TRIX is a form of momentum indicator known as a technical analysis oscillator and was developed by Jack Hutson, the editor of Technical Analysis of Stocks and Commodities, in the 1980s.
The purpose of TRIX is to clearly and accurately demonstrate the derivative slope of a triple smoothed exponential moving average of closing prices in the market, the name Trix having itself been derived from the TRiple EXponential nature of the indicator.
Because the TRIX indicator oscillates around a zero line, the report is designed to automatically filter out stock or currency movements which in probability are insignificant to the larger, overall trend of the market.
With TRIX, just as with any other moving average indicator report, TRIX’s triple EMA nature is trend following and allows for easy recognition of the current trend movement.
Because of its zero line alignment up trends and downtrends are easy to spot as crossing the zero line signals a change to the trend.
This is especially useful as it allows the zero line to act as an active signal line, so that the indicator showing a positive cross over the zero line may act as a buy signal and a negative, or downward cross over the zero line acting as a sell signal.
Trix is an oscillator based on the Triple exponentially-smoothed moving average. Its purpose is to separate the important changes in prices from the random “noise” in prices. Thanks to this, the trend in price becomes much more apparent. If Trix is rising (while being in positive values), the momentum of the price rise is increasing and conversely, if it is falling, prices are rising slower or even decline (if it is under 0).
Trix oscillates around the 0 value, whereas crossing above this value is usually considered a buy signal.
Conversely, if Trix crosses under 0, it implies a sell signal.
Like most oscillators, Trix is also used to find divergence with price, as it is considered a leading indicator.