Chasing the Wind and Capturing Shadows: Unveiling the Dual EMA

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To unveil the mysterious veil of the Double Exponential Moving Average (Double EMA), this cat will take you on a deep exploration of this indicator known as the market-sensitive nose! Imagine if the market is a vast ocean, then the Double EMA is the sensitive dolphin that can keenly capture the fluctuations on the water's surface.

First, let's talk about what a Double EMA is in simple terms. Do you know what a regular EMA (Exponential Moving Average) is? It's like a lazy cat that reacts slowly to price changes. But a Double EMA, hey, that's a double agile cat! By pinching two EMA lines together, it quickly captures every small market fluctuation. In simple terms, a Double EMA is like adding a fast filter to the fast line, allowing you to seize more profit opportunities. Double Exponential Moving Averages use two moving average lines to confirm an uptrend when the price crosses above the average line and confirm a downtrend when the price crosses below the average line. When the price moves away from the direction of the average, a trend change may be occurring. Additionally, moving average lines can also be used to represent support and/or resistance areas.

Now let's talk about how to calculate this little gadget. The calculation formula may seem complicated, but in reality, it's as simple as seasoning when cooking: first calculate one EMA, then use this EMA to calculate another EMA, and finally play a little mathematical game with these two EMAs to obtain our Double EMA. It's like mixing two portions of fried rice together to make the flavor richer!

The formula for calculating the Double Exponential Moving Average (DEMA) is as follows:

DEMA = 2 × EMAN - EMA of EMAN

Definition: N = Lookback period

To calculate the Double Exponential Moving Average, first choose the lookback period you want to examine (e.g. 5, 15, 100 periods). Once the lookback period is selected, calculate the EMA (EMAN) within that period. Then apply the same lookback period to EMAN to obtain a different EMA. Finally, multiply EMAN by 2 and subtract the smoothed EMA value.

Of course, when using Double EMA, you have to be careful, just like playing a game. Because it reacts quickly, like a sensitive cheetah, it may make you dizzy in the market fluctuations. Especially when using a longer lookback period, be aware that its reaction speed may be slower than the short-term lookback period. In simple terms, you can't expect an old cheetah to run as fast as when it was young!

Also, don't forget a little secret about Double EMA: sometimes it can give you too many signals and overwhelm you. It's like a gossiping neighbor who tells you about every little thing happening. Sometimes you have to learn to filter out this information.

Lastly, remember that when using Double EMA, it's best to combine it with other indicators or analysis tools. It's like adding not only salt but also other seasonings when cooking to create a delicious dish.

Summarize, the double EMA is a magical tool that allows you to navigate the market with ease. It is fast, sensitive, and can help you capture every small fluctuation in the market. However, remember to use it with caution and not get lost in its speed! Next, I will explain the code for this indicator.

This code is a Pine Script script used for a technical indicator on the TradingView platform. It creates a Double Exponential Moving Average (Double EMA) indicator and plots it on the chart.

Here is an explanation of the code:

This line defines an indicator function with the following parameters:

title: The full name of the indicator is "Double EMA".

shorttitle: The abbreviation is "DEMA".

overlay: Set to true to allow the indicator to be overlaid on the main chart.

timeframe: The timeframe is an empty string, indicating that the indicator is applicable to the currently selected timeframe of the chart.

timeframe_gaps: Set to true to allow for gaps between different timeframes.

This line defines an input variable length, with a default value of 9, and a minimum value limit of 1. Users can adjust this variable through the interface to change the period length used in calculating the double EMA.

This line defines another input variable src, with a default value set to the closing price (close). Users can also choose other price data as input through the interface.

This line uses the ta.ema function to calculate the exponential moving average (EMA) of a specified period length and assigns the result to the variable e1.

This line uses the ta.ema function again, but this time with e1 as the input and assigns the result to the variable e2. In fact, it calculates another EMA between two consecutive EMAs.

This line calculates the value of the Double Exponential Moving Average (DEMA) based on the formula and assigns the result to the variable dema. The formula is obtained by multiplying the first EMA by 2 and then subtracting the second EMA.

The last line uses the plot function to draw the Double Exponential Moving Average (DEMA) on the chart. It takes the data, title, and color as parameters. In this example, the data is the values of the variable dema, and the title is "DEMA".