Triangular Moving Average

The Triangular Moving Average indicator provides a double-smoothed trend line that places greater weight on the middle of a lookback period to reduce market noise and minimize whipsaw signals.

Usage

The Triangular Moving Average (TRIMA) is primarily used for trend identification and smoothing out volatile price action. Because it is calculated as a Simple Moving Average (SMA) of an SMA, it reacts more slowly to price changes than a standard moving average.

This characteristic allows traders to use the TRIMA as a baseline for trend direction. When price remains above the TRIMA, the trend is generally considered bullish; when below, it is considered bearish. The increased lag can be beneficial in trending markets, as it prevents the indicator from reacting too quickly to minor price corrections, thereby keeping traders in a position longer and reducing the frequency of false signals (whipsaws).

Details

The TRIMA is a double-smoothed simple moving average. While a standard SMA applies equal weight to every price point in its period, the double-smoothing process of the TRIMA results in a weighted distribution where the data points in the center of the lookback period have the most influence on the current value.

Mathematically, the script calculates the SMA of the source price over a specific period and then calculates the SMA of that resulting value over the same period. This implementation ensures a very smooth curve that is less sensitive to outliers or sudden spikes compared to Exponential Moving Averages (EMA) or standard SMAs.

Settings

• Source: Determines the price data used for the calculation (e.g., Close, Open, High, Low).
• Periods: Sets the lookback length for both SMA calculations, controlling the overall smoothness and lag of the indicator.

FAQ

What is the main benefit of using a Triangular Moving Average over a Simple Moving Average? The TRIMA provides a smoother output with less "noise" than a standard SMA. This helps traders stay in trends longer by avoiding premature exits caused by minor price fluctuations.

How does the TRIMA react to price volatility? Due to its double-smoothed nature, the TRIMA reacts slowly to volatility. It requires a sustained move in price to change its trajectory, making it an effective tool for identifying long-term cycles rather than short-term scalping opportunities.

How can I access the Triangular Moving Average? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.