Triple Exponential Average - TRIX

See: Triple Exponential Moving Average - TEMA.

Stock prices (and the prices for any asset) bounce around over time. They go up. They go down. Some of these moves represent steps in long-term trends. Some are just day-to-day nonsense. Like...some billionaire needs to sell shares so she can raise cash to build a radar on her personal space station. It has nothing to do with the supply/demand outlook for the stock in question. It's just a blip that won't matter in the long-run.

The triple exponential average is meant to remove some of the noise from price movements. It starts with a triple exponentially smoothed moving average.

We'll break that one down a bit. A moving average flattens out short-term fluctuations. It's constructed using the average price for some previous period of time. Those averages then become points in a line. That line, the moving average, traces a longer-term trend line...one that leaves out some of the meaningless bouncing around the price takes on a moment-to-moment basis.

Now to the triple exponent part. It just indicates how the moving average is calculated. The math is complicated, but think of it in terms of "these grapes are triple-washed for freshness." Like, "we just sprayed this moving average with a triple-wash of math, so you know it's fresh and smooth."

The TRIX tracks the percentage change in that special moving average. It puts the changes in average price in context with the overall price of the stock. A $1 move for a $10 stock means much more than a $1 move for a $100 stock.

The TRIX, then, represents a technical analysis tool that is meant to strip out the meaningless moves and focus on the price changes that actually matter long-term. It's considered a momentum indicator.