TRIMA (Triangular Moving Average)

Overview

The Triangular Moving Average (TRIMA) is a double-smoothed moving average that places more weight on the middle portion of the data series, creating a triangular weight distribution. Developed as an enhancement to the Simple Moving Average, TRIMA provides one of the smoothest trend indicators available, making it particularly valuable for identifying longer-term trends and filtering out short-term market noise.

Parameters

Parameter	Type	Default	Description
input_data	Array	Required	The price data array (typically close prices)
period	Integer	30	Number of periods for TRIMA calculation

Parameter Details

Note: Array elements should be ordered from oldest to newest (chronological order)

input_data - Typically uses closing prices for standard trend analysis - Can use other price types (high, low, typical price) for specialized applications - Requires sufficient data points: approximately period * 1.5 for stable calculations - More historical data improves the indicator's reliability and smoothness

period (time_period) - Default is 30 periods, providing excellent smoothness for trend identification - Common periods and their uses: - 10-20 periods: Short to medium-term trends - 30-50 periods: Standard trend identification (most common) - 100+ periods: Major long-term trends only - Shorter periods provide some responsiveness but lose TRIMA's smoothness advantage - Longer periods maximize smoothness but increase lag significantly - Recommended ranges: - Swing trading: 20-30 periods - Position trading: 30-50 periods - Long-term investing: 100-200 periods

Usage

Basic Usage

require 'sqa/tai'

prices = [44.34, 44.09, 44.15, 43.61, 44.33, 44.83,
          45.10, 45.42, 45.84, 46.08, 46.03, 46.41,
          46.22, 45.64, 46.21, 46.25, 46.08, 46.46,
          46.82, 47.00, 47.32, 47.20, 47.57, 47.80,
          48.00, 48.15, 48.30, 48.40, 48.55, 48.70,
          48.85, 49.00]

# Calculate 30-period TRIMA (default)
trima = SQA::TAI.trima(prices)

puts "Current TRIMA: #{trima.last.round(2)}"

With Custom Parameters

# Calculate 20-period TRIMA
trima_20 = SQA::TAI.trima(prices, period: 20)

# Calculate 50-period TRIMA for long-term trends
trima_50 = SQA::TAI.trima(prices, period: 50)

puts "Short-term TRIMA (20): #{trima_20.last.round(2)}"
puts "Standard TRIMA (30): #{trima.last.round(2)}"
puts "Long-term TRIMA (50): #{trima_50.last.round(2)}"

Understanding the Indicator

What It Measures

The TRIMA measures trend direction with maximum smoothness:

• Long-term Trend Direction: Identifies major market trends by double-smoothing price data
• Market Structure: Shows the overall direction of market movement without short-term noise
• Dynamic Support/Resistance: Acts as a very stable support level in uptrends and resistance in downtrends
• Trend Confirmation: Excellent for confirming trends identified by faster indicators

TRIMA solves the problem of market noise obscuring the underlying trend. By applying a triangular weight distribution where middle values have the highest influence, TRIMA creates one of the smoothest trend indicators available.

Calculation Method

The TRIMA uses a double-smoothing process with triangular weighting:

1. Determine Sub-period: Calculate (period + 1) / 2 for odd periods, or period / 2 for even periods
2. First SMA: Calculate Simple Moving Average over the sub-period
3. Second SMA: Calculate SMA of the first SMA
4. Result: A double-smoothed average with triangular weight distribution

Formula:

For odd period n:
  Sub-period = (n + 1) / 2
  TRIMA = SMA(SMA(prices, sub-period), sub-period)

For even period n:
  Sub-period = n / 2
  TRIMA = SMA(SMA(prices, sub-period), sub-period + 1)

Where:
- The first SMA smooths the price data
- The second SMA smooths the first SMA
- This creates a triangular weight distribution
- Middle values have the highest influence on the result

Indicator Characteristics

• Range: Unbounded (follows price range)
• Type: Overlay indicator (plotted on price chart)
• Lag: High lag, very smooth with delayed response
• Best Used: Long-term position trading, trend confirmation, filtering noise

Interpretation

Value Ranges

The TRIMA's value follows the price range with significant smoothing:

• TRIMA Rising: Indicates established uptrend
• TRIMA Falling: Indicates established downtrend
• TRIMA Flat: Suggests consolidation or balanced market

Key Levels

• Price Above TRIMA: Bullish condition, confirmed uptrend
• Price Below TRIMA: Bearish condition, confirmed downtrend
• Price Crossing TRIMA: Major trend change signal (infrequent but significant)
• Distance from TRIMA: Extreme distances suggest potential mean reversion

Signal Interpretation

How to read the TRIMA's signals:

1. Trend Direction
2. Price above rising TRIMA = confirmed major uptrend
3. Price below falling TRIMA = confirmed major downtrend

4. TRIMA flat = no clear long-term trend

5. Momentum Changes

6. TRIMA slope steepening = strengthening trend
7. TRIMA slope flattening = weakening trend

8. TRIMA slope reversal = major trend change (rare but significant)

9. Reversal Signals

10. Price crosses below TRIMA = major trend reversal to downtrend
11. Price crosses above TRIMA = major trend reversal to uptrend
12. Due to lag, these are late signals but very reliable

Trading Signals

Buy Signals

Specific conditions that generate buy signals:

1. Primary Signal: Price crosses above TRIMA and TRIMA is rising
2. Confirmation Signal: Multiple periods of closes above TRIMA
3. Entry Criteria: Wait for pullback to TRIMA for better entry

Example Scenario:

When price crosses above TRIMA and TRIMA slope turns upward,
confirm the uptrend. Wait for price to pull back toward TRIMA,
then enter long with stop loss 3-5% below TRIMA.
Target major resistance levels or use trailing stop.

Sell Signals

Specific conditions that generate sell signals:

1. Primary Signal: Price crosses below TRIMA and TRIMA is falling
2. Confirmation Signal: Multiple periods of closes below TRIMA
3. Exit Criteria: Don't wait for signal; TRIMA is for trend confirmation, not timing

Example Scenario:

When price crosses below TRIMA and TRIMA slope turns downward,
exit all long positions. The major trend has reversed.
Consider re-entering only after price recrosses above TRIMA.

Divergence Analysis

Bullish Divergence: - Price makes lower lows while TRIMA makes higher lows or stays flat - Indicates major trend exhaustion to the downside - Very reliable due to TRIMA's smoothness eliminating false signals - Excellent long-term reversal indicator

Bearish Divergence: - Price makes higher highs while TRIMA makes lower highs or stays flat - Indicates major trend exhaustion to the upside - Signals potential long-term top formation - Best used for position exits rather than short entries

Best Practices

Optimal Use Cases

When TRIMA works best: - Long-term position trading: Ideal timeframe for TRIMA's characteristics - Trend confirmation: Excellent filter for faster indicator signals - Major trend identification: Clear identification of primary market direction - Low-frequency trading: Best for traders who make few, high-conviction trades

Combining with Other Indicators

Recommended indicator combinations:

With Trend Indicators: - Use faster MA (EMA 20) for entries while TRIMA confirms overall trend - Combine with ADX to confirm trend strength when TRIMA shows direction

With Volume Indicators: - Confirm TRIMA crossovers with volume analysis for major trend changes - Use volume to time entries within TRIMA-confirmed trends

With Other Oscillators: - Use RSI for entry timing within TRIMA trends - Use MACD for earlier trend change warnings while TRIMA confirms - Stochastic helps identify pullback entry points in TRIMA trends

Common Pitfalls

What to avoid:

1. Using for Timing: TRIMA is too slow for entry/exit timing
2. Day Trading: TRIMA lag makes it unsuitable for short-term trading
3. Expecting Quick Signals: TRIMA signals are infrequent but significant
4. Over-trading: Wait for clear TRIMA signals; fewer trades, higher quality

Parameter Selection Guidelines

How to choose optimal parameters:

• Short-term trading: Not recommended; use faster MAs instead
• Medium-term trading (swing): 20-30 period TRIMA as trend filter only
• Long-term trading (position): 30-50 period TRIMA for primary trend
• Backtesting: Test on historical data; optimize for trend filtering, not entries

Practical Example

Complete trading example with context:

require 'sqa/tai'

# Load historical price data
prices = [44.34, 44.09, 44.15, 43.61, 44.33, 44.83,
          45.10, 45.42, 45.84, 46.08, 46.03, 46.41,
          46.22, 45.64, 46.21, 46.25, 46.08, 46.46,
          46.82, 47.00, 47.32, 47.20, 47.57, 47.80,
          48.00, 48.15, 48.30, 48.40, 48.55, 48.70,
          48.85, 49.00, 49.15, 49.30, 49.45, 49.60]

# Calculate TRIMA for trend filter
trima = SQA::TAI.trima(prices, period: 30)

# Calculate faster EMA for entries
ema_fast = SQA::TAI.ema(prices, period: 10)

# Analysis logic
current_price = prices.last
current_trima = trima.last
current_ema = ema_fast.last

# Check TRIMA trend direction
trima_slope = current_trima - trima[-5]
trend = if trima_slope > 0
  "UPTREND"
elsif trima_slope < 0
  "DOWNTREND"
else
  "NEUTRAL"
end

puts "Major Trend (TRIMA): #{trend}"
puts "TRIMA Value: #{current_trima.round(2)}"

# Trading logic based on TRIMA trend
if trend == "UPTREND"
  # Look for pullback entries in uptrend
  if current_price < current_ema && current_price > current_trima
    puts "BUY Setup: Pullback in uptrend"
    puts "Price between EMA and TRIMA - good entry zone"
    puts "Entry: Near #{current_ema.round(2)}"
    puts "Stop: Below #{current_trima.round(2)}"
  elsif current_price > current_ema
    puts "Uptrend in Progress"
    puts "Hold long positions, wait for pullback to add"
  elsif current_price < current_trima
    puts "WARNING: Price below TRIMA in uptrend"
    puts "Consider tightening stops"
  end

elsif trend == "DOWNTREND"
  puts "Downtrend in Progress - AVOID LONGS"
  if current_price > current_ema
    puts "Rally to resistance (EMA) - potential short entry"
    puts "Or wait for trend reversal above TRIMA"
  end

else
  puts "No Clear Trend - Wait for TRIMA direction"
  puts "Current Price: #{current_price.round(2)}"
  puts "Distance from TRIMA: #{((current_price - current_trima) / current_trima * 100).round(2)}%"
end

# Check for major trend reversal
prev_price_position = prices[-2] > trima[-2]
current_price_position = current_price > current_trima

if !prev_price_position && current_price_position
  puts "\n*** MAJOR TREND REVERSAL: Bullish ***"
  puts "Price crossed above TRIMA - major uptrend beginning"
elsif prev_price_position && !current_price_position
  puts "\n*** MAJOR TREND REVERSAL: Bearish ***"
  puts "Price crossed below TRIMA - major downtrend beginning"
end

Related Indicators

Similar Indicators

• SMA: Single smoothing, less smooth than TRIMA
• EMA: Exponential weighting, much more responsive
• DEMA: Double exponential, opposite philosophy (speed vs smoothness)

Complementary Indicators

• EMA: Use for entries while TRIMA confirms trend
• ADX: Confirms trend strength when TRIMA shows direction
• RSI: Times entries within TRIMA trends
• ATR: Sets stop-loss distances in TRIMA trends

Indicator Family

TRIMA belongs to the moving average family with unique characteristics: - SMA: Equal weighting of all periods - WMA: Linear weighting favoring recent prices - TRIMA: Triangular weighting favoring middle prices (smoothest) - Use TRIMA when smoothness and noise reduction are paramount

Advanced Topics

Multi-Timeframe Analysis

Use TRIMA across multiple timeframes: - Weekly/Monthly TRIMA for primary market direction - Daily TRIMA for intermediate trend - Use faster indicators on lower timeframes for entries - Only trade in direction of TRIMA on higher timeframe

Market Regime Adaptation

TRIMA performance in different market conditions: - Strong trends: TRIMA excels at identifying and confirming - Ranging markets: TRIMA stays flat, signaling no trend (very useful) - Volatile markets: TRIMA smooths volatility, shows underlying trend - Quiet markets: TRIMA may be too slow; consider faster indicators

Statistical Validation

TRIMA reliability metrics: - Very high reliability for trend identification (80-90% accuracy) - Low false signal rate due to extreme smoothing - Late entry signals but excellent trend confirmation - Best used as filter, not standalone trading system

References

• Kaufman, Perry J. "Trading Systems and Methods"
• Murphy, John J. "Technical Analysis of the Financial Markets"
• Pring, Martin J. "Technical Analysis Explained"

See Also

• Overlap Studies Overview
• SMA Documentation
• WMA Documentation
• Moving Average Comparison