Stochastic Momentum Index Secrets - Complete Video Guide

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Using The Stochastic Momentum Index - Complete Video Guide

The stochastic momentum index (SMI) is like the stochastic oscillator on steroids and was brought to the trading world by William Blau.Instead of reading the closing price of the asset as the standard stochastic indicator, the SMI will calculate the closing price in relation to the average of the high/low range.Momentum traders are looking to take advantage of any increase in momentum, generally in the direction of the trend.  The SMI, since it uses a range of data, is considered to be a better and faster read on the changes in momentum.Stochastic Momentum Index BreakdownOscillators like the SMI are often called oversold and overbought indicators.There are two lines called %D and %K that we need to pay attention to:%K is usually set to 5 and represents the main movements of price - slow line%D is the fast line, a simple moving average of the %K and is set to 3These two lines oscillate between the values of +100 and -100.  The 0 line is the median of the high/low range of our look back period.

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