Article/Author: Omega Research Inc., 1997

Download: TRIX.ELA

Category: Indicator > Oscillators

Description:

The TRIX indicator is an oscillator used to identify oversold and overbought markets and it can also be used as a momentum indicator. As is common with many oscillators, TRIX oscillates around a zero line. When used as an oscillator, a positive value indicates an overbought market while a negative value indicates an oversold market. As a momentum indicator, a positive value suggests momentum is increasing while a negative value suggests momentum is decreasing. Many analysts believe the TRIX crossing above the zero line is a buy signal while closing below the zero line is a sell signal. Also, divergences between price and TRIX can indicate significant turning points in the market.

TRIX calculates a triple exponential moving average of the log of the Price input over the period of time specified by the Length input for the current bar. The current bar�s value is subtracted by the previous bar�s value. This prevents cycles shorter than the period defined by Length input from being considered by the indicator.

Usage:

Two main advantages of TRIX compared to other trend-following indicators are its excellent filtration of market noise as well as its tendency to be a leading rather than a lagging indicator. It filters out market noise using the triple exponential average calculation thus eliminating minor short term cycles that may otherwise signal a change in market direction. Its ability to lead a market stems from its measurement of the difference between each bar�s "smoothed" version of the price information. When interpreted as a leading indicator, TRIX is best used in conjunction with another market timing indicator to minimize the effect of false indications.

INPUTS: PRICE(CLOSE), LENGTH(18);



IF CURRENTBAR > 1 THEN

	PLOT1(TRIX(PRICE, LENGTH), "TRIX");

PLOT2(0, "ZERO");



{ALERT CRITERIA}

IF PLOT1 CROSSES OVER 0 THEN

	ALERT("TRIX HAS CROSSED TO POSITIVE TERRITORY")

ELSE

	IF PLOT1 CROSSES UNDER 0 THEN

		ALERT("TRIX HAS CROSSED TO NEGATIVE TERRITORY");