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The TRI indicator

The Range Indicator (TRI) was developed by trader Jack Weinberg in his popular book “Technical Analysis of Stocks & Commodities”.

These are the advantages of the TRI indicator:

  • A good indicator to detect a trend.
  • A very good indicator to follow the trend!
  • The indicator can be combined with other indicators.
  • Easy to understand and easy to use.
  • The indicator is FREE.

The TRI shows the relationship between the average daily price range (high – low) and the difference between yesterday’s closing price and today’s closing price. The TRI is the ratio of these two values with the difference in closing prices being the denominator*. If the differences between the closing price is big, the ratio will be a small number. Big differences in closing prices indicates a market, which is in a trend.

Jack Weinberg uses a TRI < 20 as the indicator of a trend. When the TRI moves above this level the trend is weakening. When the TRI is above 70 the trend is completely finished and the market is often back where it started. The interesting period starts the moment the TRI dips below 20.

This example shows a 60-minute chart of the DAX market index. The TRI is visible below the chart. The periods when the TRI is interesting for traders, are also shown in the main chart by a coloured background. With the exception of the last period, where the trend does not develop, it is clear that the periods indicated by the TRI are interesting for traders.

TRI indicator.
 
 

* The Stochastic %K indicator is applied to the result of this division, and the stochastic range is obtained (0-100). The stochastic range is then smoothed by an exponential average.

Practical implementation

Open the chart of the instrument you wish to trade.

In the WHS Proposals folder, select the TRI indicator.