Double Exponential MA

Double Exponential Moving Average Technical Indicator (DEMA)

The Double Exponential Moving Average Technical Indicator (DEMA) is a tool developed by Patrick Mulloy and published in February 1994. It is used to smooth price series and can be applied directly on a price chart of a financial security. Additionally, it can also be used to smooth values of other indicators.

Advantages of DEMA

One of the main advantages of the DEMA indicator is its ability to eliminate false signals that may occur during saw-toothed price movements. This allows traders to save their positions during strong trends.

DEMA follows the price more closely than an EMA with the same period (dashed).

Calculation of DEMA

DEMA = 2 * EMA(PRICE, N) - EMA(EMA(PRICE, N), N)

Where:

EMA(PRICE, N) is the exponential moving average of the price over N bars;
EMA(EMA(PRICE, N), N) is the same exponential moving average applied a second time.