Every trend trader eventually runs into the same frustration with moving averages: the lag. By the time a standard EMA confirms a trend change, you’ve already missed a chunk of the move. The DEMA indicator for MT4 was designed to fix exactly that problem. Developed by Patrick Mulloy in 1994, the Double Exponential Moving Average applies the EMA calculation twice to mathematically cancel out a significant portion of the inherent delay, giving you faster signals without switching to a completely different indicator type.
In this review, I’ll walk you through how the DEMA works, the best settings for different trading styles, and a practical strategy you can apply on your MT4 charts today.
What is the DEMA Indicator?
The Double Exponential Moving Average is an advanced smoothing technique that Patrick Mulloy introduced in a January 1994 article for Technical Analysis of Stocks & Commodities magazine. His goal was straightforward: create a moving average that responds to price changes more quickly than the standard EMA while still filtering out market noise.
The DEMA formula is surprisingly elegant:
DEMA = 2 x EMA(n) – EMA(EMA(n))
What this does is calculate a regular EMA, then calculate a second EMA of that EMA, and use the difference between them to strip out additional lag. The result is a line that hugs price more tightly than either the SMA or the standard EMA of the same period length.
One important point: the DEMA is not built into MetaTrader 4 by default. Unlike the SMA, EMA, SMMA, and LWMA options available from the standard Moving Average menu, the DEMA requires a custom indicator file. You can download it free from the link at the bottom of this page.
How the DEMA Works on MT4
When applied to a chart, the DEMA appears as a single line flowing through the price candles, just like any other moving average. The difference becomes immediately obvious when you plot it alongside a standard EMA of the same period. The DEMA line turns at trend reversals noticeably earlier, and it stays closer to price during strong moves.
Directional bias works the same way as with any moving average. Price above the DEMA line signals bullish conditions; price below it signals bearish. Where the DEMA really earns its keep is in crossover setups. Because the DEMA responds faster, crossover signals between a fast DEMA and a slow DEMA (or a slow EMA) arrive earlier than traditional EMA crossovers, which means tighter entries and less slippage on the initial move.
The trade-off is real, though. That extra speed comes with increased sensitivity to short-term price spikes. In choppy, range-bound markets, the DEMA will generate more whipsaw signals than a standard EMA. This is the fundamental balance Mulloy built into the formula: you gain speed but accept more noise.
Key Features
- Non-repainting: Once a candle closes, the DEMA value for that bar is permanently fixed
- Significantly less lag than standard EMA, SMA, or SMMA at the same period setting
- Works on all timeframes from M1 to Monthly
- Customizable period, applied price, and line color
- Pairs well with slower moving averages for crossover confirmation
- Lightweight custom indicator with minimal impact on MT4 performance
Best Settings for DEMA Indicator
Because the DEMA is inherently faster than a standard EMA, you generally want to use slightly longer period values than you would with a regular EMA to compensate for the increased sensitivity.
| Parameter | Scalping (M1-M5) | Day Trading (M15-H1) | Swing Trading (H4-D1) |
|---|---|---|---|
| Fast DEMA Period | 10 | 21 | 50 |
| Slow DEMA/EMA Period | 25 EMA | 55 EMA | 100 EMA |
| Applied Price | Close | Close | Close |
The crossover between a DEMA and a standard EMA can be particularly effective. The DEMA turns first, and the EMA confirms. This hybrid approach gives you the speed advantage of the DEMA for entries while using the EMA’s smoother behavior as a trend filter.
Recommended starting point: Apply a 21-period DEMA alongside a 55-period EMA on the H1 chart. This combination captures trend changes early while the slower EMA keeps you out of most whipsaw traps.
Pros and Cons
| Pros | Cons |
|---|---|
| Responds to trend changes significantly faster than standard EMA | More prone to whipsaws and false signals in ranging markets |
| Same period settings produce earlier entries with tighter stops | Not built into MT4 – requires custom indicator installation |
| Non-repainting and reliable for backtesting | Can be overly sensitive on lower timeframes (M1, M5) |
| Works well as a hybrid with standard EMA for crossover strategies | Slightly more complex to understand than basic moving averages |
How to Install DEMA Indicator on MT4
Since the DEMA is not included in MT4 by default, you’ll need to install it as a custom indicator.
Step 1: Download the DEMA .ex4 file from the download section at the bottom of this page.
Step 2: Open your MT4 terminal. Click File > Open Data Folder from the top menu. This opens a Windows Explorer window.
Step 3: Navigate to MQL4 > Indicators and paste the downloaded DEMA .ex4 file into this folder.
Step 4: Close and reopen MT4, or right-click the Navigator panel on the left side and select Refresh.
Step 5: In the Navigator panel, expand Custom Indicators, locate DEMA, and drag it onto your chart. Set the period (21 is a good starting value), choose your preferred color, and click OK.
For a detailed walkthrough with screenshots, see our full guide on how to install custom indicators on MT4.
Trading Strategy Using DEMA Indicator
Here’s a DEMA-EMA hybrid crossover strategy that leverages the DEMA’s speed advantage while using a standard EMA as a trend filter. Works best on H1 and H4 timeframes.
Setup: Apply a 21-period DEMA (blue) and a 55-period EMA (red) to your chart.
Buy Signal:
1. The 21 DEMA crosses above the 55 EMA
2. Wait for price to pull back toward the DEMA line without crossing below the 55 EMA
3. Enter long when a bullish candle closes above the 21 DEMA after the pullback
4. Confirm with MACD histogram above zero for additional conviction
Sell Signal:
1. The 21 DEMA crosses below the 55 EMA
2. Wait for price to rally back toward the DEMA line without breaking above the 55 EMA
3. Enter short when a bearish candle closes below the 21 DEMA after the pullback
Stop Loss: Place the stop 5-10 pips beyond the 55 EMA at the time of entry.
Take Profit: Target a 1:2 risk-reward ratio. Alternatively, trail your stop along the 21 DEMA and exit when price closes against your position beyond that line.
The reason this hybrid approach works better than using two DEMAs is simple: two fast-responding lines cross each other too frequently, generating excessive noise. Pairing the DEMA with a standard EMA gives you the best of both worlds.
DEMA vs EMA
This is the comparison that matters most since the DEMA was specifically designed to improve on the EMA:
| Feature | DEMA | EMA |
|---|---|---|
| Lag | Significantly reduced | Moderate (less than SMA) |
| Whipsaw Risk | Higher in ranging markets | Lower, smoother line |
| Signal Speed | Faster entries by 2-5 bars typically | Standard baseline speed |
| Built into MT4 | No – requires custom indicator | Yes – available by default |
| Formula Complexity | 2*EMA(n) – EMA(EMA(n)) | Standard exponential weighting |
| Best Use | Early trend entries in trending markets | General trend following and crossovers |
Verdict: Use the DEMA when you’re trading actively on lower timeframes and want earlier entries into trending moves. Stick with the standard EMA for swing trading or when you’re operating in choppy conditions where the extra speed would generate too many false signals. Many experienced traders use both: the DEMA for entries and the EMA for overall trend direction.
Frequently Asked Questions
Is the DEMA indicator free for MT4?
Yes. The DEMA indicator is available as a free custom indicator download for MT4. Unlike the standard EMA or SMA, the DEMA is not built into MetaTrader 4 by default, so you need to install the .ex4 file manually. Download it from the link at the bottom of this page.
Does the DEMA indicator repaint?
No. Once a candle closes, the DEMA value for that bar is fixed permanently. The only movement you’ll see is on the current unclosed candle, which is normal behavior for any moving average type.
What is the difference between DEMA and EMA?
The DEMA applies the EMA formula twice and uses the result to cancel out additional lag. Its formula is 2*EMA(n) – EMA(EMA(n)). This makes the DEMA noticeably faster than a standard EMA of the same period, producing earlier signals but with a slightly higher risk of whipsaws in ranging markets.
What is the best DEMA period for day trading?
For day trading on M15 to H1 timeframes, a 21-period DEMA paired with a 55-period EMA works well. The faster DEMA captures trend shifts early while the slower EMA filters out noise. Adjust periods based on the volatility of the pair you’re trading.
Can I use DEMA on MT5?
Yes. MT5 actually includes DEMA as a built-in moving average method, unlike MT4. You can apply it directly from the Indicators menu without needing a custom file. The calculation and behavior are identical across both platforms.
Download DEMA Indicator for MT4 – Free
Our DEMA custom indicator includes features beyond the basic calculation:
- Adjustable period and applied price – full customization for any strategy
- Crossover alerts – popup, email, and push notifications when DEMA crosses a reference MA
- Trend color coding – the line changes color based on slope direction for quick visual reads
Platform: MT4 (Build 1000+)
File type: .ex4
File size: 8 KB
Version: 1.3
Last updated: March 2026
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Overall Rating: 4.4/5
| Category | Rating |
|---|---|
| Accuracy | 4.3/5 |
| Ease of Use | 4.0/5 |
| Features | 4.4/5 |
| Value | 4.8/5 |
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