Triangular Moving Averages: Reducing Noise in Your Crypto Trading

The Moving Averages indicator is highly favoured in crypto trading due to its simplicity in both calculation and interpretation. There are various types of Moving Averages, with the most popular ones being Simple Moving Averages and Exponential Moving Averages. However, sometimes cryptocurrency traders seek a smoother version to reduce false signals. This is where the concept of Triangular Moving Averages comes in. In basic terms, it is an average of an average. Let’s delve deeper into this indicator. 

1. Triangular Moving Averages: What’s It

In cryptocurrency trading, the Triangular Moving Averages indicator is a special type of indicator, though it has several similarities to other Moving Averages like SMA and EMA. It calculates the average price of a crypto asset over a set number of data points. But what sets TMA apart is that it is an extra smooth one – it is like taking an average of an average, meaning the date is smoothed out twice for a more reliable view of price trends.

2. Calculating TRIMA: The Basics

The formula to calculate TRIMA is given below:

TRIMA = Sum of (SMA values) / N

Basically, there are two stages in the TRIMA calculation process. 

• Stage 1: Compute the SMA

Add up the last N prices (P1, P2, P3, and so on) and divide the sum by N.

SMA = (P1 + P2 + P3 + ……. + PN) / N

• Stage 2: Find the Average of all the SMA Values to Obtain TMA Values

Add up the SMAs you calculated (SMA 1, SMA2, SMA3, and so on) and divide the sum by N.

TMA = (SMA1 + SMA2 + SMA3 + …… + SMAN) / N

3. Steps to Launch TRIMA on a TradingView Chart

• Sign in to TradingView
• Open a chart
• Click ‘indicator’
• Search for ‘Triangular Moving Averages
• If not found, use a regular Moving Average (MA) and change it to ‘Triangular’ in settings. Apply SMA (1) and then another SMA (2) using SMA (1) as input.
• Start analysing with Triangular Moving Averages.

4. Use of TRIMA in Cryptocurrency Trading

Triangular Moving Averages aim to smooth price data, creating a chart line that responds more slowly than a Simple Moving Average. They are beneficial for spotting sustained price trends. They are ideal for reducing sensitivity to frequent price changes. 

5. Endnote

TRIMA or TMA are useful for crypto traders seeking less sensitivity to frequent price changes and clearer trend signals, so it is a very powerful tool in the cryptocurrency trading sector. But, TRIMAs too have a few limitations. They can react more slowly in volatile markets, potentially causing delays in trade decisions. If quick response to price changes is essential, other Moving Averages like SMA or EMA may be a better choice. Therefore, understanding the specific requirements of your trading strategy is crucial when using TMAs.