TRIX (Triple Exponential Average)
TRIX is a momentum oscillator that shows the rate of change of a triple exponentially smoothed moving average. It helps identify overbought and oversold conditions, as well as potential trend reversals by filtering out price movements that are considered insignificant.
Formula
EMA1 = EMA(Close, Period)
EMA2 = EMA(EMA1, Period)
EMA3 = EMA(EMA2, Period)
TRIX = 100 × (EMA3 - Previous EMA3) / Previous EMA3
How TRIX Works
TRIX applies triple exponential smoothing to reduce noise and identify the underlying trend. The indicator oscillates around a zero line, with positive values indicating bullish momentum and negative values suggesting bearish momentum. Crossovers of the zero line and signal line (typically a 9-period moving average of TRIX) generate trading signals.
Trading Strategies Using TRIX
Strategy Examples
- Trade zero-line crossovers for trend direction
- Use signal line crossovers for entry/exit points
- Look for divergence between price and TRIX
- Combine with other momentum indicators for confirmation
- Monitor extreme readings for potential reversals
Support and Resistance
- TRIX levels create dynamic support/resistance zones
- Historical reversal points form key S/R levels
- Zero-line acts as major support/resistance
- Extreme readings often mark important price levels
- Convergence of multiple timeframes strengthens S/R
Trend Identification
- Positive TRIX values confirm uptrend
- Negative readings indicate downtrend
- Slope of TRIX shows trend momentum
- Multiple timeframe analysis for trend strength
- Watch for trend line breaks on TRIX
Advantages and Limitations
Advantages
- Effectively filters market noise
- Clear trend signals through zero-line crossovers
- Useful for identifying momentum shifts
- Works well in trending markets
Limitations
- Can lag behind price action
- May generate false signals in choppy markets
- Requires confirmation from other indicators
- Less effective in ranging markets
Best Practices When Using TRIX
- Use multiple timeframe analysis to confirm trend signals
- Combine with other technical indicators for validation
- Wait for clear zero-line crossovers before entering trades
- Monitor TRIX slope changes for trend momentum shifts
- Consider overall market conditions when interpreting signals
- Use proper position sizing and risk management
- Look for divergences between price and TRIX
- Document which TRIX settings work best for your trading style
- Adjust strategies based on market volatility
- Use wider stops in trending markets
- Scale positions based on signal strength
- Be patient waiting for high-probability setups
- Avoid trading against strong market trends
- Keep detailed records of TRIX-based trades
- Regularly review and optimize your TRIX trading approach