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<SPAN
class=014042803-09052003>Dennis,
<SPAN
class=014042803-09052003> <SPAN
class=014042803-09052003>
T R I X
Overview
TRIX is a momentum
indicator that displays the percent rate-of-change of a triple exponentially
smoothed moving average of the security's closing price. It is designed to keep
you in trends equal to or shorter than the number of periods you
specify.
<FONT color=#0000ff face=Arial
size=2>Interpretation
The TRIX indicator
oscillates around a zero line. Its triple exponential smoothing is designed to
filter out "insignificant" cycles (i.e., those that are shorter than the number
of periods you specify).
Trades should be placed
when the indicator changes direction (i.e., buy when it turns up and sell when
it turns down). You may want to plot a 9-period moving average of the TRIX to
create a "signal" line (similar to the MACD indicator, and then buy when the
TRIX rises above its signal, and sell when it falls below its signal.
Divergences between the
security and the TRIX can also help identify turning points.
Example
The following chart
shows Checker Drive-In, its 12-day TRIX (solid line), and a 9-day "signal"
moving average of the TRIX (dotted line).
<IMG height=268
src="gif00303.gif" width=380>
I drew "buy" arrows when
the TRIX rose above its signal line and drew "sell" arrows when it fell below
its signal line. This method worked well when prices were trending, but it
generated numerous false signals when prices were moving sideways.
A bearish divergence
occurred when the TRIX was falling (trendline "A") while prices rose. Prices
subsequently corrected. Similarly, a bullish divergence occurred when the TRIX
was rising (trendline "B") while prices were falling. Prices subsequently
rallied.
<FONT color=#0000ff face=Arial
size=2>Calculation
To calculate the TRIX
indicator:
Calculate an n-period
exponential moving average of the closing prices.
Calculate an n-period
exponential moving average of the moving average calculated in Step
#1.
Calculate an n-period
exponential moving average of the moving average calculated in Step
#2.
Calculate the
1-period (e.g., 1-day) percent change of the moving average calculated in Step
#3.
<SPAN
class=014042803-09052003>TEMA
<SPAN
class=014042803-09052003>
<SPAN
class=014042803-09052003>
Description
TEMA is a
unique smoothing indicator developed by Patrick Mulloy.<SPAN
> It was originally introduced in the January
1994 issue of Technical Analysis
of Stocks & Commodities magazine.
As Mr.
Mulloy explains in the article:
"Moving
averages have a detrimental lag time that increases as the moving average length
increases. The solution is a modified version of exponential smoothing with less
lag time."
TEMA is
an acronym that stands for Triple Exponential Moving Average.<SPAN
> However, the name of this smoothing technique
is a bit misleading in that it is not simply a moving average of a moving
average of a moving average. It is a
unique composite of a single exponential moving average, a double exponential
moving average, and a triple exponential moving average that provides less lag
than either of the three components individually.
Interpretation
TEMA can
be used in place of traditional moving averages.
You can use it to smooth price data or other indicators.<SPAN
> Some of
Mr. Mulloy's original testing
of TEMA was done on the MACD.
Oddly, he found that the faster responding TEMA-smoothed MACD
produced fewer (yet more profitable) signals than the traditional 12/26
smoothed- MACD. A custom indicator named
"MACD (TEMA-smoothed)" is included with <SPAN
>MetaStock
Pro.
This type
of smoothing is certainly not limited to the MACD.<SPAN
> You may want to experiment on other indicators
as well.
Regards,
Jayson
<FONT face=Tahoma
size=2>-----Original Message-----From: dltodd
[mailto:dennistodd@xxxxxxxxxxx]Sent: Thursday, May 08, 2003 8:46
PMTo: amibroker@xxxxxxxxxxxxxxxSubject: [amibroker] TEMA
vs TRIXCan someone tell me exactly what the difference
is between these two functions and what the calculations are for
each?The Amibroker HELP doesn't really describe the difference and it is
hard to tell from the HELP description.Thanks in
AdvanceDennisSend
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