Trend indicators
DEMA: Double Exponential Moving Average
A faster moving average that cuts much of the usual delay, so it turns closer to the actual turning points.
L’idée en termes simples
All moving averages lag behind the price. DEMA estimates that lag and subtracts it: it takes an ordinary EMA, measures how far a second, smoother EMA trails it, and pushes the line forward by that amount.
Mode de calcul
Calculate an EMA of the price, then an EMA of that EMA. DEMA is twice the first minus the second.
EMA1 = EMA(close, N)
EMA2 = EMA(EMA1, N)
DEMA = 2 × EMA1 − EMA2 (default N = 14)Comment l’utiliser
- Use it where you would use an EMA but want quicker signals.
- Crossovers of price and DEMA, or of a short and a long DEMA, signal trend changes earlier.
Tirer des conclusions
- Because it is quick, DEMA is better at catching turns and worse at ignoring noise.
Exemple
With N = 14 on a 1-hour chart, DEMA turns down two candles after a top where a 14-period EMA turns down four or five candles after it.
Les prix des exemples sont donnés à titre d’illustration.
Points de vigilance
- More speed means more false signals in choppy markets.
Un peu d’histoire
Patrick Mulloy introduced DEMA in Technical Analysis of Stocks & Commodities magazine in 1994.
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