Description
The DEMA is a type of moving average that is designed to reduce lag and increase the sensitivity of the moving average. DEMA is calculated using two exponential moving averages, one short-term and one long-term, which are then combined to create a smoother, more responsive moving average. Compared to other moving averages, DEMA provides a faster response to price changes and reduces the impact of lag. The formula for DEMA includes two parameters, the number of periods for the short-term and long-term exponential moving averages, which can be adjusted to suit individual trading strategies. The smoothing effect of DEMA is achieved by using a weighted average of the two exponential moving averages, resulting in a more accurate representation of price movements.