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DEMA and TEMA (Double and Triple Exponential Moving Average)
Moving averages that apply EMA calculations multiple times and combine them with a specific formula to further reduce lag compared to a single EMA.
DEMA (Double Exponential Moving Average) and TEMA (Triple Exponential Moving Average), developed by Patrick Mulloy, apply the EMA calculation multiple times to the same data and combine the results with a specific formula, designed to further reduce the lag a standard single EMA still carries.
TEMA applies the technique one layer further than DEMA, generally reacting even faster to price changes, at the cost of being correspondingly more sensitive to short-term noise. See Kaavon's dedicated DEMA and TEMA article for the full calculation and the trade-off involved.
Examples
- TEMA generally reacts to a price change faster than DEMA, which in turn reacts faster than a standard single EMA of the same length.
- DEMA and TEMA's reduced lag comes at the cost of increased sensitivity to short-term price noise, the same trade-off most faster-reacting moving averages make.