Here’s how the TRIX trading strategy goes.
Take a long position when the TRIX line crosses above the zero line. And take a short position when the TRIX line crosses below the zero line.
To improve the TRIX Trading Strategy a bit further, we will use the 200 period EMA.
So here’s how the complete TRIX Trading Strategy goes.
Buy when the TRIX line crosses above its zero line, only if the entry candle is above the 200 period moving average. The stoploss goes below the pullback.
And sell when the TRIX line crosses below its zero line, only if the entry candle is below the 200 period moving average. The stoploss goes above the pullback of the trend.
Here’s an example. As you can see, when the price was in an uptrend, the TRIX indicator was staying above its zero line. We don’t know how long the uptrend is going to last, and we don’t want to buy at the top of the trend. So we wait for the TRIX to show a decreasing momentum in this uptrend, and when the downward momentum stops and the upward momentum begins, in other words, when the TRIX indicator crosses above the zero line, we will take a long position.
Here, the TRIX indicator was staying below the zero line in the downtrend. Since we don’t want to sell at the bottom of the trend, we wait for the TRIX value to show an upward momentum, and when the TRIX line crosses below the zero line in this downtrend, we will take a short position, with a stoploss above the pullback.
To find the win rate of the TRIX Trading Strategy, we will test it 100 times in the next video. Subscribe to see that.