It came to my attention that one very common implementation of SMI was incorrect; rather than subtracting the first hour delta and adding the last hour delta it subtracts the whole day delta and adds the last 30m delta. While this indicator might have had some use, it is not what I understand to be the actual Smart Money Index and so I post this as a correction for use in other scripts.
So for a US stock, the morningClose and the afternoonOpen in your script should equal the close of the 10:00 and the 14:30 candle on a 30 minute chart, right?
If I check with - for example - Tesla on the 12th of February 2021 using the daily chart, your script (adapted for plotting morningClose and afternoonOpen) returns 815.99 (morningClose) and 810.40 (afternoonOpen), whereas the 10:00 close and 14:30 close of Tesla on a 30 minute chart for the same day are 789.32 (10:00 close) and 803.50 (14:30 close), same for other stocks.
Is this an error or have I understood the meaning of the script incorrectly?
ragnarok628
⋅
@Coffeehouse-Analytics, neither! It's just that you're looking at first 30m/last 30m, I've implemented first hour/last hour. A lot of the references I found on the web are actually using first 30m/last hour. I think all are arguably valid, just a matter of preference. If you would like to modify this to do it your way please feel free =)
charlielmao123
⋅
how do I use the smart money index? I presume the less reactive line is the smart money and the more volatile line is the dumb money?
ragnarok628
⋅
@charlielmao123, well no, the less reactive is just an SMA of the SMI; the volatile is the actual SMI. As for how to use, actually i don't know! i don't use it myself; i just happen to be a coder that found an error and wanted to contribute ^_^