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. 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 the NQ (NASDAQ 100) futures market, but exactly the same steps should be used on whichever markets you are trading with this system. 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).