Triangular Moving Average (TRIMA)

Definition

TRIMA is a type of moving average line derived from two rounds of smoothing calculations on price data. Specifically, it first calculates the Simple Moving Average (SMA) and then applies a secondary smoothing process to the resulting SMA to obtain the final Triangular Moving Average (TRIMA). Compared to other moving average lines, TRIMA strikes a balance between smoothness and lag.

Calculation

TRIMA consists of one part: an SMA based on that SMA. The formula for calculating TRIMA is as follows:

TRIMAn=SMA(SMAn)

Where:

• SMAn​ is the SMA value on day n,

• TRIMA is the SMA of SMA.

Difference Between TRIMA, SMA, and EMA

Due to its double smoothing nature, TRIMA tends to have longer lag compared to SMA and EMA. Therefore, TRIMA reacts slower to price fluctuations. During trending periods, signals generated by TRIMA typically lag behind peaks and troughs of the cycle compared to SMA. This can potentially lead to lower profits when using TRIMA. However, during periods of market consolidation, TRIMA generates fewer trading signals compared to SMA, helping traders avoid unnecessary positions and thereby reducing trading costs.