Introduction to the Smoothed Smart Money Pressure Oscillator Indicator
Oscillators are typically developed to follow the movements of price action to help traders make sense of what the market is doing. This indicator was developed to show the money flow pressure derived from the price chart as an oscillator with a smoothed presentation of the trend.
What is the Smoothed Smart Money Pressure Oscillator Indicator?
The Smoothed Smart Money Pressure Oscillator Indicator is a trend following indicator which is based on the Smart Money Pressure Oscillator. It is a variation which plots smoother oscillations compared to the Smart Money Pressure Oscillator.
The Smoothed Smart Money Pressure Oscillator plots two lines on a separate indicator window, the oscillator line and its signal line. These two lines oscillate on a free range and without any clear middle line.
Its trend direction indications are identified based on how the two lines crossover. The trend direction is bullish whenever the oscillator line is above the signal line. Inversely, the trend direction is bearish whenever the oscillator line is below the signal line. Crossovers between the oscillator line and the signal line indicate a probable trend reversal.
How the Smoothed Smart Money Pressure Oscillator Indicator Works?
The Smoothed Smart Money Pressure Oscillator has an underlying Smart Money Pressure Oscillator indicator within its algorithm. It uses the value resulting from the Smart Money Pressure Oscillator indicator and applies a smoothing element to it. The smoothened value is then used to plot the Smoothed Smart Money Pressure Oscillator line. It then calculates for the signal line which is also a smoothened value of the main Smoothed Smart Money Pressure Oscillator line.
How to use the Smoothed Smart Money Pressure Oscillator Indicator for MT5
The Smoothed Smart Money Pressure Oscillator Indicator has several parameters which can be modified within its settings.
“SM Period” refers to the number of periods used for the underlying Smart Money Pressure Oscillator.
“SM Smoothing period” refers to the number of periods used on the smoothed oscillator line.
“SM Smoothing period” allows users to choose the type of moving average used for the smoothing.
“Signal line Smoothing period” refers to the number of periods used on the signal line.
“Signal line Smoothing method” allows users to choose the type of moving average used on the signal line.
“Graph inverse” toggles the reversal of the lines since the original formula is negatively correlated to price action.
Buy Trade Setup
When to Enter?
Open a buy order as soon as the Smoothed Smart Money Pressure Oscillator line crosses above its signal line.
When to Exit?
Close the trade as soon as the main oscillator line crosses below the signal line.
Sell Trade Setup
When to Enter?
Open a sell order as soon as the Smoothed Smart Money Pressure Oscillator line crosses below its signal line.
When to Exit?
Close the trade as soon as the main oscillator line crosses above the signal line.
Conclusion
This indicator can be a very effective trend reversal signal indicator. However, it should be used in confluence with other trend reversal signal indications and price action. It is also very effective as a trend direction trade filter wherein traders can opt to trade short-term momentum pulses in the direction of the trend indicated by the two lines.
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