Triple Exponential Average (TRIX):
Triple Exponential Moving Average (TEMA) technical indicator was developed by Patrick Mulloy and published in the "Technical Analysis of Stocks & Commodities" magazine.
The principle of its calculation is similar to Double Exponential Moving Average (DEMA). The name "Triple Exponential Moving Average" does not very correctly reflect its algorithm. This is a unique blend of the single, double and triple exponential smoothing average providing the smaller lag than each of them separately.
TEMA can be used instead of traditional moving averages. It can be used for smoothing price data, as well as for smoothing other indicators.
Author: MetaQuotes Software Corp.
Triple Exponential Average (TRIX)
The Triple Exponential Average (TRIX) is an indicator used to identify
divergences and overbought and oversold conditions, as well as give buy and sell
signals. The TRIX is helpful because it tends to filter out short-term
A 9-day TRIX is shown below in the chart of the E-mini S&P 500 Futures
TRIX Buy Signal
Buy when the TRIX crosses above the zero line.
TRIX Sell Signal
Sell when the TRIX crosses below the zero line.
The buy and sell signals are for entries. Using the above buy and sell
signals for exits could prove profitless. A trader could consider exiting a long
entry when the TRIX enters the oversold area and begins to turn downwards toward
the zero line. Likewise, a trader could exit a short when the TRIX enters the
oversold area and begins to turn upward and move toward the zero line.
Another valuable use of the Triple Exponential
Average is to confirm price action or not confirm price action through
The Triple Exponential Average (TRIX) is an effective indicator used to
identify divergences as well as confirm price action.
Confirmations and divergences are shown below in the chart of the E-mini
S&P 500 Futures contract:
Low #1 to Low #2
The E-mini S&P 500 Futures contract made a higher low and was likewise
confirmed by the TRIX indicator making a higher low as well.
High #1 to High #2
The e-mini future managed to make higher highs; however, the Triple
Exponential Average made a quite noticeable lower high and low. This bearish
divergence warned that prices might change course and that traders would do well
to reduce their long positions.
The TRIX making lower highs combined with the e-mini's double top formation and subsequent
neckline break would also be a powerful indication that the recent price rise
was likely over.
Low #3 to Low #4
During the S&P 500 e-mini's downtrend, it managed to make a significant
lower low. In contrast, the Triple Exponential Average made equal lows,
generally a sign that a price bottom was forming. Astute traders would see this
TRIX divergence and would begin to buy to cover their short positions.
The Triple Exponential Average (TRIX) screens out short-term volatility and
hence, is a valuable tool for medium and longer-term periods for uncovering
divergences in price as well as giving easy to understand buy and sell