The Series of Technical Analysis Studies Chapter 7: “TRIX”

What is TRIX?
TRIX is a fairly simple looking momentum indicator that smoothens out price fluctuations and shows the direction of dominant momentum in a stock or other asset.

How does it work?
The TRIX indicator smoothens price data and then looks at the period’s percentage movement of that smoothed price data. This filters out much of the price noise that’s seen on the price chart. TRIX will rise on sustained moves higher in price, and will fall on sustained moves lower in price.
TRIX is calculated in 4 steps. TRIX is the 1-period percentage rate-of-change for a triple smoothed exponential moving average (EMA), which is an EMA of an EMA of an EMA. EMA period is usually used as 15.
1. Single-Smoothed EMA = 15-period EMA of the closing price
2. Double-Smoothed EMA = 15-period EMA of Single-Smoothed EMA
3. Triple-Smoothed EMA = 15-period EMA of Double-Smoothed EMA
4. TRIX = 1-period percent change in Triple-Smoothed EMA
How to Calculate TRIX in IRIS PLUS?
Open New Chart -> Press “S” -> Select TRIX -> Click on Parameter -> Enter no. of period -> Click “OK”
Key points to remember:
  • Buying and selling signals could be created using zero line crossovers: buy signal when TRIX crosses above zero line and sell signal when TRIX crosses below zero line.
  • For long trades, buy when the TRIX crosses above 0.0 if there is some evidence that the price has started to reverse higher (trendline break, higher swing high or higher swing low).
  • For short trades, sell/short when the TRIX crosses below 0.0 if there is some evidence that the price has started to reverse lower (trendline break, lower swing high or lower swing low).
  • To control risk, a stop loss must be implemented, preferably just above a recent high if taking a short position, or just below a recent low if taking a long position.
  • Another important TRIX signal is the identification of a divergence event. Divergence is a conflicting signal between the overall movement of the indicator and price action.

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