Definition of triple exponential average (TRIX)


What is the triple exponential average (TRIX)?

The Triple Exponential Average (TRIX) is a momentum indicator used by technical traders that shows the percentage change in a moving average that has smoothed exponentially three times. The triple smoothing of moving averages is designed to filter out price movements that are considered insignificant or unimportant. TRIX is also implemented by technical traders to produce signals that are similar in nature to moving average convergence divergence (MACD).

Key takeaways

  • The Triple Exponential Average Indicator (TRIX) is an oscillator that is used to identify oversold and overbought markets and is also a momentum indicator.
  • The triple smoothing of moving averages is designed to filter out price movements that are considered insignificant or unimportant.
  • Many analysts believe that when TRIX crosses above the zero line, it gives a buy signal, and when it closes below the zero line, it gives a sell signal.

Understand the Triple Exponential Average (TRIX)

Developed by Jack Hutson in the early 1980s, the Triple Exponential Average (TRIX) has become a popular technical analysis tool to help chartists spot deviations and directional signals in stock trading patterns. Although TRIX is considered by many to be very similar to MACD, the main difference between the two is that TRIX exits are smoother due to the triple smoothing of the exponential moving average (EMA).

As a powerful oscillator indicator, TRIX can be used to identify oversold and overbought markets, and it can also be used as a momentum indicator. Like many oscillators, TRIX oscillates around a zero line. When used as an oscillator, an extreme positive value indicates an overbought market, while an extreme negative value indicates an oversold market.

When TRIX is used as a momentum indicator, a positive value suggests that momentum is increasing, while a negative value suggests that momentum is decreasing. Many analysts believe that when TRIX crosses above the zero line, it gives a buy signal, and when it closes below the zero line, it gives a sell signal. Also, any divergence between price and TRIX can indicate significant turning points in the market.

Calculate TRIX

First, the exponential moving average of a price is derived from the expression:

me

SUBWAY

TO

1

(

I

)

=

me

SUBWAY

TO

(

Price

,

North

,

1

)

where:

Price

(

I

)

=

Actual Price

me

SUBWAY

TO

1

(

I

)

=

The present value of the exponential

Moving average

begin {aligned} & EMA1 (i) = EMA ( text {Price}, N, 1) \ & textbf {where:} \ & text {Price} (i) = text {Current price} & begin {aligned} EMA1 (i) = & text {The current value of the Exponential} \ & text {Moving Average} end {aligned} end {aligned}

meSUBWAYTO1(I)=meSUBWAYTO(Price,North,1)where:Price(I)= Actual PricemeSUBWAYTO1(I)= The present value of the exponential Moving average

Next, the second smoothing of the obtained average is executed: double exponential smoothing:

me

SUBWAY

TO

2

(

I

)

=

me

SUBWAY

TO

(

me

SUBWAY

TO

1

,

North

,

I

)

EMA2 (i) = EMA (EMA1, N, i)

meSUBWAYTO2(I)=meSUBWAYTO(meSUBWAYTO1,North,I)

The double exponential moving average is exponentially smoothed out once again, hence the triple exponential average:

me

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TO

3

(

I

)

=

me

SUBWAY

TO

(

me

SUBWAY

TO

2

,

North

,

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EMA3 (i) = EMA (EMA2, N, i)

meSUBWAYTO3(I)=meSUBWAYTO(meSUBWAYTO2,North,I)

Now the indicator itself meets:

T

R

I

X

(

I

)

=

me

SUBWAY

TO

3

(

I

)


me

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TO

3

(

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1

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me

SUBWAY

TO

3

(

I


1

)

TRIX (i) = frac {EMA3 (i) -EMA3 (i-1)} {EMA3 (i-1)}

TRIX(I)=meSUBWAYTO3(I1)meSUBWAYTO3(I)meSUBWAYTO3(I1)

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