The DEMA is a trend indicator. Its main characteristic is a faster reaction to price movements. Therefore, it reduces the lag between the price and moving average.

As we argued in the EMA video, it is faster than a normal SMA. The DEMA increases to a greater extent the speed of the EMA. So, if you would like to use a very fast moving average, the DEMA can be a good option.

Like other moving averages, the DEMA is usually traded through crossovers between the fast and slow moving average.

When the fast moving average crosses the slow one upwards, the price is likely to begin a bullish trend and a buy signal is generated. Likewise, when the fast moving average crosses the slow one down the opposite happens, the bears are taking over and it sends a sell signal.