What is the relationship between TRIX and the rate of change (ROC)?

TRIX applies ROC to a triple-smoothed EMA, filtering noise to capture sustained momentum, unlike standard ROC, which reacts quickly to raw price changes.

Jul 31, 2025 at 03:14 pm

Understanding TRIX and Its Core Mechanism

TRIX, or the Triple Exponential Average, is a momentum oscillator used in technical analysis to identify oversold and overbought conditions, as well as potential trend reversals in cryptocurrency markets. It is derived from a triple-smoothed exponential moving average (EMA) of price data, which helps eliminate minor price fluctuations and noise. The calculation involves applying an EMA to the price, then applying a second EMA to the first, and finally a third EMA to the second. The resulting value is then used to calculate the rate of change (ROC) of this triple-smoothed line.

The formula for TRIX is typically expressed as:

• Compute a 14-period EMA of closing prices.
• Compute a second 14-period EMA of the first EMA.
• Compute a third 14-period EMA of the second EMA.
• Calculate the percentage rate of change of the third EMA from one period to the next.

This final step—measuring the rate of change—is what directly links TRIX to ROC. The output is a single line that oscillates around zero, where positive values indicate upward momentum and negative values indicate downward momentum.

Defining Rate of Change (ROC) in Cryptocurrency Analysis

The Rate of Change (ROC) is a straightforward momentum indicator that measures the percentage change in price between the current value and a value from a specified number of periods ago. In cryptocurrency trading, ROC is calculated using the formula:

• ROC = [(Current Price – Price n periods ago) / Price n periods ago] × 100

This indicator helps traders assess the speed at which prices are changing. A rising ROC suggests increasing bullish momentum, while a falling ROC may signal weakening momentum or bearish pressure. Because ROC is a pure measure of price velocity, it is highly sensitive to recent price movements and can generate rapid signals.

In the context of TRIX, the ROC is not applied directly to raw price data, but rather to the triple-smoothed EMA line. This distinction is crucial. While standard ROC reflects raw price momentum, TRIX’s version reflects momentum in a heavily filtered trend line, making it less noisy and more focused on sustained trends.

How TRIX Incorporates ROC in Its Calculation

The key relationship between TRIX and ROC lies in the final step of the TRIX computation. After the triple EMA smoothing process, the resulting value is a refined trend line that filters out short-term volatility. To transform this smoothed line into a momentum oscillator, analysts compute the percentage rate of change of this line over a single period (usually one bar or candle).

This means:

• Let EMA₃(t) represent the third EMA at time t.
• Then, TRIX(t) = [ (EMA₃(t) – EMA₃(t–1)) / EMA₃(t–1) ] × 100

The result is a momentum signal derived not from price itself, but from the momentum of a smoothed trend. This makes TRIX a second-order derivative of price—first smoothed via triple EMA, then differentiated via ROC. The use of ROC here allows TRIX to detect acceleration or deceleration in the underlying trend, which is especially useful in volatile crypto markets where price spikes can mislead simpler indicators.

Comparing TRIX and Standard ROC in Crypto Trading

While both TRIX and ROC are momentum oscillators, their behavior differs significantly due to their input data. A standard ROC applied to Bitcoin’s closing price over 14 periods will react sharply to sudden price jumps, such as those seen during exchange outages or whale movements. In contrast, TRIX will respond more slowly because it operates on a triple-smoothed line.

For example:

• If Bitcoin rises 10% in a single day, the 14-day ROC may spike sharply into positive territory.
• However, TRIX may show only a moderate increase, as the triple EMA dampens the impact of the single-day surge.

This makes TRIX more suitable for identifying sustained trend changes rather than short-term fluctuations. Traders using TRIX are less likely to be whipsawed by volatility, while those relying on ROC may receive earlier but potentially false signals. The trade-off is responsiveness versus reliability.

Both indicators can be used together: ROC for early momentum detection and TRIX for confirmation of trend strength.

Practical Application: Using TRIX and ROC on Trading Platforms

To apply TRIX and ROC on a cryptocurrency trading platform like TradingView or Binance:

• Open the chart for a crypto asset (e.g., Ethereum).
• Navigate to the "Indicators" menu.
• Search for "TRIX" and add it to the chart. Adjust the period (commonly 12 or 14).
• Separately, search for "Rate of Change" and add it. Set the same period for comparison.
• Observe how TRIX moves more slowly and generates fewer crossovers of the zero line.
• Watch for divergences: if price makes a new high but TRIX does not, it may signal weakening momentum.

For a manual setup:

• Download historical price data (e.g., CSV from Binance API).
• Use Python or Excel to compute three consecutive EMAs.
• Calculate the ROC of the third EMA using the percentage change formula.
• Plot the result alongside standard ROC for visual comparison.

Ensure the data frequency (e.g., 1-hour candles) matches your trading strategy. Backtest signals across multiple assets like Solana or Cardano to assess consistency.

Interpreting Crossovers and Divergences

A common signal in TRIX analysis is the zero-line crossover. When TRIX crosses above zero, it suggests the triple-smoothed trend is gaining upward momentum. A cross below zero indicates increasing downward momentum. Because TRIX is based on ROC of a smoothed line, these crossovers are less frequent but often more reliable than those in standard ROC.

Divergences are equally important:

• If Bitcoin reaches a new high but TRIX fails to surpass its prior peak, this bearish divergence may precede a reversal.
• Conversely, if price hits a new low but TRIX forms a higher low, it suggests bullish divergence and potential upward correction.

Standard ROC can show similar divergences, but they occur more frequently and require careful filtering. TRIX’s smoothing reduces false divergence signals, making it a preferred tool for swing traders in crypto markets.

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FAQs

What is the main difference between TRIX and ROC?

The primary difference is that TRIX applies ROC to a triple-exponentially smoothed price line, while standard ROC applies directly to raw price data. This makes TRIX smoother and less reactive to short-term volatility.

Can TRIX be used alone for trading decisions?

While TRIX provides reliable trend momentum signals, it should be combined with other tools like volume analysis or support/resistance levels. Relying solely on TRIX may cause missed entries due to its lagging nature.

Why does TRIX use triple smoothing instead of single or double?

Triple smoothing further reduces noise and short-term fluctuations, allowing TRIX to focus on major trend movements. Single or double smoothing retains more volatility, which defeats the purpose of filtering out market noise.

Is TRIX effective in sideways cryptocurrency markets?

TRIX tends to produce choppy signals in ranging markets due to frequent zero-line crossovers. It performs best in trending environments, where sustained momentum allows clear signal interpretation.