Using TEMA to Reduce Lag in MACD Signals

Summary

This short technical note explains a variant of MACD that substitutes a triple exponential moving average (TEMA) for the standard exponential moving average (EMA). It places the change within Patrick Mulloy’s work on reducing lag in smoothed signals: longer moving averages suppress more random fluctuations but also respond later, while EMA-based multiple smoothing methods aim to reduce that delay. The note describes TEMA as an extension of single and double exponential smoothing.

It states that MACD using TEMA can respond faster than MACD using DEMA, and that parameter choices can suit shorter-period scalping or longer-period trend applications. It also emphasizes that MACD’s central purpose is to measure momentum. The excerpt gives no precise parameter set, formula, comparison data, or backtest, so it offers a qualitative description rather than evidence that TEMA MACD improves trading results. Faster response may change the balance between responsiveness and noise, a trade-off the brief text does not quantify.

Key ideas

• TEMA extends exponential smoothing through triple applications of EMA.
• The note presents TEMA as a way to reduce lag in MACD calculations.
• It says TEMA MACD can respond faster than DEMA MACD, depending on the parameters.
• Shorter calculation periods are associated with scalping use, while longer periods are associated with trend use.
• MACD is framed primarily as a momentum indicator, and the excerpt gives no performance evidence.

Tags

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