Triangular Moving Average (TMA) – What It Is & How to Trade It

Triangular Moving Average (TMA) – What It Is & How to Trade It

What is the Triangular Moving Average (TMA)?

The Triangular Moving Average (TMA) is a type of moving average that applies a second smoothing process to an SMA, making it smoother than other moving averages like SMA and EMA. This additional smoothing reduces short-term fluctuations, making TMA particularly useful for identifying long-term trends.

TMA is calculated using the following formula:
TMA = SMA(SMA(P))
Where:

• SMA(P) is the Simple Moving Average of the price over a period P.
• The second SMA is applied to the first SMA to achieve extra smoothing.

Key Features of TMA

• Double-smoothed moving average, reducing short-term noise.
• Better for identifying long-term trends compared to SMA or EMA.
• Less responsive to sudden price movements, making it ideal for trend-following.

How to Use TMA in Forex Trading

1. Trend Identification Strategy

• Bullish Trend: Price above TMA and TMA sloping upward.
• Bearish Trend: Price below TMA and TMA sloping downward.

Recommended TMA Settings:

• Short-term traders: 20-period TMA.
• Swing traders: 50-period TMA.
• Long-term traders: 100-period TMA.

2. TMA Crossover Strategy

• Buy Signal: When a short-term TMA crosses above a long-term TMA.
• Sell Signal: When a short-term TMA crosses below a long-term TMA.

Best TMA Combinations:

• 20 TMA & 50 TMA: Medium-term trend trading.
• 50 TMA & 100 TMA: Long-term trend confirmation.

3. TMA with RSI Strategy

Using TMA with RSI can improve trade signals:

• Buy when: TMA indicates an uptrend & RSI is below 30 (oversold).
• Sell when: TMA indicates a downtrend & RSI is above 70 (overbought).

Pros and Cons of Using TMA

✅ Pros:

• Excellent at filtering market noise.
• Great for long-term trend following.
• Provides smooth trend signals.

❌ Cons:

• Lags more than SMA or EMA.
• Less effective for short-term trading.

Final Thoughts

The Triangular Moving Average (TMA) is ideal for traders who prefer a smoother moving average with less short-term noise. It works well for identifying long-term trends but is not as responsive as EMA or DEMA.