What is Stochastic Momentum Index Indicator? - Definition of SMI Indicator
Stochastic Momentum Index indicator - Stochastic Momentum Index indicators is a popular trading indicator which can be found on the - Indicators List on this site. Stochastic Momentum Index indicator is used by traders to forecast price movement depending on the chart price analysis done using this Stochastic Momentum Index indicator. Traders can use the Stochastic Momentum Index buy and Sell Signals explained below to determine when to open a buy or sell trade when using this Stochastic Momentum Index indicator. By using Stochastic Momentum Index and other indicators combinations traders can learn how to make decisions about market entry & market exit.
What is Stochastic Momentum Index Indicator? Stochastic Momentum Index Indicator
How Do You Combine Indicators with Stochastic Momentum Index? - Adding SMI Indicator in MT4
Which Indicator is the Best to Combine with Stochastic Momentum Index?
Which is the best Stochastic Momentum Index indicator combination for forex trading?
The most popular indicators combined with Stochastic Momentum Index are:
- RSI
- Moving Averages Indicator
- MACD
- Bollinger Bands
- Stochastic
- Ichimoku Kinko Hyo Trading Indicator
- Parabolic SAR
Which is the best Stochastic Momentum Index indicator combination for Forex trading? - Stochastic Momentum Index MT4 indicators
What Indicators to Combine with Stochastic Momentum Index?
Get additional indicators in addition to Stochastic Momentum Index indicator which will determine the trend of the market as well as others that confirm the market trend. By combining indicators that determine trend and others that confirm the trend & combining these indicators with Forex Stochastic Momentum Index indicator a trader will come up with a Stochastic Momentum Index based system that they can test using a demo practice trading account on the MetaTrader 4 platform.
This Stochastic Momentum Index based system will also help traders to determine when there is a market reversal based on the indicators signals generated and therefore trades can know when to exit the market if they have open trade transactions.
What is Stochastic Momentum Index Indicator Based Trading? Indicator based system to interpret price and provide signals.
What is the Best Stochastic Momentum Index Forex Strategy?
How to Select the Best Stochastic Momentum Index Forex Strategy
For traders researching on What is the best Stochastic Momentum Index forex strategy - the following learn forex tutorials will help traders on the steps required to guide them with coming up with the best strategy for market based on the Stochastic Momentum Index indicator system.
How to Create Stochastic Momentum Index Forex Systems Strategies
- What is Stochastic Momentum Index Indicator Strategy
- Creating Stochastic Momentum Index Forex Strategy Template
- Writing Stochastic Momentum Index Forex Strategy Rules
- Generating Stochastic Momentum Index Forex Buy and Stochastic Momentum Index Sell Signals
- Creating Stochastic Momentum Index Indicator System Tips
About Stochastic Momentum Index Indicator Explained
SMI Technical Analysis Signals
Developed by William Blau.
Stochastic Momentum Index, SMI indicator is an adaptation of the classic Stochastic Oscillator Technical indicator that smoothes out the stochastic oscillations.
Construction of SMI Indicator
This trading 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 upwards.
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 and -100, this trading indicator also is less prone to whipsaw fakeouts compared to the stochastic oscillator trading indicator.
Technical Analysis & How to Generate Signals
Buy and Sell Signals/ Forex Cross over Signals
The Stochastic Momentum Index can be used to generate buy & sell trade signals using the method illustrated below, Buy when the SMI is moving upwards & sell when its moving downwards.
Buy & Sell Signals/ Forex Cross over Signals
Overbought/Oversold Level Forex Cross overs
- Overbought levels above +40
- Over-sold levels below -40
Buy signal is generated when this oscillator falls below oversold level & then rises above this level & starts to move upwards.
Sell Signal is generated when this oscillator rises above overbought level and then falls below this level & starts to move downwards.
FX Divergence Forex Trading
The example below shows a bearish classic divergence between the price and the SMI. When the SMI showed this divergence the market trend reversed and started to move in a downwards direction.
Bearish Divergence Setup
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