The SMI_Correct script is a custom technical analysis tool designed for the MetaTrader 4 platform. It functions as a momentum indicator, providing visual cues to help traders understand the relationship between price action and market volatility over specific timeframes.
Core Purpose
The primary goal of this script is to calculate the Stochastic Momentum Index (SMI). Unlike standard oscillators that may react too quickly to minor price fluctuations, this specific implementation uses a multi-layered smoothing process to identify broader momentum trends more reliably.
How the Logic Works
The script processes market data through several distinct stages to arrive at its final visual output:
- Price Positioning: First, it determines where the current closing price sits relative to the high and low range of a specific lookback period (defined by the "Period_Q" setting). This helps establish whether the price is currently trading in the upper or lower half of its recent range.
- Range Measurement: Simultaneously, it calculates the total distance between the highest highs and lowest lows within that same timeframe. This provides a baseline for market volatility.
- Multi-Stage Smoothing: To prevent the data from being too "noisy" or erratic, the script applies several layers of Exponential Moving Averages (EMA). It smooths both the price positioning data and the volatility data independently across multiple cycles.
- Momentum Calculation: The final SMI value is derived by comparing these smoothed figures. By dividing the smoothed price position by half of the smoothed range and multiplying by 100, the script generates a normalized percentage line.
- Signal Generation: Finally, the script creates a "Signal" line by applying one last smoothing pass over the calculated SMI.
Visual Representation
On your trading chart, the logic produces two main lines in a separate window:
- SMI Line (Red): Represents the primary momentum trend.
- Signal Line (White): Acts as a secondary guide; traders typically look for the relationship between these two lines to identify potential shifts in market direction.
Summary of Behavior
Instead of simply showing where the price is right now, this script looks at where the price is relative to its recent extremes and then "filters" that information through multiple layers of averaging. This results in a smoother, more stable indicator intended to highlight significant momentum trends while ignoring minor market "static."
Indicators Used
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SMI_Correct
//+------------------------------------------------------------------+
//| SMI_Correct.mq4 |
//| re-write by transport_david |
//| |
//+------------------------------------------------------------------+
#property copyright ""
#property link ""
#property indicator_separate_window
#property indicator_buffers 2
#property indicator_color1 Red
#property indicator_color2 White
#property indicator_maximum 100
#property indicator_minimum -100
#property indicator_level1 50
#property indicator_level2 0
#property indicator_level3 -50
//---- input parameters
// MetaStock uses H/L (13) , 1st EMA(25) , 2nd EMA(2) , no signal line
// fmlabs does not recommend any settings
extern int Period_Q = 13; // HH LL
extern int Period_R = 25; // 1st EMA
extern int Period_S = 2; // 2nd EMA
extern int Signal = 5; // Signal EMA
extern int ShowBars = 1000;
//---- buffers
double SMI_Buffer[];
double Signal_Buffer[];
double SM_Buffer[];
double EMA_SM[];
double EMA2_SM[];
double EMA_HQ[];
double EMA2_HQ[];
double HQ_Buffer[];
//+------------------------------------------------------------------+
//| Custom indicator initialization function |
//+------------------------------------------------------------------+
int init()
{
//---- indicators
IndicatorBuffers(8);
SetIndexEmptyValue(0,0.0);
SetIndexStyle(0,DRAW_LINE);
SetIndexBuffer(0,Signal_Buffer);
SetIndexLabel(0,"Signal SMI");
SetIndexEmptyValue(1,0.0);
SetIndexStyle(1,DRAW_LINE);
SetIndexBuffer(1,SMI_Buffer);
SetIndexLabel(1,"SMI");
SetIndexEmptyValue(2,0.0);
SetIndexBuffer(2,SM_Buffer);
SetIndexStyle(2,DRAW_NONE);
SetIndexEmptyValue(3,0.0);
SetIndexBuffer(3,EMA_SM);
SetIndexStyle(3,DRAW_NONE);
SetIndexEmptyValue(4,0.0);
SetIndexBuffer(4,EMA2_SM);
SetIndexStyle(4,DRAW_NONE);
SetIndexEmptyValue(5,0.0);
SetIndexBuffer(5,EMA_HQ);
SetIndexStyle(5,DRAW_NONE);
SetIndexEmptyValue(6,0.0);
SetIndexBuffer(6,EMA2_HQ);
SetIndexStyle(6,DRAW_NONE);
SetIndexEmptyValue(7,0.0);
SetIndexBuffer(7,HQ_Buffer);
SetIndexStyle(7,DRAW_NONE);
IndicatorShortName("SMI_Correct("+Period_Q+","+Period_R+","+Period_S+","+Signal+")");
//----
return(0);
}
//+------------------------------------------------------------------+
//| Custor indicator deinitialization function |
//+------------------------------------------------------------------+
int deinit()
{
//---- TODO: add your code here
//----
return(0);
}
//+------------------------------------------------------------------+
//| Custom indicator iteration function |
//+------------------------------------------------------------------+
int start()
{
int limit;
int i;
limit=ShowBars;
if (limit >= Bars - 1) limit = Bars - 1;
for (i=limit;i>=0;i--)
{ // found at http://www.fmlabs.com/reference/default.htm?url=SMI.htm
// highesthigh - lowestlow
SM_Buffer[i]=Close[i]-((High[iHighest(Symbol(),0,MODE_HIGH,Period_Q,i)]+Low[iLowest(Symbol(),0,MODE_LOW,Period_Q,i)])/2); // SM_Buffer = Close - -------------------------
// 2
HQ_Buffer[i]=High[iHighest(Symbol(),0,MODE_HIGH,Period_Q,i)]-Low[iLowest(Symbol(),0,MODE_LOW,Period_Q,i)]; // HQ_Buffer = highesthigh - lowestlow
}
for (i=limit-Period_R;i>=0;i--)
{
EMA_SM[i]=iMAOnArray(SM_Buffer,0,Period_R,0,MODE_EMA,i); // EMA_SM = EMA(SM_Buffer)
EMA_HQ[i]=iMAOnArray(HQ_Buffer,0,Period_R,0,MODE_EMA,i); // EMA_HQ = EMA(HQ_Buffer)
}
for (i=limit-Period_R-Period_S;i>=0;i--)
{
EMA2_SM[i]=iMAOnArray(EMA_SM,0,Period_S,0,MODE_EMA,i); // EMA2_SM = EMA(EMA(SM_Buffer))
EMA2_HQ[i]=iMAOnArray(EMA_HQ,0,Period_S,0,MODE_EMA,i); // EMA2_HQ = EMA(EMA(HQ_Buffer))
}
for (i=limit-Period_R-Period_S-Signal;i>=0;i--)
{ // EMA2_SM
SMI_Buffer[i]=100*(EMA2_SM[i]/(EMA2_HQ[i]/2)); // SMI = 100 x ( ------------- )
} // EMA2_HQ / 2
for (i=limit-Period_R-Period_S;i>=0;i--)
{
Signal_Buffer[i]=iMAOnArray(SMI_Buffer,0,Signal,0,MODE_EMA,i); // Signal_Buffer = EMA(SMI_Buffer)
}
//---- TODO: add your code here
//----
return(0);
}
//+------------------------------------------------------------------+
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