More than a dozen indicators are built on the moving averages. Someone prefers to use separately sliding (MA, EMA) in different quantities. Someone builds a “rope” from them, someone uses combined indicators. The moving average formula uses a method of averaging historical data, for which the indicator is often criticized. In the average period fall anomalies, noise, fundamental bursts. True, there are no perfect tools. Therefore, we propose to consider the TRIX indicator, which is an interesting combination of sliding ones.
Exploring the possibilities of sliding
The TRIX indicator is an oscillator that reflects the relative speed of the triple smooth EMA Price Close for a fixed period. The author of the indicator is Jack Hutson, who first published it in his journal in the 80s. The task of the tool is to show the presence of a trend in the market, eliminating noise.
Indicator settings provide for the selection of the period for which the EMA is built. For different currency pairs, it is different and is selected experimentally. The first MA is calculated from Price Close, the second EMA is based on the main MA, the third EMA is based on the second. The result is a smoothed triple EMA, which shows the daily price change.
- TrixPeriod – period of the first MA;
- Signal Period – the period of the signal sliding. If in the first MA it is in the basic version 13, then in the signal one it is equal to 8 (in any case, less than the period of the first MA).
- Signals – enable audible and visual signals that appear when the MA is crossed and the signal is moving.
- Count Bars – the number of candles that are used when calculating the indicator.
If the TRIX indicator is below zero, the trend is falling, above – growing. As soon as the signal line crosses the main one from the bottom up, we open a long position, from top to bottom – a short one. If the intersection occurred at the time of the flat – ignore the signal. The crossing of the zero level of the moving signal can also be a signal to open a position.
Also, based on a general visual analysis of the TRIX indicator graph, you can estimate the amplitude of oscillations. This allows us to estimate the cyclical nature and nature of the waves, volatility. The indicator is auxiliary, therefore it should be used only with supporting tools or patterns. There are questions – ask them in the comments! And successful trading for you!