SMI Indicator
SMI indicator for MT5 is an advanced version of the stochastic oscillator with the best forex trading BUY and SELL signals.
Description
The SMI indicator for MT5 is an improved version of the classic stochastic oscillator. SMI is related to the Stochastic Momentum indicator and calculates the underlying price momentum. There is a big difference between the classic stochastic oscillator and the calculation of the SMI indicator.
SMI uses average prices between High and Low, while the Stochastic Oscillator uses closing prices, which makes SMI trading signals more sensitive. As a result, forex traders can identify BULL and BEAR pivot points and BUY and SELL accordingly.
The indicator works well on all intraday price charts as well as daily, weekly and monthly price charts and is well suited for top down technical analysis. The indicator is useful for both beginners and experienced forex traders.
New forex traders may find the smoothness of the SMI and lower trading signal frequency 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 MT5 Trading Signals
The AUDUSD M30 price chart above shows the SMI indicator for MT5 in action. The indicator is an oscillator and is displayed in a separate indicator window. The oscillator shows Orange-Blue and Gray lines in the indicator window.
Forex technical traders can use the indicator in the following two ways:
- SMI oscillator lines crossing.
- Divergence trading strategy
If the Colored line of the oscillator crosses the Gray line up, it indicates the start of a BULLISH price trend. This crossover represents a trend reversal. Thus, 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 an opposite crossover signal or a good risk/reward ratio.
Similarly, a downward crossover of the oscillator’s Colored line below the Gray line indicates a pivot point for a BEAR market. Thus, forex traders should place a SELL position with a stop loss above the previous swing high. It is best to exit the position at the opposite crossover of the oscillator or at a good risk/reward ratio. Forex traders can use this indicator for top-down technical analysis as well as automated 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 profitable. Forex traders can apply classic divergence trading rules to the SMI indicator to determine the best pivot points. However, the SMI indicator is more sensitive than the classic Stochastic Oscillator. Because SMI uses the average price range to calculate oscillator values than closing prices.
Conclusion
The indicator for MT5 can be used to trade with multiple trading methods and is also profitable just like the classic Stochastic indicator. Forex traders can download the indicator for free and install it easily.