TEMA

What is TEMA?

TEMA (triple exponential moving average) is a reduced-lag smoother introduced by Patrick Mulloy in 1994, alongside its sibling DEMA. Despite the name it is not an EMA applied three times; that would multiply the lag. Instead, Mulloy cascades three EMAs (an EMA of price, an EMA of that EMA, and an EMA of that) and combines them as three times the first, minus three times the second, plus the third. The combination cancels much of the smoothing lag while keeping most of the noise reduction.

Mulloy published both constructions in Technical Analysis of Stocks & Commodities in 1994, framing them as answers to the moving-average trader's standing complaint: every extra unit of smoothness bought with a longer average costs a unit of delay. The alternating-sign combination works because each cascaded EMA carries a predictable share of the lag, and the weighted difference cancels the leading portion of it, an error-correction idea rather than a new smoothing kernel.

On a chart TEMA hugs price noticeably tighter than an EMA of the same length and turns sooner after reversals. The price of that responsiveness is overshoot: because the lag-cancelling combination behaves partly like an extrapolation, TEMA can hook beyond price at sharp turns, and it wiggles more in chop. It is also worth separating from TRIX, which triple-smooths an EMA and then plots its rate of change as an oscillator; TEMA stays on the price scale as an overlay.

Within the reduced-lag family, TEMA is the aggressive sibling: more cancellation than DEMA, more overshoot risk than designs that pursue smoothness directly, such as the Ehlers SuperSmoother, and simpler than adaptive averages that modulate their own speed by regime. Choosing among them is choosing a failure mode, whipsaw, lag, or overshoot, and the standard advice applies: judge candidates on the market and rules actually traded.

How to calculate TEMA

TEMA uses one length setting N for all three smoothing stages.

1. 1Compute EMA1: an EMA of price with length N.
2. 2Compute EMA2 as an EMA of EMA1, then EMA3 as an EMA of EMA2, both with the same length N.
3. 3Combine them: TEMA = 3 × EMA1 - 3 × EMA2 + EMA3.
4. 4Read it like any overlay average: longer N gives a smoother, slower line, while the lag-cancelling combination keeps it closer to price than a plain EMA of equal length.
5. 5Overlay a plain EMA of the same length once: the gap between the two lines at turns is the lag being cancelled, and TEMA's hooks past price at V-reversals are the overshoot being paid for it.

How it's calculated

A lag-reduced moving average built from single, double, and triple exponential smoothing of price.

Introduced by Patrick Mulloy (1994) alongside DEMA; the 3, -3, +1 weighting cancels most of the lag a plain EMA of the same length carries.

Despite the name it is not simply an EMA applied three times; that plain triple smoothing is EMA3 alone, which lags more.

The reduced lag comes at the cost of overshoot around sharp turns and whipsaw in flat markets.

How traders use it

• In crossover systems: a fast and slow TEMA pair, or TEMA against a slower conventional average, aims to signal turns earlier than an equivalent EMA pair; earlier also means more failed signals inside ranges.
• As a trend filter: trading only in the direction of a rising or falling TEMA, often taken from a higher timeframe, with the reduced lag getting the filter onside sooner after a genuine turn.
• In ribbons and multi-length stacks, where several TEMAs of increasing length fan out in trends and compress when the trend weakens.
• As a lower-lag smoothing stage inside other indicators, for example smoothing a momentum or volume series where a standard EMA's delay is the main complaint.
• As a faster dynamic baseline: pullback traders use TEMA where a plain average would sit too far behind a fast trend, accepting extra wiggle for a dynamic S/R line the market can actually reach.

TEMA vs similar averages