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.[2]
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 much buying on market orders and short covering at the opening. 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, Dow Jones, etc.)
This script turns the smart money index into an oscillator so you can determine the relative strength of the smart money.
Thank you, if i understand when the SMI goes down i must pick a long ?
Freedevhack101
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Does this indicator lag?
jackalbani
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Any instructions on how to use this
Yelian
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I'm still trying to figure out the statistical behavior of this indicator and how to best combine it with a trend following approach. I find that it generally moves in OPPOSITE direction to what I call a "low entropy trend", implying that if you have a strongly trending market to the upside, you would tend to see this indicator trend below zero. Any thoughts?