Recently I was asked to supply one of the EquisMetastock members with the formula for the TEMA. Initially I responded that the TEMA was just a triple smoothed EMA.

It is not and I was wrong!

After some investigating I came up with a formula that demonstrates how the TEMA and its lesser valued DEMA were derived by the inventor, Patrick Mulloy. They both use unique methods to determine their final values. I believe the following information explains everything.

DEMA and TEMA are unique smoothing indicators developed by Patrick
Mulloy. TEMA was originally introduced in the January 1994 issue
of Technical Analysis of Stocks & Commodities magazine. As Mr.
Mulloy explains in the article:

"Moving averages have a detrimental lag time that increases as the
moving average length increases. The solution is a modified version
of exponential smoothing with less lag time." TEMA is an acronym
that stands for Triple Exponential Moving Average. HOWEVER, the
name of this smoothing technique is a bit misleading in that it is
not simply a moving average of a moving average of a moving
average. It is a unique composite of a single exponential moving
average, a double exponential moving average, and a triple
exponential moving average that provides less lag than either of the
three components individually.


{Arun DTMA}
{Plots either a DEMA or TEMA}
Plot:= Input("Display [1] Dema[2] Tema",1,2,2);
Period:= Input("What Period",1,250,10);
EMA1:= Mov(C,Period,E);
EMA2:= Mov(EMA1,Period,E);
EMA3:= Mov(EMA2,Period,E);
Difference:= EMA1 - EMA2;
DMA:= EMA1 + Difference;
TMA:=(3*(EMA1-EMA2))+EMA3;
If(plot=2,TMA,DMA);{end}

Enjoy,

Preston