Investing & Trading

FIR Hann Study

By Samantha Baltodano


TL;DR:

The FIR Hann Indicator is a tool that helps traders filter data to find a balance between a simple moving average's filtering ability and its lag effect. 


It is a type of filter called an FIR filter, which helps remove unwanted noise from signals. The Hann window function is a weighting system used in the FIR Hann Indicator that assigns weights to data points. 


The indicator can be used to identify trend changes and potential buying or selling opportunities.


You can test this indicator here.



What Is The FIR Hann Study?

When it comes to technical analysis, there are a wide variety of strategies that traders use to identify potential trading opportunities. One indicator is the FIR Hann Indicator. 


This indicator is designed to filter data in order to find a balance between the filtering capabilities of a simple moving average and its lag effect. 


The simple moving average is a common strategy used by traders to identify trends. However, it can be lagging, meaning it can be late to identify the start of trends. The FIR Hann Indicator is designed to address this issue by using a weighting system that gives more weight to recent data points.


The FIR Hann Indicator can be used in a variety of ways. It can be used to identify trend changes, as well as to identify potential buying or selling opportunities. Traders may also use the FIR Hann Indicator in conjunction with other indicators to confirm signals.


So, what really is the FIR Hann Indicator?


Let’s break it down into its two components: FIR and Hann.


The FIR Hann Indicator is a type of finite impulse response (FIR) filter. FIR filters are a type of digital filter that use a finite number of inputs to produce a finite number of outputs. These filters are often used in signal processing applications to remove noise or unwanted frequencies from a signal.


In simpler terms, filters like this use a specific amount of information to make sure they only give out the right amount of information back. These filters can be used to get rid of any extra noise or unwanted sounds that might get mixed in with the important information.


The Hann window function is a weighting system that is commonly used in FIR filters. It is a raised cosine function that assigns weights to data points. 


The Hann window function is designed to give more weight to data points around the middle of the filter's length and less weight to data points at the beginning and end of the filter's length. 


The FIR Hann Indicator uses the Hann window function to calculate its weighting system.



Calculation

The FIR Hann Indicator uses the following formula to calculate its weighting system:


  • w(n) = 0.5 - 0.5cos(2pin/N)


Where:  

  • w(n) is the weight assigned to the nth data point, 
  • N is the length of the filter, 
  • and n is an integer that ranges from 0 to N-1.


The FIR Hann Indicator is calculated by multiplying each data point by its assigned weight and summing the results. 


The sum is then divided by the sum of the weights to obtain the filtered value.



Trade Signals

The FIR Hann Indicator can be used to generate trade signals. 

  • When the indicator crosses above the price, it may be a signal to buy. 
  • When the indicator crosses below the price, it may be a signal to sell. 


However, traders should use caution when using the FIR Hann Indicator in isolation. It is important to consider other factors, such as market trends, before making a trading decision.



Test The FIR Hann Study

Great news! 


You can back test this exact strategy on historical data for any of your favorite symbols using TradingView. 


This strategy has already been built and all you have to do is log in and take it for a spin. You can access this indicator here.


If you’re new to back testing and to TradingView, don’t worry. I created a step-by-step guide you can follow to begin testing the FIR Hann Study.



Summary

  • The FIR Hann Indicator is an indicator used by traders to filter data and find a balance between the filtering capabilities of a simple moving average and its lagging effect.
  • It is designed to give more weight to recent data points to address the issue of the simple moving average being lagging.
  • The FIR Hann Indicator uses the Hann window function to calculate its weighting system, which gives more weight to data points around the middle of the filter's length and less weight to data points at the beginning and end of it.
  • The calculation of the FIR Hann Indicator is based on a specific formula, which multiplies each data point by its assigned weight and sums the results.
  • The FIR Hann Indicator can be used to generate trade signals, but traders should consider other factors before making a trading decision.


FIR Hann is just one of many studies that Archaide automates. For a full list of strategies and studies available click here.


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