TRIX Is For Traders by David Penn
This momentum indicator keeps you in trends for
as long as you like.
A drawback of moving average–
based indicators has always
been the lag: Moving averages
often provide buy and sell
signals long after much of a big
move has already occurred.
Although this is a relative complaint — is it better
to be early and often wrong, or late and often
correct? — it is significant enough that some
traders seek to get more out of moving averages.
Weighting and exponentially smoothing moving
averages are among the methods used to get moving
averages to yield buy/sell signals more quickly.
On the other hand, many traders who prefer to
catch big moves at the beginning (and to exit them
before they end) also choose rate of change
indicators. Those indicators are prized for their ability to
signal just when momentum has changed, like a shift from
prices in a trading range to sudden action that can point to the direction of a new trend.