TRIX: rate of change of a triple-smoothed average

What it measures

TRIX is the percentage rate of change of an exponential average that has been smoothed three times. The triple smoothing removes cycles shorter than the period almost entirely, leaving a line that turns only when the underlying trend does.

It is one of the smoothest momentum indicators available, and that smoothness is the reason to use it: fewer signals, and the ones that arrive are less likely to be noise.

The price of that is lag. TRIX confirms a trend change well after it started, and is a poor tool for anyone trying to catch a turn.

How it is calculated

These are the steps Basis performs, verified against the published definition.

1. 1

   Take an exponential average of the close over the period.

2. 2

   Take an exponential average of that result, then a third of the second result.

3. 3

   Compute the bar-to-bar percentage change of the triple-smoothed series.

4. 4

   A signal line is an exponential average of TRIX itself.

Settings

Fourteen to eighteen is common. Because of the compounding, small changes to the period have a much larger effect on responsiveness than they would on a single average, so adjust in small steps. The signal period behaves as it does on MACD and can be tuned independently without touching the underlying smoothing.

How to read it

• Crossings of zero mark a change in the direction of the smoothed trend and are the indicator’s primary signal.
• The signal-line crossover arrives earlier and is correspondingly less reliable.
• Divergence on TRIX is unusually meaningful because the smoothing has already removed most of the noise that produces false divergences elsewhere.
• A flat TRIX near zero is a market with no cycle longer than the period, which is a consolidation.
• It is expressed as a percentage rate of change, so readings are comparable between instruments in the way MACD readings are not.

Where it misleads

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