The triangular moving average is a technical indicator that is used by successful traders to make profits in the financial markets.
The Triangular Moving Average (TMA) is a weighted average of the last n prices (P), whose result is equivalent to a double smoothed simple moving average.
The TRIMA can be used in a variety of settings, including trend identification and market reversals. The TMA has a significant lag to current prices and is not well-suited to fast moving markets.
In this blog post, we’ll explore how to use the TRIMA indicator and how it can help you improve your trading results. Let’s get started!
The TRIMA Definition. The TRIMA Formula
The Triangular Moving Average is basically a double-smoothed Simple Moving Average that gives more weight to the middle section of the data interval.
TRIMA = ( SMA1 + SMA2 + … + SMAN ) / N
Where the N is the number of periods.
How to Use the Triangular Moving Average
The triangular moving average is a lagging indicator, which means that it is not suitable for use in range-bound markets. However, in trending markets, this indicator can be very useful.
The best way to use this indicator is to look for periods of consolidation followed by a breakout. When there is a breakout, the direction of the move can be used to enter a trade.
If the market is consolidating and the triangular moving average is flat, then this is an indication that the market is ranging. In this case, it is best to avoid trading or to wait for a breakout before entering a trade.
When using the triangular moving average, it is important to keep in mind that this indicator should not be used alone. It should be combined with other technical indicators or with fundamental analysis in order to make more accurate predictions about the market.
The Benefits of Using TRIMA
The triangular moving average is designed to smooth out fluctuations in prices, making it less responsive to price fluctuations, than an SMA would. This can be beneficial or problematic depending on what you are using the TRIMA for.
If it is used as a trade signal then its lags may cause hesitation while trading stocks, forex, or crypto pairs, but they could also show when trends change more gradually rather than easily.
Conclusion
The triangular moving average is a technical indicator that can be very useful for traders who are looking to profit from trending markets.
While the triangular moving average is a lagging indicator, it can still be helpful in identifying periods of consolidation followed by breakouts. As with all indicators, however, the triangular moving average should not be used alone but should be combined with other technical indicators or with fundamental analysis in order to make more accurate predictions about the market.
