This is an indicator I saw from the Steve Hopwood Forum posted in the thread "Dwain's SMACD Indicator".
I'm not allowed to post the link to that forum but you can look up the thread name and see everything there. However, I will post his insights about why he created this indicator and what it can do for traders:
"So, I've been doing a lot of stock trading recently and found that the Stochastic Momentum Index (SMI) indicator found in ThinkOrSwim to be very useful in making my trade decisions. I then went looking for the same for MT5 and came across one made by mladen. After playing with the new toy, I realized that the convergence and divergence of the SMI would give a much better signal. So, here it is my friends .. move over MACD, for SMACD."
"The rules to trading SMACD are fairly simple . (1) Identify higher TF trend. (2) Enter trade with the trend at the crossover and exit when color changes."
"I've been doing some back testing as well. Because this is a brand new indicator .. I wasn't sure about the settings. The defaults seem to be a little fast. Try these settings for a different point of view .. 20, 5, 3, 50. I'm making money on the M1 using those settings. But, I'm also using currency strength to pick the strongest against the weakest pairs."
"I will say this about SMACD .. it's a leading indicator .. not always perfect .. but most of the time gives you a few bars notice of trend change or pullback notice."
"That was the basis of my indicator as mentioned in post one [referring to Mladen's "Stochastic Momentum Index" indicator freely published on MQL5.com in 2018]. However my indicator uses the convergence/divergency of the signal, like MACD does with MA's. I think SMACD is a little more leading than just SMI [NOT to be confused with the Standardized MACD (SMACD) floating around in the Internet]."
"Anyway, I've developed this same indicator in ThinkOrSwim and use it daily to trade options. I've found that with stocks, it's best used with a daily TF. Next step is to created it in TradingView and automate stock trading."
dap711 originally coded this for MT5 as that's his trading platform and had no intention to port it over to MT4. But thanks to dap711's permission to get the source code, and a big thanks to the awesome efforts of mrtools, this indicator and its source code are now fully available and updated for both MT4 and MT4.
dap711's default settings for SMACD are:
- Length = 5
- Smooth period 1 = 5
- Smooth period 2 = 4
- SMI signal period = 8
- Length = 13
- Smooth period 1 = 25
- Smooth period 2 = 2
- SMI signal period = 5
The indicator files are attached here. Have fun and let me know what you think!
