Hull Moving Average in plain English
The Hull Moving Average HMA is a moving average designed to look smooth while reacting faster than many traditional averages. If you have used SMA or EMA you already know the core tradeoff in moving averages smoothness versus lag. Smoother lines usually respond later and faster lines can become noisy.
HMA tries to reduce that lag without turning the line into a jittery mess. It does this by combining weighted moving averages in a way that pulls the line closer to recent price action while still averaging enough data to keep the trend readable. For trend following that matters because many decisions are binary at the margin: is price trending or chopping and is momentum improving or fading.
If you are building a moving average toolkit on your charts HMA fits best as a trend context line rather than a standalone entry signal. Think of it as a tool to keep you aligned with direction and to spot transitions early without constantly flipping bias.
The simple HMA calculation
HMA is built from weighted moving averages WMA and a final smoothing step using a shorter period based on the square root of the original length.
A common definition looks like this:
HMA n = WMA of 2 times WMA price n over 2 minus WMA price n using period square root of n
Written more clearly:
HMA n = WMA( 2 × WMA(price, n/2) − WMA(price, n), √n )
What this does conceptually:
It creates a fast component 2 × WMA(price, n/2), subtracts a slower component WMA(price, n) to reduce lag, then smooths the result with WMA over √n so the line stays readable.
You do not need to calculate HMA by hand. The value is understanding the levers: n controls how responsive the line is, and the √n step is why HMA can stay smooth even when it reacts quickly.
HMA periods traders actually use
There is no universal best HMA setting because period choice depends on timeframe volatility and how long you expect trends to persist. What you want is a period that matches your decision horizon.
Common HMA periods you will see on charts:
- 9 to 16 for short term direction on intraday and very active swing charts
- 20 to 21 for a fast but usable swing trend read on daily charts
- 34 to 55 for a steadier trend filter that avoids many small pullbacks
- 100 and above when you want a higher timeframe bias line more than a trading trigger
A practical way to pick your first HMA period is to choose the number of bars that represents one decision cycle for your strategy. If you review positions weekly a 34 to 55 bar line often makes more sense than a 9 bar line. If you manage trades daily a 20 to 21 bar line may align better with your workflow.
How HMA behaves on real charts
HMA usually hugs price more closely than SMA and often turns earlier than EMA at similar lengths. That early turning is the feature but it also explains the main failure mode: HMA can change slope quickly during noise.
You will typically notice three behaviors:
First HMA shows trend slope clearly. Rising HMA with price above it is a clean visual definition of an uptrend. Falling HMA with price below it is the mirror.
Second HMA can act like a dynamic area of support or resistance during steady trends. In strong uptrends price often pulls back toward the line and resumes. In downtrends rallies can stall near it.
Third HMA can whip in ranges. Because it is designed to reduce lag it will also react to mean reversion swings. If the market is not trending HMA will look busy and cross price frequently.
Why trend followers use HMA
Trend followers use moving averages to stay on the right side of the market more often than not. HMA is popular in that role because it can signal a regime change earlier than slower averages while staying smoother than many ultra fast filters.
HMA helps with three jobs in trend following:
Direction filter: trade long bias when price is above a rising HMA and short bias when price is below a falling HMA
Pullback context: during trends HMA can help you judge whether a dip is a normal retracement or a deeper change in character
Exit structure: HMA slope changes or closes back through the line can be used as a soft exit cue especially when combined with price action
Use HMA as confirmation rather than a trigger. In practice the best entries still come from breakouts pullbacks to support tight consolidations and risk management. HMA just improves your odds of taking those setups in the right environment.
When HMA tends to work and why
HMA tends to work best when the market offers directional persistence. That usually means trends with orderly pullbacks and a clear sequence of higher highs and higher lows or the opposite in downtrends. In those conditions a responsive but smooth average is useful because it keeps you aligned without forcing constant re entries.
A simple operating rule set many trend traders adopt is:
- Only look for longs when HMA is rising and price is above it
- Only look for shorts when HMA is falling and price is below it
- If HMA is flat treat it as a warning that regime may be neutral
This works because it aligns you with the path of least resistance. In a true trend pullbacks often resolve in the trend direction and the HMA slope helps you avoid fighting that drift.
When HMA tends to fail and why
HMA fails most often in sideways markets and during volatility spikes that reverse quickly. In ranges the market alternates direction frequently and a low lag average will follow those flips. That creates whipsaws where you enter and exit repeatedly with little progress.
Two other common failure scenarios are thin liquidity and news driven gaps. In illiquid names or around major events price can jump far from the line then mean revert. HMA will swing with those moves and can tempt you into late reactions.
Common mistakes to avoid:
- Using a very short HMA as an entry signal without any market regime filter
- Treating one close below HMA as a hard exit in an otherwise strong trend
- Ignoring timeframe alignment such as taking daily long signals when weekly HMA is falling
The fix is not complicated. Slow the period slightly add a basic regime check and combine HMA with structure such as breakout levels prior highs lows and volatility based position sizing.
Summary
Hull Moving Average HMA is a moving average built from weighted moving averages designed to reduce lag while staying smooth. It is calculated by combining fast and slow WMA components then smoothing the result over a square root period. Traders commonly use HMA periods around 9 to 16 for fast direction 20 to 21 for daily swing context and 34 to 55 for steadier trend filtering.
On charts HMA tends to hug price turn earlier than slower averages and show slope changes clearly. It works best in markets with persistent trends and orderly pullbacks where a responsive trend filter helps you stay aligned. It fails most often in ranges volatility spikes and low liquidity conditions where whipsaws dominate. Use HMA as context and confirmation and let entries and exits be driven by price structure risk and market regime.