Technical Glossary / Technical Indicators – Trend Indicators
Triple Exponential Moving Average (TEMA)
A further lag-reduced average that uses the EMA three times.
Formula
TEMA = 3 x EMA - 3 x EMA(EMA) + EMA(EMA(EMA)). All EMAs share the same period.
Definition
TEMA, also from Mulloy, applies the lag-reduction idea one step further than DEMA. It combines the single, double, and triple smoothed EMA so the line stays nearer to price. It is the most responsive of the three and the most willing to follow noise if the period is short.
How it works
On a smooth trend TEMA sits close to price and turns quickly when the trend turns. On a range it will flip often, because responsiveness is the design goal. Lengthen the period if you want fewer turns. Do not expect TEMA to be calm and early at the same time.
How traders use it
Use it as a fast trail or as the fast line in a cross against a slower SMA. Judge it by how it behaves in the ranges you actually trade, not only on the trend example in a textbook.
Common mistakes
Replacing every average in a system with TEMA and assuming the system improved. The signals multiply, and so do the whipsaws.
Limitations
Like DEMA, TEMA is only closes. It has no knowledge of support, news, or the higher timeframe. A tight TEMA trail in a news spike will stop you at the spike.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.