Day traders use trading systems as their instructions for making their trades. Trading systems provide exact entries and exits, so that day traders can trade as efficiently as possible. Day trading systems usually use a price chart, and one or more indicators, and the charts are updated in real time. Some trading systems are designed for short term trades anywhere from a few minutes to a couple of hours , and others are designed for long term trades several hours.
The TRIX reversal trading system is primarily a short term system, but it can be adapted to suit long term trading. The TRIX reversal trading system uses a bar or candlestick price chart based upon a short term timeframe from 1 to 5 minutes , with a short term TRIX between 3 and 15 bars using the typical price as its input the average of the high, low, and closing prices of each bar.
The trade is based upon the TRIX reversing its direction, which indicates that the price has started moving in the opposite direction. The TRIX is calculated using a triple smoothed exponential moving average which is the same as three consecutive exponential moving averages.
The TRIX value is the difference between the previous and current moving average values, and is displayed as a value above and below a zero line. The example charts are 3 minute bar charts, with a 9 bar TRIX of the typical price the average of the high, low, and close of each bar. The color difference will make it easier to identify when the TRIX has changed direction. For example, if the TRIX was moving upwards its bars were green , and it starts to move downwards its bars change to red , then the TRIX has changed direction, and vice versa for the opposite direction.
Enter your trade when the high or low of the entry bar the price bar where the TRIX changed its direction is broken by a subsequent bar. On the example chart, the first trade is a long trade, because the TRIX reversed upwards turned green , and the high of the entry bar shown in white was broken by the next bar.
The second trade is a short trade, because the TRIX reversed downwards turned red , and the low of the entry bar shown in white was broken by the next bar. The TRIX Reversal trading system does not have a specific exit, except for an entry in the opposite direction.
For example, if you are in a long trade, and the chart shows a short entry, you would exit the long trade and enter the short trade. On the example chart, the long trade only went 3 ticks into profit, so it would probably have been a losing trade, but the subsequent short trade went 34 ticks into profit, so it easily covered the losing trade, and made some additional profit.
Note that if your stop loss is reached before an entry in the opposite direction, you would exit with your stop loss, and then remain flat no active trades while you wait for the next entry. The TRIX reversal trading system will be reported in the blog on a random basis i. You can use these trading reports to follow the TRIX reversal trading system, and also to compare it to your own trading. If you have any questions or comments about the TRIX reversal trading system, or would like to see additional charts of the trade, leave a comment in the blog , and I will be glad to provide additional information.
Updated October 27, Chart Settings The TRIX reversal trading system uses a bar or candlestick price chart based upon a short term timeframe from 1 to 5 minutes , with a short term TRIX between 3 and 15 bars using the typical price as its input the average of the high, low, and closing prices of each bar.More...