What is the TRIX indicator?
The Triple Exponential Moving Average (TRIX) indicator is a powerful technical analysis tool. This can help investors identify price momentum and identify oversold and overbought signals of a financial asset.
Jack Hutson is the creator of the TRIX indicator. He created it in the early 1980s to show the rate of change of a triple exponentially smoothed moving average.
The indicator consists of three main components:
• Zero line
• TRIX line
• Percentage scale
trix indicator
The TRIX indicator identifies overbought and oversold markets and can also be an indicator of momentum. Like most oscillators, TRIX fluctuates around the zero line. In addition, divergences between price and TRIX can mean big turning points in the market.
TRIX calculates a triple exponential moving average of the entry price log. It calculates this based on the time given by entering the length for the current bar.
How to use the TRIX indicator?
When used as an oscillator, it shows potential high and low price zones. A positive value tells traders that an overbought market exists, while a negative value means an oversold market. When traders use TRIX as a momentum indicator, it filters out price spikes that are vital to the overall dominant trend.
A positive value means that the momentum is increasing, while a negative value means that the momentum is decreasing. Many analysts believe that when TRIX crosses the zero line, it gives a buy signal, and when it closes below the zero line, it gives a sell signal.
Trix indicator calculation:
TRIX, which is the triple smoothed EMA, is the EMA, and the EMA is therefore “triple”. Exponential moving averages give more weight to the latest price information.
Most traders use the default 14-period when calculating TRIX. But traders can adjust the parameters depending on the needs of the trader. Following are the steps used in calculating the 14-period TRIX:
• One-smoothed EMA = 14-period EMA calculated based on the close of the price
• EMA double-smoothed = 14-period EMA of one-shot smoothed EMA
• EMA with triple smoothing = 14-period EMA with double smoothing.
• TRIX = 1-period percentage change of triple smoothed EMA
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