About the Triple Exponential Moving Average Indicator
The Triple Exponential Moving Average, commonly known as TEMA, is a trend-following indicator developed by Patrick Mulloy in 1994.
It was created to address one of the main weaknesses of traditional moving averages, which is lag during fast-moving markets.
By combining a single EMA, double EMA, and triple EMA into one calculation, TEMA responds more quickly to price changes.
The indicator smooths price action while filtering out a significant amount of short-term volatility.
This allows traders to observe trend direction with greater precision compared to standard exponential or simple moving averages.
On the chart, the Triple Exponential Moving Average appears as a single line that changes color based on trend direction.
Green typically reflects bearish pressure, while red highlights bullish momentum.
Signals are generated when price interacts with the line or when the line changes color.
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Key Features
- Advanced moving average with reduced lag.
- Combines single, double, and triple EMA calculations.
- Filters short-term volatility from price action.
- Color-changing line for quick trend identification.
- Useful for identifying long-lasting market trends.
Indicator Chart
The chart below shows the Triple Exponential Moving Average indicator plotted directly on the price chart.
The red and green line adapts to price movement, highlighting shifts in trend direction.
Traders use these changes to time entries and exits during trending phases.
Guide to Trade with Triple Exponential Moving Average Indicator
Buy Rules
- Wait for the TEMA line to slope upward.
- Confirm the line changes color to red.
- Ensure price is trading above the TEMA line.
- Enter a buy trade after the color change is confirmed.
Sell Rules
- Wait for the TEMA line to slope downward.
- Confirm the line changes color to green.
- Ensure price is trading below the TEMA line.
- Enter a sell trade after the color change is confirmed.
Stop Loss
- Place the stop beyond the most recent swing point.
- Keep the stop outside minor pullback zones.
- Avoid placing stops directly on the TEMA line.
- Adjust the stop as the trend continues.
Take Profit
- Target prior highs or lows in the trend direction.
- Hold the position while the TEMA color remains unchanged.
- Exit partially near extended price moves.
- Close the trade when the line color reverses.
MT4 TEMA + Zero-Lag MACD Forex Strategy
This strategy uses the Triple Exponential Moving Average (TEMA) to define trend direction, and the Zero-Lag MACD for MT4 to catch momentum entries.
The TEMA gives a smoother, more responsive trend filter than a simple or standard EMA, helping to avoid noise.
The Zero-Lag MACD histogram signals when momentum aligns with the trend.
This setup works well on M5 and M15 charts and can be used by day traders who want disciplined entries and exits with moderate pip targets.
Buy Entry Rules
- Price must be above the TEMA, and TEMA must be sloping upward (bullish trend).
- Zero-Lag MACD histogram bars must cross above the zero line (positive momentum).
- Enter a long trade at the next candle after the histogram turns positive.
- Place a stop loss a few pips below the recent swing low or slightly below the TEMA line.
- Set take profit at a 1:2 risk-to-reward ratio, or exit when the histogram turns negative or price closes below TEMA.
Sell Entry Rules
- Price must be below the TEMA, and TEMA must be sloping downward (bearish trend).
- Zero-Lag MACD histogram bars must cross below the zero line (negative momentum).
- Enter a short trade at the next candle after the histogram turns negative.
- Place a stop loss a few pips above the recent swing high or slightly above the TEMA line.
- Set take profit at a 1:2 risk-to-reward ratio, or exit when the histogram turns positive or price closes above TEMA.
Advantages
- The TEMA smooths price action while reacting faster than standard MA, helping avoid whipsaws.
- Zero-Lag MACD offers more responsive momentum signals than standard MACD, giving quicker entries.
- Combining trend filter + momentum reduces false signals compared to using either alone.
- Clear, objective rules with defined stop loss and take profit improve risk control.
- Suitable for short-term day trading on multiple currency pairs with sufficient volatility.
Drawbacks
- In sideways or choppy markets, this setup may produce false or weak signals.
- Because of lag in TEMA and MACD, entries may come slightly late, reducing potential profit.
- Frequent trades on lower timeframes require discipline and quick decision-making.
- Small pip targets mean a string of losses may hit you harder without strict risk management.
Case Study 1
On EURJPY M15 during a London–New York overlap session, the price was trading above the TEMA, which had a smooth upward slope.
The Zero-Lag MACD histogram turned from negative to positive just after a small retracement.
The trader entered a long position at the next candle.
Stop loss was placed 10 pips below the recent swing low.
Within 35 minutes price rose strongly, and the trade hit a 22-pip take profit (double the 11-pip risk).
The histogram stayed positive, and the price remained above TEMA throughout, confirming the upward momentum.
Case Study 2
On AUDUSD M5 during the early Asian session, the price dropped below the TEMA, and the TEMA slope turned downward.
Shortly after, the Zero-Lag MACD histogram crossed below zero.
The trader entered a short at the next candle with a stop loss 8 pips above the recent swing high.
The pair depreciated quickly, and after 20 minutes the position reached a 16-pip profit target (1:2 risk-reward).
The histogram remained negative, and the price stayed below TEMA, validating the bearish bias.
Strategy Tips
- Prefer major and liquid pairs like EURJPY, AUDUSD, GBPUSD or USDCHF to ensure tighter spreads and reliable momentum.
- Avoid trading during quiet sessions or flat periods when volatility is low, as signals become less reliable.
- Consider using a volatility filter (for example, ATR or spread threshold) to avoid trades in low-volatility conditions.
- Maintain strict risk management: use small position sizes and never risk more than a small percentage of your account per trade.
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FAQ
How is TEMA different from a standard EMA?
TEMA uses multiple EMA calculations to reduce lag.
This allows it to react faster to price changes while remaining smooth.
Is the Triple Exponential Moving Average suitable for short-term trading?
Yes. Its reduced lag makes it useful for intraday and short-term trend trading when markets are active.
Does the TEMA indicator work well in ranging markets?
The indicator performs best in trending conditions.
In sideways markets, frequent color changes may occur with limited follow-through.
Summary
The Triple Exponential Moving Average MT4 indicator offers a faster and smoother alternative to traditional moving averages.
Minimizing lag and filtering volatility helps traders focus on meaningful trend movement.
Its color-changing design makes trend direction easy to interpret, while its responsiveness supports timely trade decisions.
For traders seeking clearer trend signals without excessive delay, TEMA remains a practical and time-tested solution.
