The Double Exponential Moving Average (DEMA) is a forex indicator designed to reduce lag and improve trend-following accuracy. In this guide, we’ll explore how DEMA works, its advantages, and the best trading strategies to use it effectively.
The Double Exponential Moving Average (DEMA) is a modified version of the Exponential Moving Average (EMA) that reduces lag, providing traders with faster trend signals. Developed by Patrick Mulloy, DEMA helps traders react more quickly to price movements compared to traditional moving averages.
DEMA is calculated using the following formula:
DEMA = (2 × EMA(n)) – EMA(EMA(n))
Where:
Recommended DEMA Settings:
Using two DEMAs with different periods helps generate trade signals:
Best DEMA Combinations:
Pairing DEMA with MACD (Moving Average Convergence Divergence) improves trade confirmation:
✅ Pros:
❌ Cons:
The Double Exponential Moving Average (DEMA) is a powerful trend-following indicator that helps traders reduce lag and improve signal accuracy. When used correctly, it can enhance trade entries and exits, making it an essential tool for forex traders.
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