The key to success in Forex trading is the ability to correctly determine the most profitable entry and exit points from the market, as well as the use of competent money and risk management. And if the latter directly depends on the trader himself, then indicators help to find the opening/closing points of transactions. One of these tools is the TRIX indicator, which belongs to the group of oscillators and provides fairly effective signals.
The TRIX algorithm was developed almost 40 years ago, in 1980. Its creator was the world-famous analyst, trader and author of the popular book “The Wyckoff Method” - Jack Hutson. Over the past 40 years, the indicator has undergone many changes, it has been repeatedly refined and improved. Today it is considered one of the most effective oscillators and is used in many trading strategies.
The essence and features of the TRIX indicator
The TRIX indicator is a relatively new tool; it was developed back in the 80s of the last century by the famous trader and analyst Jack Hutson. Like MACD, TRIX belongs to the category of “trend oscillators”: on the one hand, the indicator is located in a separate window under the chart, and its readings are relative, on the other hand, the movement of its lines is tied to the trend. TRIX tracks changes in the triple exponential moving average. It happens like this:
- EMA is superimposed on the chart.
- Based on the readings of the first EMA, the second EMA is built.
- Based on the readings of the second EMA, the third EMA is built.
All three EMAs are assigned the same period. After the values of the last, third EMA are obtained, the main TRIX parameter is calculated: TRIX = (EMA No. 3 for the current candle – EMA No. 3 for the previous candle) / EMA No. 3 for the previous candle The resulting value will be the main TRIX parameter. In addition, the indicator has its own moving average, which is calculated through the main parameter.
Calculation of values using the “triple smoothing” method
TRIX should evaluate the degree of activity (in%) of the triple EMA in relation to the current closing price. We will need three moving averages, let's call them 1st, 2nd and 3rd order EMAs. The calculation period is set by the moving average parameters.
The final result is calculated using a recurrent method. For the current Close price, the 1st order EMA is calculated, from this result - the 2nd order EMA, and from the received data - the same calculation for the third order EMA. It turns out that three filters are sequentially applied to the current price, and as a result we should get a “true” trend, free from market noise. Like that:
EMA(t)=α∙Close(t)+(1-α)∙EMA(t-1)
DMA(t)=α∙EMA(t)+(1-α)∙DMA(t-1),
TMA(t)=α∙DMA(t)+(1-α)∙TMA(t-1),
TRIX(t)=(TMA(t)-TMA(t-1))/(TMA(t-1)*100
Where
- smoothing coefficient α, which is usually calculated as , N – number of periods;
- TRIX(t) – final value at time t;
- EMA(t), DMA(t), TMA(t) – moving averages required for calculation at time t;
- (t-1) – previous values.
We’ll leave a detailed description of the calculation mechanism to math buffs—we’re more interested in the actual application of the result.
Installation and configuration of the indicator
Since TRIX is not included in the standard package of MT 4 tools, before installing it on a chart, it must be downloaded and installed on the platform itself. You can find many resources on the Internet offering to download indicators, but it is safest to use the official website mql5.com for these purposes. After downloading the TRIX indicator, you need to transfer the file to “MQL4/Indicators” in the main folder of AVA Meta Trader 4. After this, the tool will be available in the “Custom” category of the platform indicators menu.
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The oscillator has two parameters, the change of which affects its readings - this is the period of TRIX (the three main EMA indicators) and the period of the signal line (the moving average of TRIX).
To change these periods, you need to open the “Input Parameters” tab in the indicator window before plotting it on the chart.
Trading using TRIX oscillator signals
The TRIX indicator gives the trader two main signals: when the zero line crosses and when the main line crosses the signal line. Trading using signals is carried out as follows:
- Buy trades are opened if the main line crosses the signal line from bottom to top, or if both lines cross the zero level in the same direction.
- Sell trades are opened if the main line crosses the signal line from top to bottom, or both lines cross the zero level in the same direction.
In later versions of the indicator (including the one available for download on mql5.com), the intersection of the lines is indicated by arrows, which immediately indicate in which direction the trade should be opened.
However, TRIX signals alone are not enough for full-fledged trading; at least one more indicator is needed for mutual filtering.
Money management
Money management has long been the most important basic concept of trading, and working with it correctly, it is easy and simple to increase the efficiency of options trading several times. If you want to get a stable profit from trading, the easiest way to achieve this is with the help of money management rules, which will help you quickly adjust your money management.
- Minimum capital : when trading, try to put the minimum capital to buy an option; the price of such an option should not be higher than 5% of your account size; buy inexpensive options, then transactions will not affect your deposit so much. Using these basics of money management, you will save capital for a long time.
- Minimum deposit : when trading, try to spend your deposit economically when participating in transactions; when purchasing a specific asset, you do not need to transfer all capital to it; try to maintain a positive deposit, always taking into account that this capital will still be needed in trading. Using these basics of money management, you will save your deposit for a long time.
- Minimum options : when trading, try to buy a minimum of options, starting, for example, with 2-3 assets; this rule most likely applies to trading beginners; As you become more confident in trading, you can gradually increase the number of assets you trade. Using these basics of money management, you will begin to work effectively from the very first steps in options.
- Minimum of emotions : when trading, try to always use only a serious working attitude, because on the stock exchange you will need analytics and the need to make informed decisions, on which the productivity of trading depends; Remember that in trading it is not enough to rely only on experience, emotions and attitude, first of all, will make the results desired. Using these money management basics, you can make options trading your profession.
TRIX + MA strategy
To increase trading efficiency, we will supplement the trading system with the TRIX indicator with two MAs with periods of 10 and 20. Thanks to this, false signals will be filtered out and the percentage of profitable transactions will increase.
Trading using the TRIX + MA system is carried out as follows:
- If the fast MA crosses the slow one from bottom to top and the main TRIX line crosses the signal line in the same direction, a buy trade is opened.
- If the fast MA crosses the slow one from top to bottom and the main TRIX line crosses the signal line in the same direction, a sell trade is opened.
Stop loss is set at the nearest extreme or key level, take profit is set according to the same principle, but at least 1.5 times larger than the stop loss. If it is impossible to fulfill this requirement, it is better to refuse to enter the market altogether, since the mathematical expectation from such trading will be negative.
Advantages and disadvantages of TRIX
The TRIX indicator is very similar to the MACD, and has almost the same advantages and disadvantages. Although these two trend oscillators are constructed using different formulas, they both show the global direction of the trend and also help determine its reversal points.
Like MACD, TRIX is inefficient to use without additional filtering tools. However, if many proven trading strategies have already been developed with MACD, then finding a reliable TS with TRIX is much more difficult. In addition to the standard combination of TRIX + MA, only dubious systems with custom indicators are offered on thematic forums, the effectiveness of which is not known. Therefore, traders need to make a choice on their own: either spend time and personally test these systems, or use strategies with the proven and classic MACD.
Trading in financial markets involves a high level of capital risk. In order to reduce risks, it is recommended to strictly follow the rules of money management and always set Stop Loss. All decisions that a trader makes when working on Forex are his personal responsibility.
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Expiration
Expiration (from the English Expiration, “end”) is the moment when binary options trading ends, when market participants learn about the results of their forecasts. Today it is also one of the basic concepts in trading. Like money management, it can make trading much more successful.
Types of options:
- Ultra-short options - 30 seconds - 5 minutes.
- Short-term options – 10 minutes – several hours.
- Medium-term options – one day – several weeks.
- Long-term options – month – six months.
Is expiration extension allowed?
Allowed, not in all modern trading terminals. If during trading you realize that you have indicated an incorrect forecast, you can simply extend the expiration of the option, which will reduce losses and generate profits.
Expiration rules:
- For exchange newcomers, it is better to initially work with long-term transactions that will guarantee stability and a minimum risk of loss.
- It is better for experienced exchange players to work with an expiration that will make trading and waiting for its end the most comfortable. Also, be careful when choosing a broker. Find out if you can extend expiration during trading, which will reduce losses several times.
- For those who need instant income from the exchange, it is better to work with short-term transactions that guarantee income within 30 seconds.
- For those who need stable income from the exchange, it is better to work with long-term transactions that guarantee a good income.
Expiration in strategies with Trix
Expiration on a trend
Short-term trading : allowed; TRIX is able to generate high-quality signals of market trends, which will allow you to get high profits even in the case of express trading. Medium-term expiration : allowed; TRIX is one of those indicators that very accurately determine profitable market trend signals, which makes work on the stock exchange many times more effective; For reliability, it is worth using additional tools. Long-term expiration : allowed; TRIX quite accurately determines profitable market trend signals, and for a more accurate forecast you can use all the knowledge about profitable strategies, fundamental and technical analysis, which will lead long-term trading to decent profits.
Expiration on zero crossing
Short-term trading : allowed; TRIX shows many high-quality signals of market trends, which will allow you to get high profits even in the case of express trading. Medium-term expiration : allowed; TRIX is one of the few indicators that very accurately determine profitable market trend signals, which makes work on the stock exchange several times more effective; For reliability, it is worth using additional tools. Long-term expiration : allowed; TRIX quite accurately determines profitable market trend signals, and for a more accurate forecast you can use all the knowledge about profitable strategies, fundamental and technical analysis, which will lead long-term trading to the most profitable results.
Expiration at a signal of divergence and convergence
Short-term trading : allowed; TRIX demonstrates a large number of high-quality market trend signals, which will allow you to achieve high results even in the case of turbo trading. Medium-term expiration : allowed; TRIX very accurately determines profitable signals of market trends, which makes work on the stock exchange several times more effective; For reliability, it is recommended to use additional tools. Long-term expiration : allowed; TRIX quite accurately determines profitable market trend signals; also, for an accurate forecast, use all the knowledge about profitable strategies, fundamental and technical analyzes, which will lead your trading to good results.
Expiration in the “Trix+ Alligator ”
Short-term trading : allowed; Both indicators: TRIX and Alligator work perfectly together and demonstrate profitable signals quite accurately, which will allow you to achieve high results even in the case of turbo trading. Medium-term expiration : allowed; TRIX, together with the Alligator, perfectly complement each other, accurately demonstrating profitable signals, which makes work on the stock exchange several times more effective. Long-term expiration : allowed; TRIX and Alligator qualitatively determine profitable market trend signals; also, for an accurate forecast, use all the knowledge about profitable strategies, fundamental and technical analyzes, which will lead your trading to good results.
On the path to becoming a professional trader, special attention should be paid to studying the issue of expiration time, which will give you the opportunity to quickly achieve the desired result. Get acquainted with the functional terminal of the leading broker on the Russian market, Binomo, which offers a choice of convenient expiration periods from 30 seconds to 1 day. Go to the broker's website binomo.com right now and make your trading profitable.
