Advanced Moving Averages (WMA/DEMA/TEMA/HMA) — what it is and how to use it in trading
Definition
WMA, DEMA, TEMA, and HMA are four alternative moving-average weighting schemes, each reducing lag behind price in its own way compared to a plain SMA or EMA. All four are overlays drawn directly on the price chart, just like a regular moving average.
How it works in the builder
The wma operand (default period 20) is a weighted moving average — the most recent candles carry more weight than older ones, decaying linearly. dema (period 20) is a double EMA — 2×EMA minus an EMA of that EMA, which mathematically speeds up the response compared to a plain EMA. tema (period 20) goes one step further — a triple EMA (3×EMA1 − 3×EMA2 + EMA3) that reacts to a trend change faster than EMA or DEMA. hma (period 20) is built differently — a weighted difference of two WMAs (over the full and half period) with an extra smoothing pass over the square root of the period, reaching near-zero lag through a different mechanism than triple exponential smoothing.
What it looks like on the chart
WMA is drawn as one smoothed line over the candles, with a row of shrinking bars beneath it — a visual cue for the linearly decaying weight of each bar. DEMA additionally shows a second, fainter line behind the main one — a visual nod to it being built as a doubled EMA minus an EMA of that EMA. TEMA draws three nested, increasingly transparent lines — the triple smoothing layer made visible. HMA is drawn as one line, but noticeably more angular, with sharp, unsmoothed kinks at every price turn.
Typical use
All four are most often used as a faster replacement for EMA in trend entries: a price/line crossover ("close crossed_above hma(20)") or a crossover between two such averages of different periods. HMA, having the least lag, is often picked for scalping and very short timeframes, DEMA/TEMA as a compromise between reaction speed and a bit more smoothness, WMA as the gentlest step up from SMA toward faster variants.
Common pitfalls
Less lag is not free: DEMA and TEMA mathematically extrapolate the EMA's direction, so on sharp reversals or noisy markets they can overshoot the actual price and produce more false crossovers than a plain EMA. HMA is just as fast, but its jagged, angular line creates more small price crossovers of its own during a range. The default period (20) is the same for all four, but it is worth calibrating per instrument and timeframe rather than carrying it over unthinkingly from one MA to another.
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WMA
Block variants
DEMA
TEMA
HMA