Double Exponential Moving Average (DEMA)

Definition

Double Exponential Moving Average (DEMA) is an enhanced moving average indicator designed to reduce the inherent lag of typical moving averages like EMA (Exponential Moving Average). DEMA achieves faster responsiveness and smoother trend lines by combining two exponential moving averages (EMAs).

Calculation

DEMA consists of two parts: a regular EMA and an EMA based on that EMA. The formula for calculating DEMA is as follows:

DEMA=2×EMA−EMA(EMA)

Where:

• EMA\text{EMA}EMA is the Exponential Moving Average of the base data.

• EMA(EMA)\text{EMA}(\text{EMA})EMA(EMA) is the Exponential Moving Average of the EMA.

Through this formula, DEMA not only smooths price data but also reduces lag, making it more sensitive to price changes compared to a single EMA.