Hull Moving Average (HMA) | RizeTrade

What is the Hull Moving Average (HMA)?

The Hull Moving Average (HMA) is a refined type of moving average designed to reduce lag while maintaining a smooth line that accurately reflects market trends. Developed by Alan Hull in 2005, the HMA combines elements of weighted moving averages (WMA) with a unique smoothing formula to create a faster, more responsive trend indicator.

It helps traders identify market direction and potential turning points with fewer false signals compared to traditional moving averages like the SMA or EMA.

🔑 Key Takeaways

 ⚡ The HMA minimizes lag more effectively than SMA, EMA, or WMA.
 📈 It reacts quickly to price changes while maintaining smooth, low-noise signals.
 🎯 Ideal for spotting short- to medium-term trends and potential reversals.
 📊 Highly effective in trend-following and crossover-based trading strategies.
 🔗 Often combined with RSI, MACD, or volume indicators for improved accuracy.

🚀 How Accurate Is the Hull Moving Average (HMA)?

The Hull Moving Average (HMA) is designed to minimize lag while maintaining smooth trend signals — but how effective is it when tested across different markets and timeframes?

🧪 Internal Backtesting Overview

Statement:
We conducted a detailed backtest using our Indicator Performance Matrix to evaluate HMA performance under varying market conditions.

Evidence:

• 2,412 HMA-based trade signals tested across Forex, stocks, indices, and crypto

• Timeframes ranged from 1-minute scalping charts to daily trend setups

• Compared directly against SMA, EMA, and WMA for responsiveness and accuracy

• Data derived from internal MetaTrader simulations

Insight:
The HMA consistently reduced signal lag while improving entry timing compared to traditional moving averages, making it particularly effective in strongly trending markets.

📈 Performance Results

Statement:
We analyzed the HMA’s base performance and compared it to setups that used trend or momentum confirmations such as RSI or MACD.

Evidence:

Insight:
The HMA achieved its best results in clear trend environments, improving accuracy by 8–10 percentage points when paired with momentum confirmation tools.
Traders seeking smoother yet responsive signals can track their HMA trade performance over time to fine-tune entries and better adapt to shifting market conditions.

📊 Hull Moving Average (HMA) Calculation

the hull moving average is calculated using Weighted Moving Averages (WMAs), combining them in a way that balances responsiveness and smoothness better than traditional moving averages.

🧮 Formula

HMA = WMA( 2 × WMA(n/2) − WMA(n), √n )

Where:

• WMA → Weighted Moving Average

• n → Period length

⚙️ Step-by-Step Calculation

1. Compute WMA with Period n/2
   Find the WMA using half the chosen period length.
   Example: if n = 16, then n/2 = 8 → calculate WMA(8).

2. Compute WMA with Period n
   Calculate the WMA using the full period length.
   Example: WMA(16).

3. Find the Difference
   Subtract the longer WMA from twice the shorter one:
   (2 × WMA(n/2)) − WMA(n)

4. Apply Final Smoothing
   Take a WMA of the above result using a period of √n (square root of n).
   This final step produces the HMA, a smooth yet highly responsive moving average.

📘 Example — HMA(16)

✅ The final HMA(16) line is both smoother and faster than a simple or exponential moving average.

💡 Why Traders Use HMA

🧭 Quick Summary

• ⚙️ Formula: HMA = WMA( 2 × WMA(n/2) − WMA(n), √n )

• 📅 Common periods: 9, 16, 21, 50

• 📈 Purpose: Identify trend direction with minimal lag

• 💡 Tip: Use HMA crossovers or slope changes to confirm trend reversals

Best Hull Moving Average (HMA) Settings

The optimal HMA settings depend on your trading approach, asset volatility, and timeframe. Based on backtesting and professional trader input:

💡 Pro Tip:
Use a short-term HMA (10) and long-term HMA (50) for crossover strategies. A bullish crossover occurs when the short-term HMA crosses above the long-term one — a reliable signal of upward momentum.

📉 How to Trade with the Hull Moving Average (HMA)?

The Hull Moving Average reacts quickly to price changes while staying smooth, making it ideal for capturing trend shifts with minimal lag.

🔍 Entry

Watch how price interacts with the HMA or how two HMAs cross for directional cues.

• Buy setup: when the price closes above a rising HMA, or a fast HMA crosses above a slow HMA, confirming bullish acceleration.

• Sell setup: when the price closes below a falling HMA, or a fast HMA crosses below a slow HMA, showing momentum turning bearish.
  Color-coded HMAs (green/red) can help visualize transitions more clearly.

🛡️ Stop-Loss

Set stops just below the latest swing low for long positions or above the recent swing high for shorts.
This method limits risk during quick reversals that can occur in volatile markets.
Adjust stops as the HMA slope continues in your favor to protect open profits.

🎯 Target

Aim for key support or resistance levels, or apply a 2:1 reward-to-risk ratio for structured exits.
Traders seeking extended gains may trail stops using Fibonacci extensions or ATR-based trailing methods to ride strong directional moves.

Trading Strategies that Use the Hull Moving Average (HMA)

HMA Crossover Strategy

Concept
This strategy identifies early trend reversals by tracking crossovers between two Hull Moving Averages. The shorter HMA reacts quickly to price shifts, while the longer one smooths out noise and defines the overall direction.

Setup
Apply two HMAs — for example, HMA (9) and HMA (21).

Long Setup
Enter long when the 9-HMA crosses above the 21-HMA, signaling bullish momentum.

Short Setup
Enter short when the 9-HMA crosses below the 21-HMA, confirming a bearish trend.

Example
On a GBP/USD 15-minute chart, the 9-HMA crossed above the 21-HMA at 1.2660, indicating a new uptrend.
A trader entered long, set a stop loss at 1.2630, and exited at 1.2720, capturing a 2:1 reward-to-risk trade.

What Gives It an Edge
The HMA’s reduced lag and enhanced smoothness help traders catch emerging trends earlier than with traditional moving averages.

HMA + RSI Strategy

Concept
Combining the Hull Moving Average with the RSI provides both trend direction and momentum confirmation, filtering out false entries.

Setup
Use an HMA (20) alongside an RSI (14).

Long Setup
Go long when price trades above HMA and RSI > 50, confirming bullish alignment.

Short Setup
Go short when price trades below HMA and RSI < 50, confirming bearish continuation.

What Gives It an Edge
This approach ensures trades align with both trend strength and momentum, reducing false breakouts during consolidations.

HMA + MACD Strategy

Concept
The HMA provides trend context, while the MACD refines entries and exits through momentum crossovers.

Setup
Apply an HMA (20) and a MACD (12, 26, 9).

Long Setup
Enter long when the MACD line crosses above the signal line and price remains above the HMA.

Short Setup
Enter short when the MACD line crosses below the signal line and price stays below the HMA.

What Gives It an Edge
Combining these indicators captures trend acceleration with confirmation from both price structure and momentum rotation.

Real Trading Example of the Hull Moving Average (HMA)

On a Tesla (TSLA) 4-hour chart, the 20-period HMA turned upward following a prolonged downtrend, while RSI climbed above 50, confirming renewed buying pressure.
A trader entered long at $230, placed a stop at $222, and took profit at $248 near prior resistance.
The trade achieved a 2.25:1 reward-to-risk ratio, validated by a strong upward slope in the HMA.

Best Indicators to Combine with the Hull Moving Average (HMA)

Common Mistakes and How to Avoid Them

Ignoring Market Type
The HMA performs best in trending conditions. Avoid using it in sideways or choppy markets where false crossovers are frequent.

Using Too Short a Period
Very short HMAs (e.g., 5–8) react too quickly and can create excessive noise. Stick to balanced settings like 9–21 for clarity.

Trading Against the Slope
Never trade against the HMA slope — it often reflects dominant momentum and helps avoid countertrend traps.

❓ What Is the Difference Between the SMMA and the EMA?

The SMMA smooths all past data evenly, while the EMA gives more weight to recent prices for quicker trend reactions.

Both aim to reduce lag compared to the Simple Moving Average (SMA), but each offers a distinct balance between responsiveness and stability.
The SMMA produces a steadier, more refined curve that filters out market noise, whereas the EMA reacts swiftly to fresh price movement — making it better suited for traders who thrive on speed and momentum.

⚙️ SMMA vs. EMA

Ultimately, the SMMA gives long-term traders a clearer, noise-free view of overall direction, while the EMA provides sharper, faster updates for intraday strategies.
For a nuanced blend of both, consider experimenting with dynamic moving average hybrids to fine-tune entries across varying market speeds.