✔️ Information reviewed and updated in April 2024 by Eduardo López
The TRIX indicator is usually a little known concept for those who are just starting out in the world of trading. Which consists of the sale of listed assets that have a lot of market liquidity, with this we refer to stocks, currencies and futures.
There is a special glossary where you can find specific terms that allow you to fully understand the investment markets and their denominations, however, there are some that continue to cause a bit of confusion. Today we will teach you the importance of this concept and why it is relevant when trading.
➡✨What is the TRIX indicator?
The TRIX indicator is characterized by being a momentum oscillator that analyzes the percentage change rate of a smoothed triple exponential moving average of the closing price of the stock. It was designed with the objective of keeping the investor in the same or short trends according to the number of periods with which it is calculated.
It is responsible for carrying out a technical analysis of the stock market in a concrete way, and this is done through the interpretation of graphs whose data offer relevant information of the moving averages. Its name comes from the acronym in English Tripe Exponential Average, which in Spanish means Triple Exponential Average.
➡✨ How can we interpret the TRIX indicator?
The TRIX usually hovers around a zero line, which is designed to filter out insignificant cycles, By this we mean cycles shorter than the number of periods specified to build it.
So you must bear in mind that the indicator can change direction, buy when it turns up and sell when it turns down. Normally people draw a 9-day moving average of the indicator to be able to create a signal or trigger line (very similar to the MACD), this with the aim of making negotiations and buying when the TRIX crosses up its signal line or selling when it falls by below it.
The TRIX is an indicator of technical analysis with many similarities to the William% R, so it is useful when wanting to identify trend changes.
➡✨ Signals for better analysis
It is important to remember that moving averages are primarily used to filter and smooth prices and trends.. Using three means and implementing them will allow us to obtain complementary information that will most likely help us to perfect our process and even the stockings themselves.
This indicator at the moment is in charge of capturing the speed of the market, in addition to eliminating the interferences that cause price fluctuations in a short-term period. Therefore, it generates a purification of the price series that facilitates the observation of the underlying trend.
You do not have to worry much about the signals, since no matter what they are, it does not necessarily have to determine the future of your investment strategy. You have to carefully weigh the results along with your fundamental analysis information.
➡✨Last considerations
One of the main benefits of TRIX is related to oversold and overbought contexts.
The indicator is very useful to obtain profitability in operations with shares.
