Second, they look if the market trends in a different direction than SMI. As long as Smart Money Confidence is not at an extreme, when it’s rising we should generally expect prices to decline. It’s only when Confidence rises above 70% that we should flip our opinion and expect that the market is now more favorable. FVG indicator —

Allows your Charts to stay CLEAN for your T.A.

When the Smart Money gets very confident that stocks will rise, they usually do. Smart Money Confidence is a model that aggregates indicators reflecting sentiment among investors that tend to use the stock market to hedge underlying positions. Or, they’re just contrarian investors who prefer to sell into a rising market and buy into a declining one.

How is a Day Trader’s Workday Divided? Key Market Sessions!

The SMI is just one of many technical analysis tools investors have at their disposal. You can use it to track the intraday trading patterns of other investors, which can help you make your own decisions. Furthermore, it has the potential to show you whether you are making impulsive trades or “smart money” moves. However, whether it works for you as an index depends on yourself.

They sometimes may split trades over time in order to not make a material impact and of course not to decrease liquidity to the point where there may be no one to take the… Price action and supply and demand is a key strategy use in trading. We wanted it to be easy and efficient for user to identify these zones, so the user can focus less on marking up charts and focus more on executing trades. This indicator shows you supply and demand zones by using pivot points to show you the recent highs and the recent lows. There are two main types of traders in the financial market. There are the experienced traders and hedge fund managers, who are also known as the smart money.

How to Trade with the Smart Money Index

Almost everyone has heard of “Smart Money”, “Dumb Money” and the so called “Crowd”, and that is exactly what our indicators are all about. Top performing money managers, savvy investors and institutional asset managers are relying on them. One of them is the Smart Money Flow Index for instance, which is also featured on the BLOOMBERG PROFESSIONAL Service under SMART .

The foundation of the indicator is in the stocks industry. The indicator was calculated by using the data in the S&P 500 index. Still, the indicator can be used well even in other financial assets like currencies, commodities, and cryptocurrencies. The more stocks rise, the less confidence these investors have that stocks will keep rising. The Smart Money Flow Index (SMFI) has long been one of the best kept secrets of Wall Street.

The Idea of the Smart Money Flow Index

This indicator is based on Smart Money MCDX
(Pine editor @v4)

Indicator built for cryptocurrencies. Check this indicator
This indicator help you see when institutional buyer enter/exit trade and is a good combination with RSI + Stochastic RSI . As you can see above, the smart money index is a straight line that mostly moves along the price. Unlike other indicators, the SMI does not send a signal of when to buy or when to short. These letters stand for the yesterday’s SMI, while the FHG/L is the first hour gain or loss, while the MG is the market’s gain or loss in the last hour of trading. Furthermore, the SMI benefits traders who want short-term returns.

• For example, if the Dow Jones Industrial Average takes a hit, the SMI should also trend lower.
• FVG indicator —

  Allows your Charts to stay CLEAN for your T.A.

• These traders have decades of experience in the industry, and They know how to spot trends and act as soon as possible.
• This script combines automatic orderblock and imbalance tracking.

For those reasons, you’ll usually see Smart Money Confidence rise as stocks drop. They are the proverbial “knife-catchers” and it seems like they’re always losing because it appears as though they’re constantly fighting the trend. Therefore, you should always use the indicator with others like the RSI, momentum, and the Parabolic SAR. Finally, we recommend that you take time to learn and practice with a demo account. As such, they tend to make mistakes such as following the crowd, buying at the top and selling at the bottom.