Moving averages are common technical indicators in forex trading. They are broadly used in technical analysis as an indicator which represents the average closing price of the market over a given time frame. Although different types of averages abound, two of the most common ones are Simple Moving Average and the Exponential Moving Average. Both of which are adopted in the basic structure of forex trading strategies. Alan Hull created the bespoke Hull Moving Average MT4; it consists of a smooth moving average and an incredibly fast-moving average. So today we can see if this one makes our best metatrader indicators page.
Why Adopt the Hull Moving Average MT4?
The Hull Moving Average MT4 is very often used in forex trading systems to execute strategies. It is typified by very little lag in the generated signals. Hull Moving Average is a vast improvement on moving averages. And the Hull Moving Average was created primarily to help overcome the challenge of lagging factors. It is inherent in most moving averages especially the Simple Moving Average. The strength of Hull Moving Average over other typical moving averages is that offers a lot more speed. While you gain the added advantage over most other traders because it helps you to attain a competitive edge over the pack.
One significant challenge with regular moving averages as alluded to earlier is its lagging factor. It is not ideal for trading. Being able to predict the future as accurately as possible or recognizing, where to exit your trade early enough is something every trader looks forward to. It is where the Hull Moving Average stands shoulder taller than others.
Application of the Hull Moving Average
There are several ways to put the indicator to profitable use. You can profitably put the tool to use by setting up one Hull Moving Indicator for MT4. It allows you to see changes in the market at a glance and take advantage of the changes visually observing the behaviour of the Hull Moving Average Indicator MT4. You can observe the sloping as well as the change of the sloping angle to guide you into buying and selling opportunities.
Another way to profitably use the Hull Moving Average MT4 is to load two HMA indicator for the crossover. It provides the opportunity to quickly gauge the market sentiments and be able to determine if it is a bearish or bullish market emphatically.
How it can be Used to Buy or Sell
The Hull Moving Average indicator was created as a functional price filtering tool. It contains the natural elements of the conventional moving averages; it impacts the price as support/resistance and market entry dynamics based on the angle of curves inclination. Besides, the Hull Moving Average permits a trader to decide the trend with the assistance of the colour model inherent the indicator.
In the event that an upward trend prevails, the Hull Moving Average changes its colour from red to blue. In this way showing a buying opportunity because the price may rise further after that. The difference in the shade of colour of the moving average would likewise flag a market entry. To enter a buy or sell can be tricky off course. That is why you can test the hull moving average in combination with a price action indicator.
When using Hull Moving Average for trading, when a change of slope occurs, the hull moving average indicator notifies you to be ready to buy or sell.
When the slope begins to point upward, it is an indication to get ready to buy. Consequently, you can enter immediately at market order or request a buy stop pending entry 1-2 pips above the peak of the candlestick that arises, making the slope to point upward.
When the slope begins to point downward, it indicates that you should get ready to sell. At that point, you can place a sell market order or request a sell stop pending exit 1-2 pips under the low of the candlestick that causes the slope of hull moving average indicator to point down.
Bearish pattern Chart
The Hull Moving Average evens price changes, in addition to eradicating signals delays; reasons for individual uniqueness in computation reached this impact. Therefore, a trader can utilize the indicator during trades without any fear that the Hull Moving Average would give delayed signals to trade an asset or enter the market.
Besides having independent utilization of the Hull Moving Average MT4 in trading, the Meta Trader indicator can also be applied as a market entry filter with trade being opened based on different indicators or various strategies for analysis. For this situation, the moving average can be utilized for shutting exchanges. The tool can be applied as follows when the indicator changes its colour to the contrary one. A trader should close a trade opened in line with the price trend while holding on for another market entry signal.
The HMA calculation is done as follows:
HMA(x, n) = WMA( 2*WMA(x, n/2) − WMA(x, n), sqrt(n) )
1. Calculate the WMA (Weighted Moving Average) for half of the period under consideration and multiply your result by 2.
2. Then, calculate the WMA of the full period under consideration and subtract your answer from the first result.
3: Take the square root of the full-time period under consideration.
The formula for HMA calculation is:
HMA= WMA(2*WMA(n/2) − WMA(n)),√(n))
HMA(n) = WMA(2*WMA(n/2) – WMA(n)), sqrt(n))
Can also be written as follows:
HMA(n) = WMA(2*WMA(n/2) – WMA(n)), √(n))
A trader needs not to bother about how to compute HMA manually as computation is done automatically by the Indicator software.
Drawbacks with the indicator
One serious drawback with Hull Moving Average is that as an average moving indicator, it is not consistent with reality. Its value of the average price is more often than not seriously overestimated, making it very dangerous to use over a short period.
It is not recommended to use Hull Moving Average without an additional filter.
Last Remarks on Hull Moving Average MT4
The primary reason for developing the Hull Moving Average was in pursuit of designing a moving average. It is both responsive to present market price activity while maintaining curve smoothness. Over the years, the indicator has gained wide acclaim because of its speed and smoothness, which is a significant advantage over other moving averages.
While recommending it as a trading tool, it is essential to mention the clause. It should not be used alone; rather, it should be adopted in conjunction with other indicators.
Furthermore, you could use other indicators and tool present here through this link to boost your earning.