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TRIX Divergence Indicator

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TRIX Divergence Indicator for MT4
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TRIX Divergence Indicator Generation III is modern indicator with complex mathematic algorithm (BJF Trading Group innovation). You will see divergenses on the chart and indicator. Arrows painted above/below the open bar and not in the past. You can see when actually you can trade. It is never to late! Signals based on closed bars so the arrows above/below open bar never disappear.

MT4 Indicator TRIX  Divergence

MT4 Indicator TRIX Divergence indicates fractal divergence by TRIX indicator.When divergence appears between TRIX and the price, it indicates a high probability that the current trend will finish soon. A signal to buy is when a new Low-fractal is formed below the previous one and a corresponding TRIX value is higher than the previous one. A signal to sell is when a new Up-fractal is formed above the previous one and a corresponding TRIX  value is lower than the previous value. The indicator TRIX has a lot of customizable settings.

One important note about TRIX divergences is that they are more reliable when the second TRIX hook occurs outside of the overbought/oversold regions. If a divergence occurs beyond the OB/OS regions I may enter for a quick scalp but I will be much more hesitant in staying for very long or betting on a reversal.

TRIX Divergences on higher timeframes are where I catch some of my biggest and most powerful moves. That being said they are not infallible and, as always, careful money management guidelines must be adhered to. Divergences that occur on the 55-tick chart often fail and are easily the most unreliable kinds to take. I will usually take them only for a quick scalp & even then only with confirmation from some other source.

TRIX Divergence Indicator

 

TRIX Indicator Explanation

Trix Indicator (or TRIX) is a technical analysis oscillator developed in the 1980s by Jack Hutson, editor of Technical Analysis of Stocks and Commodities magazine. It shows the slope (i.e. derivative) of a triple-smoothed exponential moving average. The name Trix is from "triple exponential."

Trix is calculated with a given N-day period as follows:
Smooth prices (often closing prices) using an N-day exponential moving average (EMA).
Smooth that series using another N-day EMA.
Smooth a third time, using a further N-day EMA.
Calculate the percentage difference between today's and yesterday's value in that final smoothed series.

Like any moving average, the triple EMA is just a smoothing of price data and, therefore, is trend-following. A rising or falling line is an uptrend or downtrend and Trix shows the slope of that line, so it's positive for a steady uptrend, negative for a downtrend, and a crossing through zero is a trend-change, i.e. a peak or trough in the underlying average.

The triple-smoothed EMA is very different from a plain EMA. In a plain EMA the latest few days dominate and the EMA follows recent prices quite closely; however, applying it three times results in weightings spread much more broadly, and the weights for the latest few days are in fact smaller than those of days further past.

Note that the distribution's mode will lie with pN-2's weight, i.e. in the graph above p8 carries the highest weighting. An N of 1 is invalid.

The easiest way to calculate the triple EMA based on successive values is just to apply the EMA three times, creating single-, then double-, then triple-smoothed series. The triple EMA can also be expressed directly in terms of the prices as below, with p0 today's close, p1 yesterday's, etc., and with

trix indicator formula

(as for a plain EMA):

trix indicator formula2

The coefficients are the triangle numbers, n(n+1)/2. In theory, the sum is infinite, using all past data, but as f is less than 1 the powers fn become smaller as the series progresses, and they decrease faster than the coefficients increase, so beyond a certain point the terms are negligible.

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