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Close, typical price or HL2: which price your moving average uses
Posted: Sun Oct 18, 2026 8:15 am
by Fairman
Close, typical price or HL2: which price your moving average uses
Most people leave the price source of a moving average on the default, which is usually the close. But most platforms let you choose others: open, high, low, median price (high plus low divided by two, often called HL2), typical price (high, low and close divided by three), or weighted close.
The difference is usually small, but it's not nothing. A moving average on the close reacts to where each bar finished. One on HL2 reacts to the middle of each bar's range, which ignores where it closed. Typical price is somewhere between.
On bars with long wicks, the difference shows up. A bar that spikes up and closes near its low pulls an HL2 average up more than a close average.
For crossover systems, the source can change signal timing by a bar or two. For trailing stops based on moving averages, it can change exit points slightly.
Which is better? There's no general answer. The close is the most common, so it matches what most people see. HL2 and typical price smooth out the effect of where the bar closes, which some people like on noisy lower timeframes.
If you share charts or compare with others, check the source. Two traders with the same moving average length but different sources will see different lines.
Re: Close, typical price or HL2: which price your moving average uses
Posted: Sun Oct 18, 2026 11:13 am
by FTtrader
Fairman wrote: Sun Oct 18, 2026 8:15 am
Close, typical price or HL2: which price your moving average uses
Most people leave the price source of a moving average on the default, which is usually the close. But most platforms let you choose others: open, high, low, median price (high plus low divided by two, often called HL2), typical price (high, low and close divided by three), or weighted close.
The difference is usually small, but it's not nothing. A moving average on the close reacts to where each bar finished. One on HL2 reacts to the middle of each bar's range, which ignores where it closed. Typical price is somewhere between.
On bars with long wicks, the difference shows up. A bar that spikes up and closes near its low pulls an HL2 average up more than a close average.
For crossover systems, the source can change signal timing by a bar or two. For trailing stops based on moving averages, it can change exit points slightly.
Which is better? There's no general answer. The close is the most common, so it matches what most people see. HL2 and typical price smooth out the effect of where the bar closes, which some people like on noisy lower timeframes.
If you share charts or compare with others, check the source. Two traders with the same moving average length but different sources will see different lines.
Hello Fairman,
This is an excellent topic and one of the most overlooked variables in both discretionary technical analysis and algorithmic system design. Most traders drop an SMA or EMA onto their chart, leave the applied price on Close, and never give it a second thought. But when you start breaking down market micro-structure—especially on lower timeframes like the M15—that default setting can actually work against you.
Here is an extended breakdown of how these different price sources impact market data, especially in high-volatility environments.
Re: Close, typical price or HL2: which price your moving average uses
Posted: Sun Oct 18, 2026 11:13 am
by FTtrader
The "Close" (The Psychological Default)
The Close is the industry standard because it represents the final consensus between buyers and sellers at the end of a specific period. On a D1 or H4 chart, the close holds massive psychological weight. Breakouts are confirmed or denied based on where the daily candle closes.
However, in continuous, 24-hour markets like Spot Forex, Gold (XAUUSD), and Crypto, a candle "close" on an M15 or H1 chart is somewhat arbitrary—it's just a snapshot in time dictated by your broker's server timezone (usually GMT+2/3). Because of this, relying purely on the close can make your moving averages highly susceptible to end-of-hour volatility spikes.
Re: Close, typical price or HL2: which price your moving average uses
Posted: Sun Oct 18, 2026 11:13 am
by FTtrader
Median Price / HL2 (The Noise Filter)
Calculated as (High + Low) / 2.
If you are scalping or trading intraday, HL2 is arguably one of the best applied prices you can use. It plots the absolute mathematical center of the candle's traded range, completely ignoring the open and close.
Why does this matter? Liquidity grabs and stop hunts. When you see a massive pin bar with a long wick on XAUUSD, a Close-based MA will be violently yanked in the direction of the candle body. An HL2-based MA absorbs that entire wick and anchors to the midpoint of the volatility, providing a much smoother, truer representation of the mean price for that period. It significantly reduces false crossover signals in choppy, ranging markets.
Re: Close, typical price or HL2: which price your moving average uses
Posted: Sun Oct 18, 2026 11:14 am
by FTtrader
Typical Price / HLC3 (The Algorithmic Sweet Spot)
Calculated as (High + Low + Close) / 3.
Typical price strikes a perfect balance. It accounts for the total extreme range of the candle (the High and Low) but anchors it slightly with the final settlement (the Close). If you look closely at institutional volume indicators like VWAP (Volume Weighted Average Price) or oscillators like the CCI (Commodity Channel Index), they use Typical Price by default. For trailing stops via moving averages, HLC3 often keeps you in the trade just a fraction longer during a pullback than a Close-based MA would.
Re: Close, typical price or HL2: which price your moving average uses
Posted: Sun Oct 18, 2026 11:14 am
by FTtrader
High & Low (The Channel Builders)
While rarely used for a single moving average line, applying an MA to the High and another to the Low is incredibly useful for building dynamic volatility channels (similar to Keltner Channels or Donchian Channels). A 10-period SMA set to the High and a 10-period SMA set to the Low creates a dynamic support/resistance band. In strong trends, price will "ride" the High MA band, and you can use a break of the Low MA band as a mechanical exit trigger.
Re: Close, typical price or HL2: which price your moving average uses
Posted: Sun Oct 18, 2026 11:14 am
by FTtrader
An EA Developer's Perspective
From a system architecture standpoint—whether you are coding in MQL4/5 for MetaTrader or C# for cTrader—changing the applied price enum (e.g., from PRICE_CLOSE to PRICE_TYPICAL) can completely alter the backtested expectancy of a strategy. A crossover system that bleeds money using the Close might suddenly show a positive profit factor using HL2 simply because the median price filters out the micro-whipsaws that trigger premature entries.
Re: Close, typical price or HL2: which price your moving average uses
Posted: Sun Oct 18, 2026 11:15 am
by FTtrader
The Verdict
If you are trading D1 charts, stick to the Close. The daily close is a global benchmark.
If you are scalping M15 or trading H1 charts on volatile assets like Gold or Crypto CFDs, experiment with HL2 or Typical Price. They act as a built-in low-pass filter, smoothing out the broker-specific noise and giving you a much clearer picture of the actual trend.
Has anyone else here actively backtested HL2 versus Close on their intraday crossover strategies? I'd be curious to see how much it impacted your specific win rates.
Re: Close, typical price or HL2: which price your moving average uses
Posted: Sun Oct 18, 2026 1:37 pm
by Fairman
Some indicators have the source baked in. ATR uses high, low and previous close. Stochastic uses high, low and close. Changing the source on those isn't always possible, and where it is, it changes the indicator's meaning. The price source question mostly applies to moving averages, Bollinger bands, RSI and similar indicators that work on a single price series. For those, it's a setting worth noticing, especially when copying settings from a video or another platform. Copying a setting from someone else without the source can mean the line you see differs from theirs, even with the same length. A quick check of the input settings saves a lot of confusion.
Re: Close, typical price or HL2: which price your moving average uses
Posted: Sun Oct 18, 2026 6:11 pm
by Fairman
On tick volume or Heikin Ashi charts, the price source matters more. If your chart shows Heikin Ashi candles and you apply a moving average, some platforms calculate it on the real prices and some on the Heikin Ashi values. The two can differ quite a bit. Checking what your platform does avoids being surprised when the average sits in a different place from what you expected, or when a strategy tested on one platform behaves differently on another. A quick test is to plot the same average with both sources and see whether they line up on a few recent bars. If they don't, you know the platform is using a different source than you assumed.