Patrick Mulloy's 1994 moving averages cancel the lag of an EMA by taking a linear combination of stacked EMAs. DEMA uses two layers, TEMA three, sharpening price tracking without losing smoothness.
The Double Exponential Moving Average (DEMA) and the Triple Exponential Moving Average (TEMA) were both introduced by Patrick Mulloy in 1994. In a paper published in Technical Analysis of Stocks & Commodities, he started from a single question.
Can the lag of an EMA be cancelled by stacking more EMAs?
A standard exponential moving average (EMA) weights recent prices more heavily than a simple moving average (SMA), so it reacts faster, yet because it is still a smoothing operation it always lags. When price turns, the line takes a beat to catch up. Shortening the period reduces the lag but makes the line jumpy. Faced with this chronic trade-off, Mulloy chose not to shorten the period but to add and subtract several EMAs so that the lag components cancel each other out.
DEMA combines an EMA in two layers, TEMA in three. The names do not mean "apply EMA twice or three times" in isolation. They denote a moving average built as a two- or three-stage linear combination of EMAs. Miss this and you misread the formula.
How to Read
OANDA:USDJPY
It appeals to intraday and short-term traders who find a plain EMA a beat too slow. Common settings are around 21 and 55, but because the design is lag-corrected, the same period moves far faster than an EMA would.
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