# Technical Analysis from A to Z

by Steven B. Achelis

T R I X

Overview

TRIX is a momentum indicator that displays the percent rate-of-change of a triple exponentially smoothed moving average of the security's closing price. It is designed to keep you in trends equal to or shorter than the number of periods you specify.

Interpretation

The TRIX indicator oscillates around a zero line. Its triple exponential smoothing is designed to filter out "insignificant" cycles (i.e., those that are shorter than the number of periods you specify).

Trades should be placed when the indicator changes direction (i.e., buy when it turns up and sell when it turns down). You may want to plot a 9-period moving average of the TRIX to create a "signal" line (similar to the MACD indicator, and then buy when the TRIX rises above its signal, and sell when it falls below its signal.

Divergences between the security and the TRIX can also help identify turning points.

Example

The following chart shows Checker Drive-In, its 12-day TRIX (solid line), and a 9-day "signal" moving average of the TRIX (dotted line).

I drew "buy" arrows when the TRIX rose above its signal line and drew "sell" arrows when it fell below its signal line. This method worked well when prices were trending, but it generated numerous false signals when prices were moving sideways.

A bearish divergence occurred when the TRIX was falling (trendline "A") while prices rose. Prices subsequently corrected. Similarly, a bullish divergence occurred when the TRIX was rising (trendline "B") while prices were falling. Prices subsequently rallied.

Calculation

**To calculate the TRIX indicator:**

- Calculate an n-period exponential moving average of the closing prices.

- Calculate an n-period exponential moving average of the moving average calculated in Step #1.

- Calculate an n-period exponential moving average of the moving average calculated in Step #2.

- Calculate the 1-period (e.g., 1-day) percent change of the moving average calculated in Step #3.

*Technical Analysis from A to Z*is reproduced here with permission from the author and publisher.

### Contents

- Preface
- Acknowledgments
- Terminology
- To Learn More
- Bibliography
- About the Author
- Technical Analysis
- Price Fields
- Charts
- Support & Resistance
- Trends
- Moving Averages
- Indicators
- Market Indicators
- Line Studies
- Periodicity
- The Time Element
- Conclusion
- Absolute Breadth Index
- Accumulation/Distribution
- Accumulation Swing Index
- Advance/Decline Line
- Advance/Decline Ratio
- Advancing-Declining Issues
- Advancing, Declining, Unchanged Volume
- Andrews' Pitchfork
- Arms Index
- Average True Range
- Bollinger Bands
- Breadth Thrust
- Bull/Bear Ratio
- Candlesticks - Japanese
- CANSLIM
- Chaikin Oscillator
- Commodity Channel Index
- Commodity Selection Index
- Correlation Analysis
- Cumulative Volume Index
- Cycles
- Demand Index
- Detrended Price Oscillator
- Directional Movement
- Dow Theory
- Ease of Movement
- Efficient Market Theory
- Elliott Wave Theory
- Envelopes (Trading Bands)
- Equivolume/Candlevolume
- Fibonacci Studies
- Four Percent Model
- Fourier Transform
- Fundamental Analysis
- Gann Angles
- Herrick Payoff Index
- Interest Rates
- Kagi
- Large Block Ratio
- Linear Regression Lines
- MACD
- Mass Index
- McClellan Oscillator
- McClellan Summation Index
- Median Price
- Member Short Ratio
- Momentum
- Money Flow Index
- Moving Averages
- Negative Volume Index
- New Highs-Lows Cumulative
- New Highs-New Lows
- New Highs/Lows Ratio
- Odd Lot Balance Index
- Odd Lot Purchases/Sales
- Odd Lot Short Ratio
- On Balance Volume
- Open Interest
- Open-10 TRIN
- Option Analysis
- Overbought/Oversold
- Parabolic SAR
- Patterns
- Percent Retracement
- Performance
- Point & Figure
- Positive Volume Index
- Price and Volume Trend
- Price Oscillator
- Price Rate-of-Change
- Public Short Ratio
- Puts/Calls Ratio
- Quadrant Lines
- Relative Strength, Comparative
- Relative Strength Index
- Renko
- Speed Resistance Lines
- Spreads
- Standard Deviation
- STIX
- Stochastic Oscillator
- Swing Index
- Three Line Break
- Time Series Forcast
- Tirone Levels
- Total Short Ratio
- Trade Volume Index
- Trendlines
- TRIX
- Typical Price
- Ultimate Oscillator
- Upside/Downside Ratio
- Upside/Downside Volume
- Vertical Horizonal Filter
- Volatility, Chaikin's
- Volume
- Volume Oscillator
- Volume Rate-of-Change
- Weighted Close
- Williams' Accumulation/Distribution
- Williams' %R
- Zig Zag