Double Weighted Moving Average

The DEMA was first presented by Patrick Mulloy in Stocks & Commodities in 1994. This indicator replicates the DEMA formula, applying it to the WMA (weighted moving average) instead of the EMA.

The Double Weighted Moving Average for NinjaTrader 8

Indicator Description

The Double Weighted Moving Average (DWMA) is commonly used in time series analysis, although less known than the DEMA. Generally, the indicator is more responsive to price changes while in a trend, but has a tendency to overshoot once the trend changes.

Other Library Indicators

A higher timeframe DWMA may be used in combination with other tools for technical analysis, such as channel indicators, momentum oscillators, support / resistance levels and volume analysis. For channel indicators, you may review the Donchican Channel or the Squeeze Channel. A Donchian Channel Strategy was reviewed in our Indicator Spotlight, as was the Squeeze Momentum setup. Furthermore, the Indicator Spotlight looked at how the TDI indicator utilizes the RSI in three timeframes.

For support / resistance, you may consider using Fibonacci lines, for example the Prior Day Fibs, standard Daily PivotsCamarillo Pivots Daily or the Rolling Daily Pivots. Our Indicator Spotlight newsletter previously looked at a trading strategy based on Fibonacci Retracement levels.

For volume analysis you may review Better Volume or Relative Volume as discussed here. For instruments that lack reliable volume information (FX/Crypto currencies), you may consider using the Relative Ranges indicator, which was discussed this post.

Other that the DWMA, our moving average category included the ALMA, Exponential Hull Moving AverageMoving Average Wave or the MA Cross. Our Indicator Spotlight also discussed determining a trend bias using the Trigger Lines. A separate post discussed different approaches for assigning weight to moving averages, specifically contrasting the ALMA indicator to the SMA, WMA and TMA.

Finally, you may want to review our Trend Analysis and Trend Filters, such as the ADXADXVMADirectional Movement Index (DMI)Efficiency RatioButterworth FilterGaussian FilterLaguerre Filter, Rainbow Filter, Supersmoother Filter and the Supertrend indicator.

The DWMA is available for NinjaTrader 8.

Double Weighted Moving Average