Triple Exponential Moving Average (TEMA)

TEMA Definition

TEMA stands for Triple Exponential Moving Average and is used to identify trends in the market.   It was developed by Patrick Mulloy and was first published in the 1994 issue of Technical Analysis of Stocks and Commodities.  Mulloy discovered that by developing a unique composite of a simple exponential moving average, double exponential moving average and a triple exponential moving average, he could reduce the amount of lag between the indicator and price action.  The TEMA is a custom indicator and is not included in many trading platforms. 

Trading with the Triple Exponential Moving Average

Mulloy discovered that by modifying the MACD to with a TEMA input, it produced better results than the standard MACD, which is based on the exponential moving average. 

Triple Exponential Moving Average Formula

Below is the formula for the triple exponential moving average:

(3 * EMA) - (3 * EMA of EMA) + EMA of EMA of EMA)

Where:

EMA = n-day exponential moving average