TRIX, or triple exponential average, is a calculation used to determine certain trends in the closing price of a security. TRIX is a momentum indicator in that it shows the rate of change as well as the trending direction.
Smoothing Out Data Spikes
Exponential moving averages smooth a trend line, that is, they minimize the effect of short term fluctuations. TRIX is determined by taking an exponential moving average over a certain time frame, then smoothing it statistically, then smoothing it one more time. Triple smoothing decreases the influence of individual highs and lows so the general trend can be observed. It is a way of making sure outlying data points don’t distort calculations of price change trends. Triple smoothing filters out periods shorter than the periods used to create the moving average. TRIX is a leading indicator that is influenced by more recent closing prices. Check out tradingview’s advanced charting tools
Price Change Momentum
Traders use short period moving averages to generate a signal line. By noting where the TRIX trend line crosses the signal line, and in which direction, traders can get a sense of the direction of price momentum. This informs decisions to buy or sell. The TRIX trend line crossing the signal line in an upward direction suggests an opportune time to buy. When it crosses in a downward direction it might be a prudent time to sell.TRIX | Indicator Series Click To Tweet
As a leading indicator that shows both the direction and rate of change, TRIX can be a powerful decision-making tool. It does have the pitfalls of all indicators used in technical analysis. False positives are always a possibility. Using TRIX in combination with other indicators helps minimize their effect, as does using two time periods to calculate TRIX. TRIX calculations are very effective in pointing toward changes in momentum direction, but the exact turning point cannot be either calculated or predicted.
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