Is the Hull moving average better than a normal moving average? What will be the win rate
of the hull moving average trading strategy? In this video I took 100 trades with the Hull
moving average Trading Strategy, and here's what happened. If you have been trading even
for a little while, chances are you have probably heard about the simple moving average and
the exponential moving average. And if you are a subscriber of the Trading Rush Channel,
you already know the win rate of the Moving Average Trading Strategy. On the Trading Rush
Channel, we tested both, Simple moving average, and exponential moving average 100 times,
and both of them had a profitable win rate. The Hull Moving Average is not exactly like
the moving average that most traders are used to. So will it make more money than
the other moving average trading strategy? Let's find out. If you still don't know about
the profitable and simple moving average strategy that actually made money, check out the EMA and
SMA moving average strategy videos on the Trading Rush Channel. And Subscribe and ring
that notification bell, to see win rates of more trading strategies that we test and have
tested 100 times because you don't want to risk your money on a strategy that doesn't
even work.
This is a 100-period simple moving average, and this is a 100-period exponential moving
average. Now we know that the exponential moving average is different from the simple
moving average because it gives more importance to the latest candles. But visually they are
not that different from each other. The simple and exponential moving average are staying
close to each other. But, if you add the same 100 period Hull moving average, even your
dog can tell that the hull moving average is calculating the average in a different
way and is showing a different value on the chart.
The Hull Moving Average was created by Alan Hull, and its main focus was to smooth out
the moving average and reduce the lag. And that's exactly what the Hull moving average
does. On a trending chart, if you plot a 100 period SMA, EMA, and the Hull Moving average
at the same time, you will notice that the 100 period Hull moving average will stay very
close to the candles, while the Simple and Exponential will stay far away.
The Hull Moving Average is a moving average so people are going to use it to find the
direction of the trend. But the creator of the HMA indicator Alan Hull does not recommend
using the Hull as a crossover trading strategy. In other words, it is not recommended to use
the Hull Moving Average to generate crossover signals. Which makes sense, because the whole
point of making the HMA was to reduce the lag and show the change in direction quickly
as possible.
In an uptrend, traders look for buying opportunities when the Hull moving average starts to rise
up, and when the HMA is falling, traders look for short opportunities. Now let's be honest,
you are not going to take trades only based on a moving average. If you can trade only
with a moving average, you can probably trade without using a moving average like Hull.
Because if you look closely, you will notice that all Hull Moving Average is doing is sticking
close to the price. And if you remove the Hull Moving Average, you can still easily
tell where the price is going.
But what many of you wanted to find out was, if the Hull Moving Average was Better than
the Simple and Exponential Moving Average Trading Strategies, and what will happen if
we break the rules and use it as a crossover strategy. What will be the win rate of the Hull Moving
Average Strategy?
The Hull Moving Average Crossover Trading strategy is easy to understand and goes like
this. When the 100 period Hull moving average crosses above the 200-period simple moving
average, it's a buy signal. In the long setup, the stop loss goes below the 200
simple moving average. Similarly, when the 100 period Hull Moving Average crosses below
the 200-period simple moving average, it's a sell signal. In the short setup, the stop
loss goes above the 200 period moving average. Furthermore, the entry candle should not be
on or between the simple and Hull moving average. Simple as that.
So I tested the Hull Moving Average Trading Strategy 100 times, and here's what I found
out.
Number 1. The best part about the HMA strategy is the space between the Hull moving average
and the Simple Moving Average. In a long setup, since we are entering the trades when the
price is above both Hull and Simple Moving Average, the area between the Moving Averages
is acting as the Cloud of the Ichimoku Cloud Indicator. If you have watched the Ichimoku
Cloud Trading Strategy Video on the Trading Rush Channel, you already know that cloud is one
of the best parts about the Ichimoku Cloud Indicator and how it filters the slow trending
and range markets. By using the 200 period SMA with the 100 period Hull moving average,
we are creating an area similar to the cloud that filters some of the range markets on
a chart.
Number 2. If you take a look at the profit graph on the Trading Rush App, you will notice
that Hull Moving Average was making money consistently at the beginning. This was when
the price was making big moves after the entry signals. But since the market moves sideways
most of the time, a couple of trades were lost in a row. At one point, the Hull Moving
Average Trading Strategy lost 12 trades in a row. Now, remember, I tested this strategy
with a 1.5 to 1 reward risk ratio to compare it with other trading strategies we have tested
on the Trading Rush Channel. But while taking 100 trades with it, I noticed that many winning
trades had the potential to make more than 2 times more profit than the risk. In other
words, while using the Hull Moving Average Trading Strategy, it can sometimes be better
to trail the stop loss to catch the big move, and to get a high reward risk ratio. I have
already talked about some of the best trailing stop loss indicators on the Trading Rush Channel,
check it out to learn more.
So after taking 100 trades with the Hull Moving Average Trading Strategy, I got an approximate
win rate of 42 percent with a 1.5 to 1 reward risk ratio. Since we were booking more profit
than the risk, the HMA trading strategy still made money in the Trading Rush App, but this
profit was not as good as some other trading strategies we have tested on the Trading Rush
Channel. It won 4 trades in a row but lost 12 trades in a row. The Hull Moving Average
Crossover strategy is not that bad, it is just that your chances of making good money
with it are low. But let's see where it ranks up against other trading strategies we have
tested so far, by giving the Hull Moving Average Trading Strategy a TR score.
If you have watched the Golden Cross Trading Strategy Video or are already familiar with
it, you probably realized that the Hull moving average crossover strategy is very similar
to the Golden Cross Strategy. And surprisingly, both strategies got the same win rate after
testing 100 times. Since the Hull moving average got the same win rate as the Golden Cross,
it gets a 4.2 out of 10 in the Win Rate category, just like the Golden Cross Strategy.
It gets a 7.5 in the easy-to-use category. And gets a 4 out of 10 in the Reliability
Category. The profit graph of the Hull Moving Average Strategy was slightly better than
the profit graph of the Golden Cross Strategy and less noisy when compared with the profit
graphs of some other strategies that also got a win rate of around 42 percent. So in
the consistent profits category, it gets a 4 out of 10. And in the quality of the Trades
Category, it gets a 4.5 out of 10.
So the Hull Moving Average trading strategy gets a TR Score of 24.2 out of 50. And on
the Trading Rush Website, it ranks 17th from the top, below the RSI Supertrend Trading
Strategy, and above the Stochastic Strategy.
And that's all. Like the video, if you liked it. Subscribe and ring that notification bell,
to see win rates of more trading strategies that we tested 100 times. If you want me to
test your trading strategy 100 times, mention it in the comments below. After all, you don't
want to risk your money on a strategy that has a low win rate in the first place. Support
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Thanks a lot for watching.