# TRIX Reversal

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 moreÂ indicators and the charts are updated in real time.

Some trading systems are designed forÂ short-termÂ trades (anywhere from a few minutes to a couple of hours), and others are designed forÂ long-termÂ trades (several hours). The TRIX reversal trading system is primarily aÂ short-termÂ system, but it can be adapted to suitÂ long-termÂ trading.

### Chart Settings

The TRIX reversal trading system uses a bar or candlestick price chart based upon aÂ  short-termÂ timeframe (from 1 to 5 minutes), with aÂ short-termÂ 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.â€‹â€‹â€‹

### TRIX Explanation

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 averageÂ values and is displayed as a value above and below a zero line. When the TRIX is above the zero line, the price has upwards momentum, and when the TRIX is below the zero line, the price has downwards momentum.

The following step by step tutorial of the TRIX trading system, use s theÂ NQÂ (NASDAQ 100) futures market, but exactly the same steps should be used on whicheverÂ marketsÂ you are trading with this system. The example charts areÂ 3-minuteÂ bar charts, with a 9 bar TRIX of the typical price (the average of the high, low, and close of each bar).

• ### 01 Open a Chart

Open a 3 minute OHLC (Open, High, Low, and Close) bar chart.

• ### 02 Add the TRIX

Add a 9 bar TRIX of the typical price (calculated as (High + Low + Close) / 3)).

If you are using Sierra Chart (or other charting software that allows you to color the TRIX bars), color the bars green when the TRIX is moving upwards, and red when the TRIX is moving downwards (or whatever colors you prefer). The color difference will make it easier to identify when the TRIX has changed direction.

• ### 03 Wait for the TRIX Reversal

Wait until the TRIX changes direction, which should be indicated by the TRIX bars changing color.

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.

• ### 06 Repeat the Trade

Repeat the TRIX reversal trade from step # 4 (Wait for the TRIX Reversal), until either your daily profit target has been reached, or your market is no longer active (i.e. it is closed, or is no longer moving decisively).

• ### 07 Trading Reports and Questions

The TRIX reversal trading system will be reported in the blog on a random basis (i.e. both winning and losing trades will be shown). You can use these trading reports to follow the TRIX reversal trading system, and also to compare it to your own trading.