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.

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.

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.

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.

TEMA vs similar averages