What is Triple Exponential Average?

Triple Exponential Average (TRIX) is a momentum oscillator that displays the per cent rate of change of a triple exponentially smoothed moving average. It was developed in the early 1980s by Jack Hutson, an editor for Technical Analysis of Stocks and Commodities magazine.

With its triple smoothing, TRIX is designed to filter insignificant price movements. Traders can use Trix to generate signals similar to MACD. A signal line can be applied to look for signal line crossovers. A directional bias can be determined with the absolute level. Bullish and bearish divergences can be used to anticipate reversals.

TRIX Indicator

The Triple Exponential Average (TRIX) indicator is an oscillator used to identify oversold and overbought markets. However, it can also be used as a momentum indicator. When the TRIX indicator is used as an oscillator, much like many other oscillators, it revolves around a zero line. Therefore, a positive value indicates an overbought market, while a negative value indicates an oversold market. However, when TRIX is used as a momentum indicator, a positive value suggests momentum is increasing, while a negative value means momentum is decreasing. 

How To Calculate TRIX

Formula:- ema1 = EMA(data, period)

  • ema2 = EMA(ema1, period)
  • ema3 = EMA(ema2, period)
  • trix = 100 * (ema3 – ema3(-1)) / ema3(-1)

The final formula can be simplified to: 100 * (ema3 / ema3(-1) – 1))

The moving average used is the one initially defined by Wilder, the SmoothedMovingAverage

Why Use Triple Exponential Average

TRIX filters the market noise, and it tends to be a leading indicator rather than a lagging indicator. The market noise is filtered using the triple exponential average calculation. This eliminates minor short-term cycles that indicate a market direction change.

How to Use Triple Exponential Average (TRIX) Trading Strategy

Bullish Scenario:- Since the indicator oscillates on the zero line, if the value given by the indicator goes above 0, it indicates a bullish scenario.

Bearish Scenario:- Since the indicator oscillates on the zero line, if the value given by the indicator goes below 0, it indicates a bearish scenario.

Building Triple Exponential Average (TRIX) Strategy in Mudrex

Strategy:- 

BUY:- Trix crosses up 0

SELL:- Trix crosses down 0

TIME FRAME:- 1H

Creating on Mudrex:- 

We will use 2 Trix indicator blocks. One for selling and One for buying.

For buying, we will use the following settings:-

For selling, we will use the following settings:-

Final Strategy:-

Testing:- 

Running on Binance Futures: BTC/USDT with tick interval of 1H yielded an overall profit of 163.92%

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