Trix Indicator Guide for MT4/MT5
Trix indicator for Metatrader 4 (MT4) is one of the popular custom trading indicators in the Forex market. In fact, this triple exponential average represents a strong directional indicator. Also, a valuable instrument when it comes to spotting divergences. Actually, the MT5 Trix indicator was developed in 1980 by “Jack Hutson” and he is a useful multi-function tool. In a way, as an oscillator, the Trix indicator for Tradingview can determine overbought and oversold markets. On the other way, as a momentum detector, he can suggest whether the actual tendency is going to increase or decrease. Besides, relying on a Trix strategy can be valuable for many Forex day traders because he works better and delivers precise clues in short timeframes.
Triple Exponential Average FAQ
What is trix indicator ?
Trix Indicator Strategy differs from that of standard moving averages in that it exists in the form of an oscillator. Actually, with its triple smoothing, he is created to filter out insignificant price movement. Chartists can use it to identify the overbought and oversold Forex markets. Also, we can use it to determine bullish and bearish divergences to anticipate pullbacks. In fact, most Forex traders use the Trix strategy to confirm trends. Or, there are a few traders who consider it a useless “trend indicator” and prefer to simply use moving averages instead of him. However, we must remember that the MAs only show the average of the price over the period of time.
Thus, the general explanation when we use the MA is that when the price is above its average we are in an uptrend and vice versa. So depending on MAs to detect tendencies is somewhat limited. Conversely, the Trix strategy stands for a smoothed indicator based on the percentage rate of change and it can display whether the asset is moving up or down. Besides, the Trix indicator has two major benefits over other “trend indicators”. Firstly, he has the ability to filter the market from noise. So to avoid any worthless movement like small corrections and intraday volatility that can distort or impact the image of the underlying tendency. Secondly, he is a leading indicator.
Indicator formula
The Trix indicator presents the percentage change in value over a 1-period for a triple-smoothed exponential moving average. In other words, it’s an Exponential MA of an Exponential MA of an Exponential MA. For instance, we should pass through a couple of steps to set a 13-period Trix.
-Single-smoothed EMA: is a 13-period EMA of the closing price.
-Double-smoothed EMA: is a 13-period EMA of the single-smoothed EMA.
-Triple-smoothed EMA: is a 13-period EMA of the double-smoothed EMA.
-The Trix: is the 1-period percentage rate of change for the triple-smoothed EMA.
Let’s see now how to insert the Trix indicator in the Metatrader and Tradingview platforms.
How to trade with it?
One familiar method of using the MT4 TRIX indicator is to make a long position when it begins turning up crossing the neutral line. So, we should comprehend that the asset is usually oversold during this time. Otherwise, we are in an overbought market when it begins turning down traversing the baseline. Then we should make a short position. Actually, as we mentioned earlier, we can use the MT4 Trix indicator in two different ways:
As an impulse indicator
In this aspect, the Trix MT5 indicator will work as an oscillator. So when he is above the baseline, that means a positive value and we are in an overbought market. So we will expect an upcoming downtrend. That is why we should make a short position. Whereas, a negative value refers to an oversold market where we see the indicator below the zero line. So we will predict that the price will pull back towards the baseline, then a future uptrend. At this moment, we should open a buy order.
As a directional indicator
In fact, many CFD traders use the MT4 Trix indicator as a trend indicator in the CFD market. So if he displays a positive value then we should predict that the market will continue moving strongly in the current direction. Otherwise, we should anticipate a decrease in the present tendency when we catch a negative value. In other words, a strong momentum that pushes to the upside is reflected by higher values of the indicator. On the other side, a falling Trix indicator is translated to a strong downward movement in price. It is as simple as that. The MT5 Trix indicator is able to plot these signals because of the manner it is developed.
Besides, we can use the Trix indicator for Tradingview to determine pullbacks and identify good entry and exit areas through spotting divergences.
Trix divergence
The divergence between the MT4 Trix indicator and the price can indicate significant turning points in the Forex market. In effect, divergences are a typical technique of trading when we use an oscillator. In this regard, the Trix indicator for Tradingview is no exception either. However, based on divergence, we can predict if the tendency is rising or slowing. Also, if the asset price tends to shift direction or not. So, when the indicator fails to make a new high but the price does, we should expect a bearish divergence. On the other hand, when the MT5 indicator fails to make a new low but the price of the security does, then we can anticipate a bullish divergence.
Bullish Trix
It occurs when the MT5 indicator forms higher highs but the price doesn’t follow and makes lower highs.
Bearish Trix
Conversely, it occurs when the MT5 Trix indicator fails to make a new high, but on the other side, the price follows an uptrend movement.
Example
In fact, the Trix strategy is about combining the Trix indicator with Candlestick chart. An effective and simple Trix strategy is to use two MT5 Trix indicators with different time spans. In this way, a change in the direction will be spotted when a crossover between them happens. In a way, when the fast MA crossover the slow MA, then we should consider that the price will be in an uptrend. Likewise, when the slow MA crossover the fast MA, the asset is said to be in a downtrend. Actually, this Trix strategy suits most FX day traders and it presents an excellent and perfect timing technique.
Download Trix indicator for MT4
Trix indicator for MT4 is a multi-function tool. In effect, he is very useful when it comes to identifying tendencies. Hence, depending on crossovers, we can spot the shift in movements and directions. In a way, when The Trix MT4 indicator crosses above the zero line, it gives a bullish signal. So we must take a buy order and this moment. On the other way, if the indicator crosses below the baseline, it gives a bearish signal then we should make a short position.
Download Trix indicator for MT5
Trix indicator for MT5 suits most chartists that use short timeframes. In fact, Forex traders prefer to use it in conjunction with another market timing indicator to minimize false signs. Thus, they will benefit from his quick response to the market situations and changes in order to determine buy and sell signals through identifying overbought and oversold zones.
Conclusion
Briefly, the Trix indicator for Tradingview is a versatile custom indicator. It falls into the category of momentum and directional indicator. In a way, this MT4 indicator can confirm the rise and fall in a given tendency on the price chart. Also, he shows in which direction the asset price is moving. This MT5 indicator allows us to spot potential reversals using the crossing of the zero line and also by means of the divergence that forms. Hence, the Trix strategy is widely used among Forex day traders and it works best in the CFD markets where tendencies are well verified.