Because the HMA is more responsive than a Simple Moving Average (SMA), it can be used to track price action more closely without the erratic movements found in shorter-term indicators.

• Trend Identification: When the HMA is sloping upwards and colored green, it indicates a bullish trend. When sloping downwards and colored red, it indicates a bearish trend.
• Crossover Signals: The script includes logic to detect when the HMA changes direction. A change from a downward slope to an upward slope may signal a long entry, while a change from an upward slope to a downward slope may signal a short entry.
• Source Selection: Users can apply the HMA to different price sources such as open, high, low, or hl2 to better suit specific trading strategies.

Details

The Hull Moving Average was developed by Alan Hull to solve the lag problem inherent in traditional moving averages. The calculation utilizes weighted moving averages (WMA) to prioritize recent price data. The mathematical formula is: HMA = WMA(2 * WMA(n/2) − WMA(n), sqrt(n))

The script executes this by first calculating a WMA for half the selected period and doubling it, then subtracting a WMA of the full period. Finally, it smooths the resulting value with another WMA using the square root of the period as the length. This process cancels out lag while providing a smooth curve that remains reactive to price volatility.

Settings

• Source: Determines the price data used for the HMA calculation (e.g., Close, Open, HL2).
• Length: The lookback period used for the calculation. Higher values result in more smoothing and more lag, while lower values result in a faster, more reactive line.

FAQ

How do I interpret the color changes on the HMA? The color changes based on the slope of the average; a green line indicates the HMA is rising (bullish momentum), a red line indicates it is falling (bearish momentum), and a blue line indicates no change.

Can I use this indicator for scalping or long-term investing? Yes, by adjusting the Length setting, the HMA can be optimized for various timeframes. Shorter lengths are common for scalping, while longer lengths (such as 50 or 100) are used for trend following in higher timeframes.

How can I access the Function - Hull Moving Average? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.