Hull Traders’ Guide: Forex Trading And Mining Tips For Easy Profits

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Hull Traders’ Guide: Forex Trading And Mining Tips For Easy Profits – The Hull Moving Average is a lesser-known charting indicator, and our tests show that it outperforms other moving averages. However, with only a 17% win ratio, the Hull Moving Average is not recommended for trading as it performs poorly in consolidating markets.

Hull’s moving average is considered better compared to other moving averages and according to our tests it performs slightly better. I do not recommend using HMA as a trading tool because it is inaccurate and can lead to trading losses.

Hull Traders’ Guide: Forex Trading And Mining Tips For Easy Profits

Hull Traders' Guide: Forex Trading And Mining Tips For Easy Profits

Can traders rely on HMA as an indicator? I tested 30 Dow Jones stocks and 4 HMA setups over 8 years, corresponding to 960 years of data, to analyze the success rates to get an answer.

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The Hull Moving Average (HMA) is an advanced form of the Exponentially Weighted Moving Average (EWMA). It was created by financial analyst and trader Alan Hull. HMA attempts to reduce the lag associated with traditional moving averages by weighting prices differently over time. As a result, the indicator is more sensitive, quickly adapting to the current market.

It also has some advantages over other indicators, such as filtering out more false signals and providing clearer trading signals. HMA can be used as a standalone indicator or in combination with other indicators such as MACD or RSI. Because of its flexibility, HMA can be used in a variety of trading strategies, from short-term scalping to long-term trend-following techniques. It is a great tool for any trader who wants to stay ahead of the market.

The Hull Moving Average is a weighted moving average that gives more weight to recent prices and less weight to older prices. This creates a smoother line than other moving averages, eliminating the lag associated with traditional moving averages.

The HMA formula adjusts weights based on current market conditions, making it better suited for volatile markets. It also reduces the signals or false signals generated by other moving averages. The formula is more complicated than a simple moving average, but the results make it worth it. HMA can be used as an independent indicator or combined with other indicators to create a trading strategy.

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A Hull Moving Average (HMA) is a moving average that assigns a different weight to each data point over a period. More recent data points are given more weight than earlier ones, which reduces noise and increases the sensitivity of the average to short-term price changes.

This diagram shows Hull’s moving average traffic light system. The chart shows three moving averages: the 10-period HMA in green, the 50-period HMA in amber, and the 100-period HMA in red.

The HMA is calculated by finding the sum of the square root of several price periods and dividing it by the exponential smoothing factor. This allows HMA to quickly adapt to new market conditions, making it ideal for trend-following strategies.

Hull Traders' Guide: Forex Trading And Mining Tips For Easy Profits

“WMA” stands for weighted moving average and “n” stands for the number of data points used to calculate the average. The Hull Moving Average combines weighted moving averages (WMAs) by discarding older data and increasing the weight of newer data. It incorporates both short-term and long-term data to create a smoother curve than either of these two indicators alone.

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HMA helps traders identify potential entry and exit points more quickly and provides support/resistance levels. It can also be used to identify trends and trend reversals. Another advantage of HMA is that it generates fewer false signals than other indicators such as MACD or RSI.

Trading the corpus moving average is similar to other moving averages; look for price crossing the HMA line or use multiple HMA lines and watch for crossovers to generate buy and sell signals.

This highlights recent prices and gives them more influence on the result. Regardless of the method used, traders should always be aware of how the weights they choose will affect their moving average calculations. In addition, it is also important to choose the right range for the formula, as the range must match the time horizon of the trader’s investment.

For example, a long-term investor might use a 200-day moving average, while a short-term investor might only look at the prices of the last five days. Finally, some traders will choose to use multiple moving averages with different ranges to identify strong market trends.

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The Hull Moving Average offers traders several advantages. First, the formula’s additional weighting of recent prices makes it more responsive to current market action than simple moving averages. This can be a big advantage in strong trends, as HMA will correct its levels much faster than other formulas. In addition, the formula is perfect for short-term and day traders who need to quickly identify changes in direction. Finally, most charting software packages already have built-in calculations, eliminating the need for complex formulas or manual calculations.

The main disadvantage of using the Hull moving average is its poor performance on OHLC and candlestick charts. Our research reveals the risks of using this indicator in trading strategies, especially during market consolidation. One of the main disadvantages of using moving averages is that they tend to underperform during periods of market or stock price consolidation, which can mean negative returns.

However, one potential limitation of HMA is its neglect of short-term volatility. While near-term price movements can be highly volatile, a long-term averaging technique such as the 200-day HMA may not fully capture these fluctuations. Thus, trading only HMA may miss critical short-term buying and selling opportunities. Also, the HMA is still a lagging indicator and only confirms trends once they have started. Therefore, investors must correlate the HMA with other indicators to stay ahead of the markets.

Hull Traders' Guide: Forex Trading And Mining Tips For Easy Profits

No, Hull’s moving average indicator is inaccurate, with a win rate of only 17%. As asset prices consolidate, HMA creates many small losses. Backtesting the HMA indicator to 30 stocks in the Dow Jones Industrial Average over 8 years yielded an average win rate of 17%, meaning it outperformed a buy-and-hold strategy 83% of the time.

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To test the HMA indicator, I used TrendSpider, a leading AI stock trading software with pattern recognition and a codeless backtesting engine. Testing was configured using OHLC with exit at next open. The Heikin Ashi daily chart used exit criteria on the next trading day HL2 (high price + low /2).

I test all indicators, including HMA, in standard recommended settings, in different time frames and using different types of charts; it gives an unbiased result. In addition, the entry and exit prices use the average of the high and low prices of the day, making testing more realistic.

Follow these Hull steps to set up backtesting in TrendSpider. Sign up for TrendSpider, select Strategy Tester > Entry Condition > Add Script > Add Parameter > Condition > Price > Greater Than > HMA. For sales criteria, select > Add Scenario > Add Parameter > Condition > Price > Less Than > Hull Moving Average. Finally, click Run.

To set up backtesting, I used TrendSpider, our recommended trading software for serious traders. The screenshot below shows the exact configuration for our HMA backtesting.

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This is an example of a 20-day housing moving average on an OHLC chart. Over 8 years, a trader using the Goldman Sachs 50-Day Corpus Moving Average. (Ticker: GS ) would gain 164%, but a buy-and-hold investor would only earn 52%. This is a positive example, but average failure rates of 83% for Hull’s moving average on the OHLC charts mean it is a poor choice to trade.

Testing standard HMA setups on a daily candlestick/OHLC chart proves this indicator to be poor, with a 17% chance of outperforming the buy-and-hold strategy over all timeframes tested.

After testing 960 years of data, Hull’s moving averages have an average win rate of 7%. The table below shows that the HMA 100 has a 10% chance of beating a buy-and-hold strategy, while the 200-day HMA has only a 7% success rate.

Hull Traders' Guide: Forex Trading And Mining Tips For Easy Profits

Hull’s moving average is much better on the Heikin Ashi chart. If the dealer were to use Amgen Inc. (Ticker. AMGN) 20-day moving average over 8 years, it would have made a 127% profit, exceeding the 37% return of the buy-and-hold strategy.

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The table below shows that by taking advantage of Heikin Ashi charts, the Hull Moving Average indicator becomes a winning strategy, especially the Hull Moving Average at 50, with a win rate of 77%.

After testing 960 years of data, the average win rate for Hull’s moving averages on the Heikin Ashi chart is 61%. This means that 39% of stocks traded using this strategy will fail to beat the buy-and-hold strategy. The 50-period HMA outperformed all other moving averages we tested, with a success rate of 77%.

Why do Heikin Ashi charts perform slightly better with HMA and other indicators such as Keltner channels and price momentum? I believe this is due to price averaging, which removes the extreme highs and lows associated with traditional OHLC bars. This means fewer trades in consolidating markets and fewer small losses.

Professional traders may think, as I did, that the Heikin Ashi chart

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