NEMA: Generalizing EMA, DEMA, and TEMA to Higher Depths

Summary

NEMA is presented as a configurable family of exponential moving averages. Its depth setting selects the number of EMA iterations: depth one corresponds to EMA, depth two to DEMA, depth three to TEMA, with further depths extending the same pattern. The indicator description says it supports levels up to fifty and allows a fractional lookback period, unlike implementations that restrict the period to whole numbers.

The document illustrates the first three depths with default settings but provides no performance tests, trading rules, or comparisons of responsiveness and lag. It cautions that calculations above depth forty lose too much precision and should be treated carefully. As with other moving-average transforms, choosing a depth or period does not establish predictive value; users would need to assess behavior and robustness on their own market data.

Key ideas

• NEMA uses a depth parameter to extend EMA-derived calculations beyond the standard variants.
• Depths one, two, and three correspond to EMA, DEMA, and TEMA, respectively.
• The indicator permits fractional periods and specifies a maximum depth of fifty.
• Precision may degrade substantially above depth forty, according to the description.
• The document gives no evidence that higher-depth values improve trading results.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.