Basic Techniques  |  MAR 2002

TRIX Is For Traders by David Penn

TRIX Is For Traders by David Penn This momentum indicator keeps you in trends for as long as you like. A drawback of moving average– based indicators has always been the lag: Moving averages often provide buy and sell signals long after much of a big move has already occurred. Although this is a relative complaint — is it better to be early and often wrong, or late and often correct? — it is significant enough that some traders seek to get more out of moving averages. Weighting and exponentially smoothing moving averages are among the methods used to get moving averages to yield buy/sell signals more quickly. On the other hand, many traders who prefer to catch big moves at the beginning (and to exit them before they end) also choose rate of change indicators. Those indicators are prized for their ability to signal just when momentum has changed, like a shift from prices in a trading range to sudden action that can point to the direction of a new trend.

by David Penn