Technical Analysis Using Triple Exponential Average (TRIX)

TRIX or Triple Exponential Average is a momentum indicator and oscillator developed by Jack Hutson in the 1980s. It measures the rate of change of a triple exponentially smoothed moving average. It is a popular tool for eliminating short-term market trends to filter the overall market direction. It is indicated on a chart as an oscillator above and below a zero line. It is a smoother line than other oscillators as it is less jagged and more turns slower. It also shows the difference between current and previous triple smoothed exponential moving averages.

How Is It Calculated?

Here’s how to compute the TRIX:

Single-Smoothed EMA = 15-period EMA of the closing price
Double-Smoothed EMA = 15-period EMA of Single-Smoothed EMA
Triple-Smoothed EMA = 15-period EMA of Double-Smoothed EMA
TRIX = 1-period percent change in Triple-Smoothed EMA

How To Interpret TRIX

Being an oscillators, TRIX oscillates around a zero line. The behavior of TRIX around the zero line is useful to a trader or investor in making enter and exit stock strategies.

When TRIX crosses above the zero line, go short or buy. When TRIX goes below the zero line, go long or sell.

When TRIX is negative, the momentum is increasing. When TRIX is positive, the momentum is decreasing. Refer to the chart below for an illustration.

In Sum

Moving averages are useful tools for onward looking traders and investors. It enables them to view the long-term nature of a given stock and be more responsive to the result of the indicator. Being more smoothed, TRIX removes lagging and jagged lines that are evident in MACD charts and other moving average indicators. This is an advantage to traders and investors as they accumulate less lag time. Use it with other technical indicators to avoid mistakes. TRIX is available in trading platforms and websites. Sign up on Tradespoon now to receive winning stocks screened through expert technical analysis.