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Indicator Formula

Technical Details — Double Exponential Moving Average (DEMA)

Section titled “Technical Details — Double Exponential Moving Average (DEMA)”

Overview

Section titled “Overview”

The Double Exponential Moving Average (DEMA) reduces EMA lag by computing an EMA of the EMA, then using the formula 2×EMA - EMA(EMA). This cancels out much of the inherent lag in exponential smoothing.

Mathematical Derivation

Step 1 — Calculate First EMA

Section titled “Step 1 — Calculate First EMA”

Purpose: Standard EMA of closing prices.

$$EMA_1[t] = EMA(Close, n)$$

Where:

  • $$n$$ = Period

What This Measures: Standard exponentially smoothed price

Step 2 — Calculate EMA of EMA

Section titled “Step 2 — Calculate EMA of EMA”

Purpose: Apply EMA again to smooth the first EMA.

$$EMA_2[t] = EMA(EMA_1, n)$$

What This Measures: Double-smoothed price (more lag but smoother)

Step 3 — Compute DEMA

Section titled “Step 3 — Compute DEMA”

Purpose: Cancel out lag by doubling the first EMA and subtracting the second.

$$DEMA[t] = 2 \times EMA_1[t] - EMA_2[t]$$

What This Measures: Lag-reduced exponential average

Compact Formula Summary

$$DEMA[t] = 2 \times EMA(Close, n) - EMA(EMA(Close, n), n)$$

Default Parameter: Period (n) = 14

Complete Calculation Example

If EMA₁ = 44.59 and EMA₂ = 44.45:

$$DEMA = 2 \times 44.59 - 44.45 = 89.18 - 44.45 = 44.73$$

DEMA is closer to current price than either EMA — the doubling trick cancels lag.

Key Takeaways from the Example
  1. Lag Reduction: DEMA’s formula cancels much of the lag inherent in single EMA
  2. More Responsive: Reacts to price changes faster than EMA but slower than HMA
  3. Same Period: Uses the same period for both EMA calculations — only one parameter needed
  4. Can Overshoot: Like HMA, DEMA can temporarily lead price during strong moves