HODL Line: An Asymmetric Trend Filter with Optional HMA Smoothing

Summary

The HODL Line is a trend filter intended to distinguish periods when a buy-and-hold investor may stay invested from periods to avoid holding. It sets a step-like threshold from the recent highest and lowest closes, adjusted by an asymmetry factor. A crossing above the line signals an uptrend; a crossing below signals a downtrend. With smoothing enabled, a Hull Moving Average of price is used for crossings instead of raw closing price.

Users can choose among sensitivity settings that determine the lookback period, and can enable smoothing to reduce false signals at the cost of slower responses. The included published backtest configuration uses BTC on Binance futures over a short May 2022 interval, but the document provides no performance statistics or evidence of robustness. The indicator is described as suitable beyond crypto, though no cross-market results are shown. As with other lagging trend filters, parameter choice and delayed signals can affect entries and exits.

Key ideas

• The filter builds a threshold from the highest and lowest closes over a selected lookback, with an asymmetry adjustment.
• A crossing above the threshold indicates an uptrend, while a crossing below indicates a downtrend.
• Optional Hull Moving Average smoothing can reduce false crossings while delaying signal response.
• Sensitivity settings change the lookback horizon to suit different holding periods.
• The published BTC configuration is brief and supplies no performance statistics to validate the method.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.