HMA TREND Trading Guide
Last updated: June 17, 2026
The HMA Trend (2-State) is a smooth trend-following overlay indicator based on the Hull Moving Average (HMA). Designed by Alan Hull, the HMA solves the age-old dilemma of making a moving average responsive to current price action while remaining extremely smooth and filtering out short-term market noise.
How it works
The Hull Moving Average achieves its low lag and smoothness through a specific combination of Weighted Moving Averages (WMA):
- Calculates WMA over half the period:
WMA(period/2). - Calculates WMA over the full period:
WMA(period). - Calculates the difference and multiplies by 2:
diff = 2 * WMA(period/2) - WMA(period). - Smoothes the difference using WMA over the square root of the period:
HMA = WMA(diff, sqrt(period)).
The trend is classified as bullish (state = 1) when the HMA line is rising, and bearish (state = -1) when the HMA line is falling. Crossovers and changes in direction trigger instant reversal signals.
What does the indicator show?
- HMA Line: A smooth overlay line drawn directly on the price chart:
- Green Line: HMA is rising, indicating a Bullish Trend.
- Red Line: HMA is falling, indicating a Bearish Trend.
- Trend State: A binary strategy output (1 for Bullish, -1 for Bearish).
- Signal: Outputs 1 on the exact candle the trend flips to bullish, and -1 when it flips to bearish.
Trading Strategies
- Trend Following Crossovers: Enter Long when the HMA line turns Green, and enter Short when the HMA line turns Red.
- Trend Filter: Use HMA Trend on higher timeframes (e.g. 4H or Daily) to filter out entries on lower timeframes (only take trades in the direction of the higher-timeframe HMA).