The TRIX indicator is a momentum oscillator that uses triple exponential smoothing to filter out market noise and identify significant trend changes. By applying three EMAs in succession, TRIX reveals the underlying momentum while ignoring insignificant price fluctuations, making it ideal for identifying durable trends.
What is TRIX?
TRIX (Triple Exponential Average) shows the percentage rate of change of a triple exponentially smoothed moving average. It oscillates above and below a zero line, with positive values indicating bullish momentum and negative values indicating bearish momentum.
Key concept: The triple smoothing eliminates minor price movements, making TRIX excellent at filtering whipsaws. Signals are fewer but more significant than single-smoothed indicators.
TRIX Calculation
TRIX involves multiple smoothing steps:
Step 1: First EMA
- EMA1 = N-period EMA of Close Price
Step 2: Second EMA
- EMA2 = N-period EMA of EMA1
Step 3: Third EMA
- EMA3 = N-period EMA of EMA2
Step 4: TRIX Value
- TRIX = [(EMA3 today - EMA3 yesterday) / EMA3 yesterday] x 100
Why Triple Smoothing Works
Each EMA application smooths the data more:
Raw price: Very noisy, many false signals
EMA1: Smoother, but still reacts to minor moves
EMA2: Much smoother, filters more noise
EMA3: Very smooth, only major trends visible
TRIX then measures the rate of change of this ultra-smooth line.
TRIX Components
The TRIX Line
- Main oscillator line
- Positive values = bullish momentum
- Negative values = bearish momentum
The Signal Line
- Usually a 9-period EMA of TRIX
- Used for crossover signals
- Similar to MACD signal line concept
The Zero Line
- Separates bullish and bearish momentum
- Crossovers are significant signals
TRIX Trading Strategies
1. Signal Line Crossover
The most common TRIX strategy:
- Buy signal: TRIX crosses above signal line
- Sell signal: TRIX crosses below signal line
- More reliable than many other crossover systems due to triple smoothing
Signal Line Trade Example
Stock ABC is in a downtrend. TRIX is at -0.15, below its signal line.
Price finds support and TRIX begins rising.
TRIX crosses above the signal line at -0.08.
Enter long position with stop below recent support.
Hold until TRIX crosses back below the signal line.
2. Zero Line Crossover
Signals momentum shift direction:
- Buy signal: TRIX crosses above zero
- Sell signal: TRIX crosses below zero
- More significant than signal line crossovers
- Confirms trend direction change
3. Divergence Trading
Powerful reversal signals:
Bullish Divergence
- Price makes lower low
- TRIX makes higher low
- Triple smoothing makes TRIX divergences highly reliable
Bearish Divergence
- Price makes higher high
- TRIX makes lower high
- Early warning of trend exhaustion
4. TRIX Direction
Simplest approach - follow TRIX direction:
- Rising TRIX = bullish momentum, favor longs
- Falling TRIX = bearish momentum, favor shorts
- Use price action for entry timing
TRIX vs Other Indicators
TRIX vs MACD
- TRIX: Uses triple smoothing, slower signals
- MACD: Uses double smoothing, faster signals
- TRIX has fewer false signals but may be late to trends
- Some traders use both for confirmation
TRIX vs RSI
- TRIX: Unbounded, measures rate of change
- RSI: Bounded 0-100, measures relative strength
- TRIX better for trend following, RSI better for overbought/oversold
TRIX as a Filter
TRIX works well as a trend filter for other systems:
- Only take long signals when TRIX is above zero
- Only take short signals when TRIX is below zero
- Rising TRIX confirms bullish setups from other indicators
- Falling TRIX confirms bearish setups from other indicators
TRIX Filter Example
You have a moving average crossover system that generates many signals.
Add TRIX filter: only take MA buy signals when TRIX is above zero.
Result: Fewer trades, but higher win rate because you only trade with the underlying trend confirmed by triple-smoothed momentum.
Combining TRIX with Other Indicators
TRIX + Moving Averages
- Price above 50 MA + TRIX above zero = strong bullish
- MA crossover + TRIX confirmation = higher probability
TRIX + Price Patterns
- Breakout pattern + rising TRIX = confirmed breakout
- Reversal pattern + TRIX divergence = higher probability reversal
TRIX + Support/Resistance
- Bounce at support + TRIX turning up = strong buy
- Rejection at resistance + TRIX turning down = strong sell
TRIX Settings
Standard Settings
- TRIX period: 15
- Signal line: 9-period EMA
Alternative Settings
- 12-period TRIX: Slightly faster, more signals
- 18-period TRIX: Slower, stronger signals
- Shorter periods for day trading, longer for position trading
TRIX Advantages
- Excellent noise filtration
- Clear trend identification
- Fewer false signals than single-smoothed indicators
- Reliable divergence signals
TRIX Disadvantages
- Lag due to triple smoothing
- May miss early entries in fast-moving markets
- Not suitable for short-term trading with default settings
Common TRIX Mistakes
- Using TRIX for short-term trades without adjusting settings
- Ignoring the lag inherent in triple smoothing
- Trading against zero line crossovers
- Not combining with price action for better entries
Track Your TRIX-Based Trades
Pro Trader Dashboard helps you analyze which TRIX setups work best for your trading style.
Summary
The TRIX indicator is a powerful momentum oscillator that uses triple exponential smoothing to filter market noise and reveal significant trend changes. Its smooth nature makes it ideal for medium to long-term trend following, while signal line crossovers provide actionable trading signals. Use TRIX to confirm trends, identify divergences, and filter out noise from other trading systems. Accept its lag as a trade-off for its superior noise filtration capabilities.
Learn more: MACD indicator and moving averages.