Gapless TEMA

By eliminating the effect of the overnight gap, the Gapless TEMA transitions smoothly between the previous close and the current open. Instead of waiting for the lookback period to eliminate a gap from its calculation, the Gapless TEMA can be used immediately because it automatically adjusts to any overnight gap. Other than the below description, you may also review our Gapless Indicator Spotlight (with video).

gapless tema

Indicator Description

You may use the Gapless TEMA for instruments that have a price gap between yesterday’s close and the current open. Overnight gaps can occur with instruments that do not have an overnight trading session. For example, the FDAX for the Germany equity market is closed from 10:00 PM until 8:00 AM local time. Accordingly, significant price moves in the Asian markets can create price gaps that reflect the overnight price action.

Likewise, gaps will appear if you use a session template that only displays the regular trading session. The CME US Index Futures RTH template will only show price data from 8:30 AM to 3:15 PM Central Time. Therefore, any significant price moves that occurred overnight, will create a gap.

This is an issue for the standard TEMA because the gap is part of the lookback period.Therefore, at the session start , you’ll have to wait until the gap is eliminated from the TEMA calculation. Once the gap is no longer part of the calculation, you may rely on the indicator plots.

The calculation used for the Gapless TEMA, measures the difference between the prior day close and yesterday’s last indicator plot, transferring it to the current open. Other than adjusting for the overnight gap, the indicator also comes with an option to reset the calculation to start at the current open.

Other Library Indicators

The library also features a Zerolag TEMA. Other indicators from the Gapless Indicators category include: Gapless EMA, Gapless Keltner Channel, Gapless MACD, Gapless SMAGapless WMA and the Gapless ZLEMA.

The Gapless TEMA indicator is available for NinjaTrader 8