The Triple Exponential Moving Average (TEMA) is a more responsive version of the exponential moving average which follows the recent price bars more closely. Its formula is as follows:
Single-, Double-, and Triple-Smoothed EMAs: EMA1 = EMA of price EMA2 = EMA of EMA1 EMA3 = EMA of EMA2 TEMA = (3 x EMA1) - (3 x EMA2) + (EMA3)
As a practical matter, this indicator tends to work better in trending markets and worse in choppy markets, since it is more sensitive to recent price movements. Here is an example of three exponential moving averages, all of which are using the same number of days for their calculation. The purple line is the regular 20-day EMA, the red line is the double-smoothed (DEMA), and the cyan line is the triple-smoothed (TEMA). You can see clearly how each varies with respect to its sensitive to trend change, with the triple-smoothed (“TEMA”) being the fastest.
