What it means
The name stands for triple exponential average. An exponential moving average (EMA) is an average of recent prices that gives more weight to the latest ones, and TRIX applies this process three times in a row to the closing price, so only persistent trends survive.
Once the triple-smoothed line is calculated, TRIX takes its one-period percentage change. The result is an oscillator, a line that moves above and below a zero line.
When it is above zero, the smoothed trend is rising, and when it is below zero the trend is falling. The indicator was created by Jack Hutson, the founder of the magazine Technical Analysis of Stocks and Commodities.
A common setting is 15 periods for each smoothing, though traders vary it to suit the time frame, with shorter settings reacting faster and longer ones giving fewer false signals. The most common signals are zero-line crossings and crossings of a signal line, which is itself a moving average of TRIX, often over nine periods.
A cross above zero is read as a bullish signal and a cross below as bearish. Traders also look for divergence, where price makes a new high but TRIX does not.
Like all technical indicators, TRIX works from past prices, so it lags the market. It tends to do well in trending markets and give repeated misleading signals when prices move sideways, which is why it is usually combined with other tools and sensible risk controls.
For a finance reader, the useful lesson is how much smoothing costs. Every extra layer of averaging removes noise but delays the signal, so the indicator often confirms a turn only after a good part of the move has already happened.
In practice
Real-world examples.
Example
A swing trader watches a technology share on a daily chart. The TRIX line crosses above zero while the price is still near its low, and she takes this as an early sign that the downtrend is ending.
Example
A currency analyst at a corporate treasury uses TRIX on a weekly euro-dollar chart. A crossing below the signal line while the pair is rising warns her that the move is losing strength, so she reviews the timing of a planned hedge.
Example
An index fund manager notes in a monthly report that TRIX on a broad equity index has been negative for four months. The note treats this as one of several signs of weak momentum, alongside falling earnings estimates.
Formula
Calculation
EMA1 = EMA of closing price over n periods; EMA2 = EMA of EMA1; EMA3 = EMA of EMA2
TRIX = (EMA3 today - EMA3 yesterday) / EMA3 yesterday x 100
With n = 15, the smoothing multiplier for each EMA is 2 / (15 + 1) = 0.125. Suppose that after the three smoothing steps, EMA3 yesterday was $50.00 and EMA3 today is $50.25.
TRIX = (50.25 - 50.00) / 50.00 x 100 = 0.25 / 50.00 x 100 = 0.50. The reading of +0.50 means the triple-smoothed price rose by 0.5% in the period. If tomorrow's EMA3 were $50.20, TRIX would be (50.20 - 50.25) / 50.25 x 100 = about -0.10, signalling that momentum had turned down.Case study
Seen in the real world.
Marlow Street Trading is an illustrative, fictional proprietary desk that tested TRIX on 10 years of daily oil prices. The analyst used a 15-period setting and a rule to buy when TRIX crossed above zero and sell when it crossed below.
The test earned a modest profit overall, but most of it came from three long trends. In the long sideways periods the rule produced many small losses, with 31 of 52 trades losing money, which cut into the result.
The illustrative lesson is that TRIX is a trend tool. Marlow Street added a filter that stopped trading when price volatility was low, and the desk's records showed fewer false signals, although no rule removed them entirely. The desk also kept a log of every trade so that later reviews could separate bad luck from a weak rule.
Watch out
Common mistakes.
- Treating TRIX as a price forecast, when it only describes smoothed momentum from past prices.
- Using it in sideways markets, where zero-line crossings are frequent and mostly misleading.
- Changing the settings after each loss until the past data fits, which gives a pattern that fails in live trading.
Questions
People also ask.
What does a TRIX value above zero mean?
The triple-smoothed price is rising, which is read as positive momentum.
Why smooth three times?
Each smoothing step removes more short-term noise, so the final line responds only to sustained moves, at the cost of reacting later.
Is TRIX the same as MACD?
No, although both are momentum oscillators built from moving averages, TRIX uses the rate of change of a triple-smoothed average while MACD uses the difference between two averages.
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