# The Math Behind TEMA ## Components of TEMA TEMA is composed of three main components: 1. Exponential Moving Average (EMA) 2. A "triple smoothing" factor Let's break these down: ### EMA Calculation The Exponential Moving Average (EMA) is calculated as: $ EMA_t = \alpha \cdot P_t + (1 - \alpha) \cdot EMA_{t-1} $ Where: - $EMA_t$ is the EMA value at time $t$ - $P_t$ is the price at time $t$ - $\alpha$ is the smoothing factor, calculated as $\frac{2}{n+1}$ - $n$ is the number of periods ### TEMA Formula The TEMA is then calculated using the following formula: $ TEMA_t = 3 \cdot EMA_t - 3 \cdot EMA(EMA_t) + EMA(EMA(EMA_t)) $ Where: - $TEMA_t$ is the TEMA value at time $t$ - $EMA_t$ is the EMA of the price - $EMA(EMA_t)$ is the EMA of the EMA - $EMA(EMA(EMA_t))$ is the EMA of the EMA of the EMA ## Calculation Process 1. Calculate the EMA of the price series (EMA1). 2. Calculate another EMA on the result of step 1 (EMA2). 3. Calculate a third EMA on the result of step 2 (EMA3). 4. Multiply EMA1 by 3. 5. Multiply EMA2 by 3. 6. Subtract EMA2 * 3 from EMA1 * 3. 7. Add EMA3 to the result. This process effectively reduces lag while maintaining smoothness and attempting to minimize overshooting. ## Parameter TEMA uses a single parameter: - **Period** ($n$): Determines the number of periods used in the EMA calculations. This affects the overall reactivity and smoothness of the indicator.