The Triple Exponential Average AKA TRIX is a momentum oscillator developed by Jack Hutson in the early 1980s.
The TRIX indicator oscillates around the ‘zero’ line and identifies the overbought and oversold conditions in the market. The positive values indicate the increase in buying momentum, and the negative values indicate the increase in selling momentum.
If the indicator crosses above the zero-line, it can be regarded as a buy signal, and if it crosses below the zero-line, it can be considered as a sell signal. Traders around the world typically use this indicator to spot the divergence in the market. The default setting of the signal line in this indicator is (9 & 15). Intraday traders can lower the timeframes to (5 & 15) to get more trading signals.
Remember that on lower timeframes, the TRIX is more volatile, and it generates a lot of false signals. So if you are a long term trader or investor, we recommend you to use this indicator on higher timeframes (either daily or weekly).
This indicator is less prone to whipsaws on higher timeframes and often generates accurate trading signals. However, as always, it is recommended to use this indicator in conjunction with other reliable indicators to generate accurate trading signals.
Installing ‘TRIX Indicator’ in MT4 (step-by-step process)
By default, the TRIX indicator is not available in the MT4 Terminal, but it is available on the internet. Follow the link below to download the indicator.
Download the zip file from the above link and extract the file. Then paste it to your MT4 directory/MQL4.
Make sure to paste it in the ‘indicators’ folder.
Restart your MT4 Terminal.
Click on the Insert > Indicator > Custom > TRIX indicator.
As you can see below, we have applied the TRIX indicator on an AUD/NZD chart.
TRIX indicator – Trading strategies
TRIX and Chande Momentum Centerline Crossover Strategy
In this strategy, we have paired the TRIX along with the Chande Momentum indicator to generate accurate trading signals.
The strategy is simple. When both the indicators go above the zero-line, it can be considered as a buy signal, and when they go below the zero-line, we can count that as a sell signal.
We have applied both of our indicators to the below EUR/USD 60-minute chart. The Chande Momentum indicator fluctuates near the zero-line, and once it cuts the zero line, our strategy is half fulfilled. Right after that, the TRIX indicator also crosses the zero line from below, thereby giving us a buy signal.
This trade, if executed according to our strategy, generates a 100+ pip profit. As always, we recommend you to use the stop-loss order to protect your account, as none of the strategies can give you the trading signals with 100% accuracy.
You can book your profits at the recent high, or if the trend is strong enough, you can wait for both the indicators to give a reversal at the overbought area to close your position.
On the EUR/USD 60-minute chart, the market was in a downtrend and during the pullback phase, you can see both of the indicators crossing the zero line from above. This is a potential sell signal for us.
This trade, if executed according to our strategy, generates a 60 pip profit. This is a proven strategy which is typically used by most of the traders across the globe. We recommend you to apply this strategy only on timeframes like 60 and 15 minutes because in lower timeframes like 5-minute or 3-minute, both the indicators are prone to whipsaws and they often indicate false signals.
TRIX and RSI Strategy
In this strategy, we are going to pair the RSI indicator with TRIX to generate buy & sell signals. The RSI (Relative Strength Index) is one of the most famous indicators out there. RSI above 70 can be considered as an overbought condition in the market and RSI below 30 can be considered as an oversold condition.
The strategy here is to see if both the RSI and TRIX indicators have reached the oversold area and are giving a sharp reversal. If yes, it is a strong ‘buy’ signal. As you can see in the below EUR/JPY 60 minute chart, when both the indicators reached the oversold area, they are giving us a sharp reversal. Hence this can be considered as a potential ‘buy’ signal.
If we had taken this trade, it would have given us a profit of 150 pips. Remember to always use this strategy in a trending market, and if the trend is super strong, you can go for deeper targets also.
When the RSI and TRIX indicators reach the overbought area and give a sharp reversal, it can be considered as a ‘sell’ signal. In the below Swiss/JPY 60 minute chart, the market is in an overall downtrend, and during the pullback phase, when the market reached the resistance area, both the indicators are giving a reversal at the overbought area. This can be considered as a ‘sell’ signal.
The price goes all the way to 107.80, and our trade generates a 100+ pip profit. We suggest you to always book your profits when the RSI reaches the oversold area.
TRIX is a momentum indicator, which combines trend with momentum.
While identifying the overbought and oversold areas in the market, this indicator also identifies the bullish and bearish divergence.
Remember that this indicator often produces false signals while used in the shorter timeframes. But in the higher timeframes, it gives fewer, but accurate, signals.
Never use any indicator standalone to trade the market. TRIX also should always be paired with the other aspects of trading such as price action, support resistance or any credible indicators to get accurate signals. Happy Trading!