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Trading Indicator Toolbox – DEMA - The Moving Average to Smooth Out Everything

DEMA Trading Indicator
INTRODUCTION

DEMA stands for Double Exponential Moving Average, and is a calculation based on both a single exponential moving average and a double exponential moving average.

In general, the EMA gives more weight to recent price data than the SMA. This implies that the EMA will follow the more recent price action more closely than the SMA. The more reactive, the quicker the change in trend.

The DEMA trding indicator calculation reduces the lag even more and the calculation is as follows:

DEMA = (2*EMA(n)) – (EMA(EMA(n))), where n = period

The main purpose of the moving average is to smooth out the price fluctuations and reduce the noise to a certain extent so that the trend becomes clear. However, smoothing creates a lag which results in later signals. DEMA allows achieving a smaller lag for the same amount of smoothing.

Read the Full Article thats has examples and Charts HERE >>>