TRIX Indicator Explained -- with David Moadel
hello and welcome to looking at the markets with David Modell we're gonna
talk about the tricks indicator today not one of the better known ones but I
like it because it is super simple to use
now how you calculate it is not simple but you don't need to know all the
calculations I think it's more important to know how to use it
now before I get started explaining the tricks indicator I just want to let you
know that I do offer coaching for traders and investors when it comes to
putting together a plan or understanding technical indicators or fundamentals any
of that stuff I do offer coaching if you're interested in the coaching you
can email me at David Modell at gmail.com so let's get into the tricks
indicator keep it smooth with the tricks indicator the tricks indicator is a
momentum indicator or trend indicator it is calculated using moving averages the
tricks indicator is triple smooth which means that we're taking a moving average
of a moving average of a moving average now you don't have to understand all the
calculations I'm about to tell you but it's okay to know them if you want to so
how do they get the tricks number well step one they take the 15 period
exponential moving average or EMA using closing prices of the candlesticks and
this is true whether you're using daily candlesticks or one-minute candlesticks
or 5-minute whatever it this is this is the calculation regardless of the
timeframe of the candlesticks so step one take the fifteen period
exponential moving average step two take the fifteen period EMA
of the result from step one step three take the fifteen period EMA of the
result from step two so you have a moving average of a moving average of a
moving average and so it's going to be very smooth and very rounded the line is
not going to be jagged it's going to be smooth and finally step four you take
the one period percent change of step three and step four is the tricks if you
didn't understand all that it's okay it's just good to know what the
calculations are if you want to but more important is how you
use the tricks indicator so here's how you might use it and please understand
that no indicator works all the time none of these indicators that I talked
about work a hundred percent of the time you have to make your own decisions do
your own research know what you're doing before you do it so here's how you might
choose to use it when the trix is above zero the momentum is considered bullish
and when the trix is below zero the momentum is considered bearish so it's
just telling you the overall trend or momentum is it training upwards or
downwards that's kind of all it does it's really simple but there are other
ways you can use it you can use the Trix indicator to spot divergences between
the direction of the Trix line and the direction of the candlesticks divert
divergence meaning they're going in two different directions and the Trix
line might be telling the truth while the direction of the candlesticks might
be lying to you possibly and so it's kind of like RSI divergences or
stochastic Lian divergences it's not really that different so a bullish
divergence is when the price makes a lower low but the Trix line is still
trending upwards so if you have the price trending downwards but the Trix
line trending upwards you might you might feel that the Trix line is telling
the truth and that it's still bullish and conversely a bearish divergence is
when the price makes a higher high but the Trix line is still trending
downwards so it's just the opposite that would be a bearish divergence all right
so let's take a look at trading view and let's see what that looks like and this
is Apple stock it's a daily candlestick chart but again you could use this on
pretty much any time frame it still calculates it in the same way all right
and as you can see the Trix line pretty much follows the price action I don't
see a lot of divergences in this particular example but if you do see one
you can certainly use that and you might be led to believe you might feel that
the Trix line is telling the truth not necessarily again none of these
things work a hundred percent of the time and as you can see here on trading
view zero is the midline and supposedly you know if it breaks above it or stays
above it that's bullish momentum and if it breaks below it or stays below it
that can be considered bearish momentum and here on trading view at least the
default look-back period is 1818 periods okay
pretty simple indicator a couple of different ways you can use it and that's
your basic primer on using the tricks indicator I hope this was helpful to you
and if you want to show some support please give this a thumbs up right now
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whenever I put out new videos and also if you or someone you know would like
coaching for trading or investing you can reach out to me by email at David
Modell at gmail.com I appreciate all of your you know watching my videos you
know thanks so much for doing that I really appreciate everybody each and
every one of you thanks a lot I'll talk to you again soon