HMA stands for Hull Moving Average. It is used to determine current market trends. The curve of HMA is significantly smoother than that of Simple Moving Average (SMA). The HMA aims to reduce the time delay between HMA price and price. However, it does not follow price activity closely. This indicator is designed for trading long-term and medium-term.
Because it is smoother than a Simple Moving Average, the Hull Moving Average can withstand rapid price changes. The HMA uses WMA (Weighted moving averages) to reduce the smoothing effect.
The Hull Moving Average can be used in the same way as Average Directional Index (ADX), or Aroon indicators to identify the market trend. If the HMA curve moves up, the trend in the market is also rising. It is better to trade long positions at this point. A downtrend would prevail if the HMA curve falls.
Like almost all technical indicators, it is important for traders to test their own trading rules and data settings. A trader’s or user’s strategy will be more effective if they have access to as many options as possible.
HMA based on market observation is the most efficient strategy. A trading signal is considered a reversal or crossing of the Hull line. If there is a turn down then short-positions should be taken. However, if the Hull line is up then long-term positions should be taken.
HMA indicator calculation method is based upon the most current mathematical method. This greatly improves the smoothness and precision of market signals. The HMA average line tracks the trend well and gives precise reversal signals.
An indicator is a mathematical calculation that can be applied to the volume or price of a security. This value can be used to predict future price changes. Technical analysis tools use information such as the security’s price, high, low, volume close, and so forth to calculate its value. The Hull Moving Average indicator, or HMA, adds a lot of depth to technical analysis in order to drive current market trends.