How to Determine Triple Exponential Moving Average in Excel

The Triple Exponential Moving Average (TEMA) indicator was familiarized in an article in the Technical Analysis of Stocks & Commodities magazine: “Smoothing Data with Faster Moving Averages” in January 1994 by Patrick G. Mulloy. To analyze the stock market’s behavior, analysts use this tactic to get recent price changes. So, if you are into the stock market, you should learn about this. In this tutorial, you will learn to calculate Triple Exponential Moving Average in Excel with a suitable example and proper illustrations. So, stay with us.


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What is Moving Average?

In statistics, a moving average is a measurement utilized to examine data points by constructing a series of standards of additional subsets of the data set. In finance, a moving average (MA) is a stock indicator that people typically use in technological analysis. We calculate the moving average of stock to allow smooth out the price data by producing a continually revised average price.

Moving averages are a standard method for specialized traders to initiate the procedure of price research. You can say one of the first hands that traders will count to their charts and act as a measurement on its own or in comparison with further indicators.

Moving average is the average cost of a futures arrangement or stock over a specified time. Traders can add just one moving average or have numerous separate time structures on one diagram.

There are two types of Moving Averages:
  1. Simple Moving Average
  2. Exponential Moving Average

Now, the simple moving average is the most fundamental of moving averages computed by adding up the closing prices of the last x days and dividing by the number of days.

For example, if the prices were closed at $32.00, $35.25, and $37.30 over the past three days, the moving average would be computed as follows:

Sum of closing prices = 32.00 + 35.25 + 37.30= 104.55

Simple moving average = addition of closing prices divided by the number of days

                                          = 104.55/3 = $34.85

In the next section, we will discuss the Exponential Moving Average.


What is Exponential Moving Average?

Now, the Exponential moving averages allocate more additional consequences on current numbers and small on aged data because of a weighting variable in the analysis. It pushes them better respond to differences in price and even functions in smoothing out the line.

Exponential moving averages compute the average of a sequence of numbers utilizing a weighting multiplier that normally allocates more additional importance to more delinquent data. EMAs can be estimated in the following three steps:

1. Choose the Simple Moving Average (SMA) or use yesterday’s ending price to start.

2. Figure out the multiplier.

3. Employing price, the multiplier (time period), and the earlier Exponential Moving Average (EMA) value.

Here is the calculation for a 3-day EMA.

  1. SMA = $34.85, Closing price today is $36.75
  2. Multiplier = 2 / (1 + n) = 2 / ( 1 + 3) = 0.5
  3. EMA = (Price today x Multiplier) + (EMA yesterday x ( 1 – Multiplier)

= (36.75 x 0.5) + (34.65 x 0.5)

= $35.7

Here, the first day of the EMA analysis can either begin with yesterday’s ending price or the SMA from yesterday. You require to select a starting price for the EMA estimation.

As with simple moving averages, no computation is required on your part, the moving average arrow will figure this out for you and deliver the outcomes as a line on your graph.

While there are other more complex moving average estimations outside EMA and SMA, these two are the most familiar. Additional moving averages are an EMA that appoints distinct weighting and smoothing variables to the mensuration.

Read More: How to Calculate Exponential Moving Average in Excel


The Formula for Triple Exponential Moving Average in Excel

The triple exponential moving average (TEMA) was developed to smooth expenditure oscillations, constructing it more straightforward to specify tendencies without the lag associated with standard moving averages (MA). It accomplishes this by handling multiple exponential moving averages (EMA) of the actual EMA and subtracting out some of the lag.

We use triple exponential moving average TEMA like other MAs. It can assist in determining trend guides, indicate possible short-term trend modifications or withdrawals, and supply support or resistance. You can compare TEMA with the double exponential moving average (DEMA).

The formula of Triple Exponential Moving Average:

TEMA = (3 * EMA1) – (3 * EMA2) +EMA3

Here,

EMA1 = Exponential Moving Average

EMA2 = EMA of EMA1

EMA3 = EMA of EMA2

Steps you should follow:

  • Select a lookback time. It indicates how many times we will factor into the first EMA. The EMA will track prices near and emphasize short-term tendencies with more infrequent times.
  • If you have more extensive spans, such as 50, the EMA will not track price as near. It will accentuate the longer-term tendency.
  • Estimate the EMA for the lookback period. It is EMA1.
  • Compute the EMA of EMA1, utilizing the exact lookback period. For example, if you are employing 15 spans for EMA1, use 15 in this step as well. It is EMA2.
  • Now, figure out the EMA of EMA2, operating the same lookback time as earlier.
  • Implement the EMA1, EMA2, and EMA3 into the TEMA formula to compute the triple exponential moving average.

Similar Readings:


Steps to Calculate a Triple Exponential Moving Average in Excel

In this section, I am going to show you how to calculate the triple exponential moving average in Excel. We are using a simple dataset to demonstrate so that you can understand the processes better. I hope you will read all of these and apply them to your worksheet. It will surely increase your Excel knowledge.

Have a look at the dataset:

Triple Exponential Moving Average in Excel

Here, we have a dataset of prices for 15 days. Before we start, let’s clear some things:

Our number of periods, n=3

Multiplier = 2 / (1 + n) = 2 / ( 1 + 3) = 0.5

SMA = Simple Moving Average

EMA1 = Exponential Moving Average 1

EMA2 = Exponential Moving Average 2

EMA3 = Exponential Moving Average 3

TEMA = Triple Exponential Moving Average

We are going to calculate all of these step-by-step in upcoming sections.


Step 1: Calculate Simple Moving Average in Excel

We are going to calculate moving averages for 3 days in the whole article.

The generic formula of Simple Moving Average:

SMA = addition of closing prices divided by the number of days

SMA = (price 1 + price 2+ price 3 +……+price n)/ n

Here,

n = number of periods

📌 Steps

  • First, type the following formula in Cell D9:

=AVERAGE(C7:C9)

  • Now, press Enter and drag the Fill handle icon over the range of cells D10:D21.

Calculate Simple Moving Average in Excel

Here, we have calculated the simple moving average in Excel with the AVERAGE function.


Step 2: Compute Exponential Moving Average 1

Here, our generic formula to calculate Exponential Moving Average 1 is:

EMA = (Price today x Multiplier) + (EMA yesterday x ( 1 – Multiplier)

We don’t have EMA yesterday in the first place. If you face that, just use the SMA, to begin with.

📌 Steps

  • At first, type the following formula in Cell E9:

=(C9*$C$4)+(D9*(1-$C$4))

As we don’t have EMA yesterday yet, we are using SMA for this part.

Compute Exponential Moving Average 1

  • Now, press Enter.

This is our Exponential Moving average for today.

  • Now, type the following formula in Cell E10:

=(C10*$C$4)+(E9*(1-$C$4))

Now, we have EMA yesterday. So, place that in the formula.

  • Then press Enter and drag the Fill handle icon over the range of cells E11:E21.

Compute Exponential Moving Average 1

We are successful in calculating the  Exponential Moving Average 1 here.


Step 3: Compute Exponential Moving Average 2

Now, EMA2 means basically EMA of EMA1. To calculate Exponential Moving Average 2, we are using this formula:

EMA2 = (EMA1 x Multiplier) + (EMA yesterday x ( 1 – Multiplier)

We don’t have EMA yesterday in the first place. We are using the SMA, to begin with.

📌 Steps

  • At first, type the following formula in Cell F9:

=(E9*$C$4)+(D9*(1-$C$4))

As we don’t have EMA yesterday yet, we are using SMA for this part.

Compute Exponential Moving Average 2 in Excel

  • Then, press Enter.

This is our Exponential Moving Average 2.

  • Next, type the following formula in Cell F10:

=(E10*$C$4)+(F9*(1-$C$4))

Now, we have EMA yesterday. So, place that in the formula.

  • Then press Enter and drag the Fill handle icon over the range of cells F11:F21.

Compute Exponential Moving Average 2 in Excel

This is our Exponential Moving Average 2 for this pricelist. Let’s move on to EMA3.


Step 4: Compute Exponential Moving Average 3 in Excel

EMA3 indicates basically EMA of EMA2. To calculate Exponential Moving Average 2, we are using this formula:

EMA3 = (EMA2 x Multiplier) + (EMA yesterday x ( 1 – Multiplier)

As we don’t have EMA yesterday in the first place. We are using the SMA, to begin with.

📌 Steps

  • First, type the following formula in Cell G9:

=(F9*$C$4)+(D9*(1-$C$4))

Here, we don’t have EMA yesterday yet, we are using SMA for this part.

  • Then, press Enter.

Compute Exponential Moving Average 3

This is our Exponential Moving Average 3.

  • Next, type the following formula in Cell G10:

=(F10*$C$4)+(G9*(1-$C$4))

Here, we have EMA yesterday. So, placing that in the formula.

  • Then press Enter and drag the Fill handle icon over the range of cells G11:G21.

Compute Exponential Moving Average 3

Finally, we have calculated all the Exponential Moving Averages using the formula. It’s time to figure out the Triple Exponential Moving Average in Excel.


Final Step: Calculate Triple Exponential Moving Average in Excel

We are in the final segment. We already discussed the Triple Exponential Moving Average in the earlier section. But, we are repeating it again. The generic formula we are using:

TEMA = (3 * EMA1) – (3 * EMA2) + EMA3

Here,

EMA1 = Exponential Moving Average

EMA2 = EMA of EMA1

EMA3 = EMA of EMA2

📌 Steps

  • First, type the following formula in Cell H9:

=(3*E9)-(3*F9)+G9

Triple Exponential Moving Average in Excel

  • After that, press Enter.

Triple Exponential Moving Average in Excel

  • Now, drag the Fill handle icon over the range of cells H11:H21.

Triple Exponential Moving Average in Excel

As you can see, we are successful to calculate Triple Exponential Moving Average in Excel quite easily. Try this in your own data.


💬 Things to Remember

Corresponded to simple moving averages, EMAs produce more significant weight to current (more appropriate) data.

Calculating the EMA implicates involving a multiplier to the simple moving average (SMA).

The triple exponential moving average (TEMA) utilizes numerous EMA measures and subtracts the lag to make a trend following indicator that responds fast to price transformations.

The Triple Exponential Moving Average can help recognize trend movement, signal probable short-term trend shifts or withdrawals, and ensure backing or opposition.

When the price is beyond the TEMA, it assists secure an uptrend. When the price is below the TEMA, it helps confirm a downtrend.


Conclusion

To conclude, I hope this tutorial has provided you with a piece of useful knowledge to calculate Triple Exponential Moving Average in Excel. We recommend you learn and apply all these instructions to your dataset. Download the practice workbook and try these yourself. Also, feel free to give feedback in the comment section. Your valuable feedback keeps us motivated to create tutorials like this.

Don’t forget to check our website Exceldemy.com for various Excel-related problems and solutions.

Keep learning new methods and keep growing!


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Shanto

Shanto

Hello! I am Shanto. An Excel & VBA Content Developer. My goal is to provide our readers with great tutorials on various Excel-related problems. I hope our easy but effective tutorials will enrich your knowledge. I have completed my BSc in Computer Science & Engineering from Daffodil International University. Working with data was always my passion. Love to work with data, analyze those, and find patterns. Also, love to research. Always look for challenges to keep me growing.

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