The signal to make a buy order will happen when the TRIX moves under the signal line. The opposite happens in other words a sell order is placed when the signal line is crossed from above. This is possible in ranging and trending markets. In ranging markets, a signal line corroborates that resistance and support zones have been sustained in the market.

While in trending markets, a signal line cross shows the end of the price retracement. The main trend resumes course. Traders can use the TRIX to identify when crucial turning points take place in the market.

They can reach this by searching for divergences. When the price is moving in the opposing direction as the TRIX indicator, then you have divergences. If the price is reaching higher highs and the TRIX is at lower highs, this is a weakening up-trend and I can be interpreted as a forming of bearish reversal. If the price reaches lower lows, and TRIX achieves higher lows, that a bullish reversal is coming to the market. Bullish and bearish divergences occur when the asset and the indicator do not validate themselves.

Bearish divergences are not possible in strong uptrends. It looks like momentum is weakening because the indicator is at lower highs, as long as it is over the centerline the momentum has a bullish bias. If the security makes a lower low, and the indicator creates a higher low the bullish divergence can manifest. This higher low means less downside momentum that may foretell a bullish reversal.

When the asset creates a higher low, but the indicator shapes a lower high then it is a bearish divergence. The lower high signals fragile upside momentum that can indicate a bearish reversal sometimes. Bullish and bearish divergences work, and the secret is to separate the bad signals from the good signals. TRIX can measure the impulse of the market. The 0 value is the centerline, if it goes from below, it will be mean that the impulse is progressing in the market.

Traders can search for opportunities to make buy orders in the market. While a cross of the centerline from above means a reduced impulse in the market. Traders can search for chances to sell in the market. When calculating TRIX traders use a default period. Investors can modify the parameters depending on the needs of the trader. The steps you need to fallow in order to calculate the TRIX. The Moving Average Convergence Divergence MACD is a momentum and trend-following indicator.

By combining MACD and TRIX you can get definitive signals for starting new trends and escaping the position when a reversal takes place. The TRIX indicator is a versatile technical analysis tool that combines trend and momentum into one indicator. It is comprised of the rate of change of a triple exponentially smoothed moving average. The key signals generated by TRIX are divergences and signal line crossovers. Shorter timeframes are more sensitive, while longer time frames reduce sensitivity.

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This signal should now be strong enough to go with the UP trend and enter just Long positions. And this is also true vice versa the fall below zero-line would mean dominant DOWN trend.

We go Short when TRIX falls below its signal line. This technique is focused more on the momentum of the actual trend and traders do get the entry end exit signals sooner than by waiting for crossing the zero-line. Crossing the Signal line down means that bullish momentum is weakening and maybe there is a time to sell the asset. Crossing the Signal line up means that bearish momentum is weakening and there is a time to buy.

The signal line is typically of shorter length than the number of periods used in the TRIX calculation. By using this trading strategy the analysts are getting closer to using the index as a counter-trend oscillator like RSI , CCI or Stochastic but they should also use shorter periods to get the buy and sell signals sooner please take into account that the trend can persist for a very long time even on weakening momentum. They can alert us of a possible trend reversal.

Bullish or positive divergences are created when the price chart makes lower lows but TRIX chart creates higher lows. This could signalize a time to buy. Bearish or negative divergences are when price chart creates higher highs but TRIX curve does not a proper time to sell the asset.

We can also search for other chart patterns trend lines , supports etc. The chart patterns have the same effect on the TRIX as they would have on standard price chart. The picture below shows day TRIX blue and its 3-day moving average as the Signal line violet. Their difference is displayed by the histogram white bars. As you can see, the difference between TRIX and its Signal line produces sooner signals than the zero-line crossing would. You might also noticed that TRIX works really well in trending market left side of the chart but does not do so well in ranging market right side of the graph.

Sometimes the TRIX index is considered being also a leading indicator. We decided to set one of the leading indicators Stochastic as similar to TRIX as possible. You can see the result in the picture below The blue curve stands for TRIX; Stochastic is displayed by the violet curve. As you can see, TRIX can really react faster than Stochastic have a look at the arrows.

In fact, TRIX indicator is an oscillator it oscillated around its centerline that combines trend moving averages are trend-following indicator with its momentum. The main idea that stands behind TRIX is to filter price noise and insignificant price moves, so technical analysts can better see the trend and how much it dominates.

Choose the "x" value first. It is the time period for the indicator calculation. If we decide to calculate day TRIX we calculate day EMA of Close prices first so far we have single-smoothed EMA.

Then we calculate day EMA of the single-smoothed EMA we get double-smoothed EMA. Finally we calculate day EMA of the double-smoothed EMA and so we get triple smoothed EMA. To simplify that, we have just calculated day EMA of day EMA of day EMA. The picture below shows the difference among the moving averages.

The white curve stands for Simple smoothed day EMA, the yellow curve stands for Double smoothed day EMA and the blue curve stands for Triple smoothed day EMA. The very TRIX index is shown in the chart below the picture. As you can see with every next smoothing we get smoother curve of a moving average, but it is also more lagging.

That is because the moving average itself is a lagging indicator it generates signals later but on the other side the more reliable they should be. The smoothing ensures that the small up and down price swings are kept to minimum and a technical analyst can see the trend clearer.

Not every little pullback means a trade should be exited or that the trend is about to reverse. If an analyst wants to make it more sensitive to price changes he can use shorter period for TRIX calculation. That would also make the indicator being more volatile.

TRIX values are positive as long as the triple smoothed EMA moves up. Once it turns down, the values become negative. The values are not bound by any upper or lower limits. Now we know that TRIX is a 1-day Rate of change of Triple smoothed EMA. The higher the absolute percentage is either positive or negative percentage the stronger the momentum is. Decreasing percentage approaching the zero-line would mean that indicator and dominant market trend are loosing their momentum.

TRIX is sometimes being compared to MACD but while MACD displays the differences between short and long term moving averages of a price, TRIX is several times applied moving average to a series of data.

The thing they have in common is that they both can use 9-day moving average as the signal line. TRIX is also sometimes being compared to Percentage price oscillator PPO but it also uses one short term and one long term EMA for its calculation.

In the picture below we would like to show you the difference between MACD and TRIX. The violet curve stands for the MACD set to 16 and 22 days while the blue curve stands for TRIX set to 11 days. The days have been chosen deliberately to get as similar curves as possible. As you can see, the TRIX produces even smoother curve than MACD does but it is also a bit more lagging. There are many strategies. First of all - the best way how to comprehend them, is to imagine the TRIX area above zero-line as an UP trend and the area below zero-line as a DOWN trend.

Moreover, TRIX curve shows us the trend momentum so moving away from the zero-line means acceleration while heading towards it means deceleration of the previous trend. When it falls below the zero-line, we go Short. The rise above the zero-line baseline or centerline means that Triple smoothed EMA has just changed its direction from down to up. This signal should now be strong enough to go with the UP trend and enter just Long positions. And this is also true vice versa the fall below zero-line would mean dominant DOWN trend.

We go Short when TRIX falls below its signal line. This technique is focused more on the momentum of the actual trend and traders do get the entry end exit signals sooner than by waiting for crossing the zero-line.

Crossing the Signal line down means that bullish momentum is weakening and maybe there is a time to sell the asset. Crossing the Signal line up means that bearish momentum is weakening and there is a time to buy.

The signal line is typically of shorter length than the number of periods used in the TRIX calculation. By using this trading strategy the analysts are getting closer to using the index as a counter-trend oscillator like RSI , CCI or Stochastic but they should also use shorter periods to get the buy and sell signals sooner please take into account that the trend can persist for a very long time even on weakening momentum.

They can alert us of a possible trend reversal. Bullish or positive divergences are created when the price chart makes lower lows but TRIX chart creates higher lows. This could signalize a time to buy. Bearish or negative divergences are when price chart creates higher highs but TRIX curve does not a proper time to sell the asset. We can also search for other chart patterns trend lines , supports etc.

The chart patterns have the same effect on the TRIX as they would have on standard price chart. The picture below shows day TRIX blue and its 3-day moving average as the Signal line violet.

Their difference is displayed by the histogram white bars. As you can see, the difference between TRIX and its Signal line produces sooner signals than the zero-line crossing would. You might also noticed that TRIX works really well in trending market left side of the chart but does not do so well in ranging market right side of the graph. Sometimes the TRIX index is considered being also a leading indicator. We decided to set one of the leading indicators Stochastic as similar to TRIX as possible.

You can see the result in the picture below The blue curve stands for TRIX; Stochastic is displayed by the violet curve. As you can see, TRIX can really react faster than Stochastic have a look at the arrows. On the other side, Stochastic has to be set to very long periods to get a curve so similar to TRIX in this case calculated on days period, 7-day smoothing for fast stochastic and 7-day smoothing for slow stochastic.

Despite its ability to filter out the market noise, we would recommend you to combine TRIX index with other indicators and signals that can help you to improve trading performance. As with all of the technical indicators the best thing every trader can do is to test his own data, his own settings, and his own rules how to trade. Surprisingly, sometimes the best result can be achieved with unusual settings and trading rules that are quite strange at a first glance — the more things a trader can change and experiment with the better for him and his trading strategy.

If you are interested in a deeper study of this technical indicator and prefer ready to serve solutions, this section may be of interest to you. There you can find all available indicators in Excel files for download. Home Technical indicators TRIX indicator.

Indicators for download yes, you can also use DOGE or BTC. The formula for TRIX indicator looks like follows. How to use TRIX indicator for technical trading?

Traders looking for more sensitivity should use a shorter timeframe. Chartists looking for more sensitivity should try a shorter timeframe 5 versus It can lead a market because it measures the difference between the smoothed versions of the price information of each bar. Both are momentum oscillators that fluctuate above and below the zero line. Pre-register now and receive the candlestick patterns statistics ultimate ebook for free before anyone else! For more details on the syntax to use for TRIX scans, please see our Scanning Indicator Reference in the Support Center.

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