Smart money index (SMI) or smart money flow index is a technical analysis indicator demonstrating investors sentiment. The index was invented and popularized by money manager Don Hays.[1] The indicator is based on intra-day price patterns. The main idea is that the majority of traders (emotional, news-driven) overreact at the beginning of the trading day because of the overnight news and economic data. There is also a lot of buying on market orders and short covering at the opening. Smart, experienced investors start trading closer to the end of the day having the opportunity to evaluate market performance. Therefore, the basic strategy is to bet against the morning price trend and bet with the evening price trend. The SMI may be calculated for many markets and market indices (S&P 500, DJIA, etc.)
The SMI sends no clear signal whether the market is bullish or bearish. There are also no fixed absolute or relative readings signaling about the trend. Traders need to look at the SMI dynamics relative to that of the market. If, for example, SMI rises sharply when the market falls, this fact would mean that smart money is buying, and the market is to revert to an uptrend soon. The opposite situation is also true. A rapidly falling SMI during a bullish market means that smart money is selling and that market is to revert to a downtrend soon. The SMI is, therefore, a trend-based indicator. Some analysts use the smart money index to claim that precious metals such as gold will continually maintain value in the future.
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- Move to version 4 - Added SMA(SMI) - Added inputs
@TORNADOF5, you should correct set big TF in the settings. Default it is 60min
TORNADOF5
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@HPotter, sorry new noob here =/, if i want to swing stocks ,im sitting and watching using stoch and volume , but i like to watch stocks on 5 min time frame after i decide to enter on daily time frame , so how to better to set it if im watching the stocks 6 hours a day IoI thanks you a lot
Today's SMI reading = yesterday's SMI – opening gain or loss + last hour change
For example, the SMI closed yesterday at 10000. During the first 30 minutes of today's trading, the DJIA has gained a total of 100 points. During the final hour, the DJIA has lost 80 points. So, today's SMI is 10000 – 100 + -80 = 9820.
user1928374560XYZ
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@JoseGT, where is real formula smi on tradingview?
gtrolo
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Tested on TSLA, but the SMI lines seems almost the same as the RSI line. Where is the crucial difference? tnx!
What is the best time frame to use this indicator?
Thanks