Advanced Tools Plug-in:

TRIX - Triple Exponential Moving Average Indicator

The TRIX indicator is a momentum indicator designed to calculate the percent rate of change of a triple exponentially smoothed moving average. Very similar in the way the MACD indicator works, both indicators provide basically the same methodology behind generating market momentum and directional movement.

TRIX was designed to filter out the minor, less significant moves within a market trend. This is done just as other traditional indicators have done in the past, by utilizing multiple moving averages.

Convergence and Divergence are common uses of the TRIX indicator. Also adding the Trigger line crossover provides the trader with a buy / sell signal generated from the crossing of the two moving averages.

Formula

To calculate TRIX, you must first pick a period with which to create an exponential moving average of the closing prices. For a 15-day period:

1. Calculate the 15-day exponential moving average of the closing price.
2. Calculate the 15-day exponential moving average of the moving average calculated in step #1.
3. Calculate the 15-day exponential moving average of the moving average calculated in step #2.
4. You now have triple exponentially smoothed the moving average of closing prices, greatly reducing volatility.
5. Finally, calculate the 1-day percent change of the moving average calculated in step #3

Buy / Sell Signals

A buy signal is generated when the TRIX line crosses above the trigger line.

A sell signal is generated when the TRIX line crosses below the trigger line.