How to Add Stochastic Momentum Index Indicator on MetaTrader 4 Charts - Adding MT4 SMI Indicator

Step 1: Open Navigator Window on FX Trading Platform

Open Navigator window as shown & illustrated below: Go to 'View' menu (click on it), then select 'Navigator' window (click), or From Standard Tool Bar click the 'Navigator' button or press keyboard short cut keys 'Ctrl+N'

On Navigator window, choose 'Indicators', (Double-Click)

How to Add Stochastic Momentum Index Indicator on MetaTrader 4 - MT4 Stochastic Momentum Index Indicator

Step 2: Expand the Indicators Menu on the Navigator - Adding Stochastic Momentum Index MT4 Indicator

Expand the menu by clicking the expand button marker (+) or double click the 'indicators' menu, after this the button will appear as (-) and will now display a list as shown below - select the Stochastic Momentum Index forex chart indicator from this list of forex indicators so as to add the Stochastic Momentum Index indicator on the forex chart.

How to Add Stochastic Momentum Index Indicator - From the Above window you can then place Stochastic Momentum Index indicator that you want on the Forex chart

How to Add Custom Stochastic Momentum Index Indicator to MT4

If the technical indicator you want to add is a custom indicator - for example if the Stochastic Momentum Index technical indicator you want to add is a custom indicator you will need to first add this custom Stochastic Momentum Index indicator on the MT4 platform & then compile custom Stochastic Momentum Index indicator so that the newly added Stochastic Momentum Index custom indicator pops up on the list of custom indicators in MetaTrader 4 software.

To learn how to install Stochastic Momentum Index indicators on MT4, how to add Stochastic Momentum Index indicator window to MT4 and how to add Stochastic Momentum Index custom indicator in MT4 - How to add a custom Stochastic Momentum Index indicator in MT4.

About Stochastic Momentum Index Technical Indicator Tutorial PDF

Stochastic Momentum Index Forex Trading Technical Analysis Signals

Developed by William Blau.

Stochastic Momentum Index, SMI indicator is an adaptation of the classic Stochastic Oscillator indicator that smoothes out the stochastic oscillations.

Construction of Stochastic Momentum Index Indicator

This indicator is calculated by comparing the currency price relative to the average of an n number of periods.

Then instead of plotting these values directly, smoothing using an Exponential Moving Average is applied and then the values plotted to form the SMI.

When the closing price is greater than the average of the range, the SMI will move upward.

When the closing price is less than the average of the range, the SMI will move downwards.

This oscillator ranges between the values of +100 & -100, this indicator is also less prone to whipsaws compared to the stochastic oscillator.

FX Technical Analysis & How to Generate Signals

Buy & Sell FX Signals/ FX Crossover Signals

The Stochastic Momentum Index can be used to generate buy & sell signals using the method shown below, Buy when the SMI is moving upward and sell when its moving downwards.

Buy & Sell Forex Signals/ FX Crossover Signals

Overbought/Oversold Level Forex Trading Crossovers

• Overbought levels above +40
• Oversold levels below -40

Buy trading signal is generated when this oscillator falls below over-sold level & then rises above this level and starts to move upwards.

Sell Signal is generated when this oscillator rises above overbought level and then falls below this level and starts to move downwards.

FX Divergence Forex Trading

The example below shows a bearish classic divergence between the price and the SMI. When the Stochastic Momentum Index showed this divergence the price trend reversed and started to move in a downward direction.

Bearish FX Trading Divergence