Alan Hull developed one moving average that minimized the lag of default and traditional moving averages in 2005. According to his name, it is known as Hull moving average. The Hull moving average shows more recent data and is more responsive than other moving averages.
How to calculate Hull Moving Average
Calculating the hull moving average is a challenging task. Although knowing the hull moving average calculation process for trading with it is optional, you should see every indicator’s calculation formula for learning purposes. Follow some steps, and you will be able to calculate the hull moving average.
Firstly, calculate a weighted moving average with period “n/2” and multiply it by 2. Secondly, calculate a weighted moving average for period “n” and subtract it from the one calculated during step 1. Finally, a weighted moving average with a period of the square root of “n” was calculated using the data from step 2.
Trading strategy using Hull Moving Average
When the price increases and the Hull moving average increases, search for buy entries. Just wait for any strong bull candle which opens and closes above the HMA and enter the trade.
Search for sell entries when the price gets lower, and the hull moving average also gets lower. If you get any strong bearish candle that opens and closes below the HMA, that would be a strong signal for you.
Hull Moving Average- buy entry practical example
Look how Hull moving average gets upward, and then a strong bullish candle forms. Place a buy order above that particular bullish candle. Your stop loss will be below the candle, which first breaks the hull moving average.
Your take profit will be at most two times the risk you have taken.
260 minutes chart and daily chart is also ok trading this strategy, but for safe trading, you need to trade hourly chart with this strategy because Hull moving average was invented for day trading.
Although you can take a trade on different pairs, the ideal pairs for trading in hull moving average would be
Hull Moving Average- sell entry practical example
Here hull moving average is getting lower, and we get a candle that touches it and stops. Then we will wait for our signal candle. And here we go. We find our signal candle, which opens and closes below the hull moving average. Now we will open a sell trade, and our stop loss will be above the candle, which breaks the hull moving average for the first time. Take profit would be 1:2.
Where to get Hull moving average
You won’t get HULL moving average indicator built with the mt4 or mt5 platform. So you need to take advantage of the trading view. In the trading view, you will get many advanced indicators. And hull moving average indicator is one of them.
To succeed in forex trading, you must have a rock-solid profitable strategy. Although most forex traders have powerful methods, traders still lose money. Do you know why? Because these strategies produce profit now and then but need more consistency. Hull moving average is a powerful indicator, although it is not found by default in mt4 or mt5. If you follow this simple strategy, you could profit consistently and become a long-run racehorse in the forex market.