HMA (Hull Moving Average)

Everything is built around HMA

Alpha Trend is built around a “BaseLine” that creates and informs many other aspects of the system, called the HMA (Hull Moving Average). The BaseLine provides trend momentum identification, support and resistance and dynamic coloring based on the current price. The BaseLine is a composite moving average that has been specifically crafted using elements of two distinct types of moving averages, which are selectable and customizable by the user.

HMA Calculation

The formula for the Hull Moving Average uses two different weighted moving averages (WMAs) of price, plus a third WMA to smooth the raw moving average. There are three parts to the calculation. In the formulas listed below, “n” indicates the number of periods specified by the chartist.

First, calculate two WMAs: one with the specified number of periods and one with half the specified number of periods.

WMA1 = WMA(n/2) of price
WMA2 = WMA(n) of price

Second, calculate the raw (non-smoothed) Hull Moving Average.

Raw HMA = (2 * WMA1) - WMA2

Third, smooth the raw HMA with another WMA, this one with the square root of the specified number of periods.

HMA = WMA(sqrt(n)) of Raw HMA