SMI Indicator

SMI Indicator

SMI indicator for MT4 is an advanced version of the stochastic oscillator with the best forex trading BUY and SELL signals.

The SMI indicator for MT4 is an advanced version of the classic Stochastic Oscillator. The SMI refers to the Stochastic Momentum Indicator and calculates the underlying momentum of the price. There is a major difference between the classic Stochastic oscillator and the SMI indicator calculation.

The SMI uses the mid-range prices between the High and Low while the stochastic oscillator uses the closing prices, thus making the trading signals of SMI more responsive. As a result, forex traders can identify the BULLISH and BEARISH reversal points and BUY and SELL accordingly.

The indicator works well in all intraday price charts as well as the Daily, Weekly, and Monthly price charts and is well suited for Top-Down technical analysis. The indicator is useful for both new and advanced forex traders.

New forex traders can find the smoothness of the SMI and the reduced frequency of trading signals than the classic Stochastic oscillator. On the other hand, advanced forex traders can use the indicator to apply advanced forex trading strategies.

SMI Indicator For MT4 Trading Signals

The above GBPUSD H1 price chart shows the SMI indicator for MT4 in action. The indicator is an oscillator and is displayed in a separate indicator window. The Oscillator shows the WHITE and RED lines within the indicator window.

Forex technical traders can use the indicator in the following two methods

Crossover of the SMI Oscillator lines.
Divergence trading strategy.
If the WHITE oscillator line makes an upward cross over to the RED line it indicates the beginning of a BULLISH price trend. This crossover represents a trend reversal. So, forex traders can enter the market with a BUY trade with a stop loss below the previous swing low. The best take profit point is the opposite crossover signal or at a good risk-reward ratio.

Similarly, the downward crossover of the WHITE oscillator line below the RED line shows the reversal point for a BEARISH market. So, forex traders should place a SELL position with a stop loss above the previous swing high. It’s a best practice to exit the position at the opposite crossover of the oscillator or with a good risk-reward ratio. Forex traders can use this indicator for top-down technical analysis and also in auto trading strategies

Divergence trading using the classic Stochastic Oscillator is a popular trading strategy. Similarly, divergence trading using the SMI indicator or the Stochastic Momentum Indicator is also profitable. Forex traders can apply the classic divergence trading rules to the SMI indicator to identify the best reversal points. However, the SMI indicator is more responsive than the classic Stochastic Oscillator. As the SMI uses the mid-range of price to calculate the oscillator values than the closing prices.

Conclusion
The SMI indicator for MT4 can be used to trade multiple trading methods and is also profitable like the classic Stochastic indicator. Forex traders can download the indicator for free and install it easily.