What is SMI Ergodic?
The SMI Ergodic Indicator is a True Strength Index of the close, a double-smoothed price change divided by the same smoothing of the size of each change, using shorter lengths than the standalone TSI. Its signal line is an exponential average of it, and the oscillator is the gap between the two, drawn as green columns above zero and red columns below. All three share one pane with a dashed zero line, on a scale from -100 to +100.
It shows the direction and consistency of recent momentum and when that momentum is turning against its own average. It does not measure how far price has moved and it does not predict future prices.
How to use SMI Ergodic
- The indicator line against zero. Above zero, smoothed up moves have outweighed down moves over the window. Below zero, the reverse.
- The indicator crossing its signal line. A cross above the signal line means momentum has improved against its recent average; a cross below means it has faded. The histogram changes from red to green, or green to red, on the same bar.
- The oscillator columns. Columns growing away from zero show the indicator pulling away from its signal line. Columns shrinking towards zero show the two converging, often before a cross.
- Distance from zero. Readings near +100 or -100 mean nearly every recent move went the same way.
These are ways to read the lines, not entry signals on their own.
Settings
| Setting | Default | What it changes |
|---|---|---|
| Long Length | 20 | Bars in the first, longer smoothing pass. Higher makes the indicator smoother and slower. Minimum 1. |
| Short Length | 5 | Bars in the second, shorter smoothing pass. Higher adds smoothing and lag. Minimum 1. |
| Signal Line Length | 5 | Bars in the exponential average of the indicator that forms the signal line. Lower gives earlier and more frequent crossings. Minimum 1. |
Adjust the three lengths in the indicator settings. The close is always used as the price.
Calculation
The indicator line is the True Strength Index of the close with the two lengths, and the rest is built from it:
change = close - previous close
Indicator = 100 * EMA(EMA(change, 20), 5) / EMA(EMA(|change|, 20), 5)
Signal = EMA(Indicator, 5)
Oscillator = Indicator - SignalThe indicator is plotted on the same scale of plus and minus 100 as the True Strength Index in Altrady Charts. The ratio itself lies between -1 and +1, so the multiplier changes only the scale, not the shape. Oscillator columns are green when zero or above and red below.
Warm-up stacks through the passes. The change starts on the second bar, the 20-bar pass has its first value on bar 20 counting from 0, the 5-bar pass on bar 24, which is where the indicator line starts, and the 5-bar signal line and the oscillator on bar 28. Each exponential average is started from the simple average of its first values.
Limitations
- It lags. Three rounds of exponential smoothing sit between price and the signal line, so crossings follow price turns.
- Crossings whipsaw in ranges. With short default lengths, the line and its signal cross often when price moves sideways.
- The source is fixed. It always uses the close. If you want to measure another price, the True Strength Index lets you choose the source.
- The live candle moves. The current bar's line, signal and column change until that bar closes.
- It is not a strategy. On its own it carries no risk management, sizing or exit.
Frequently asked questions
It is a True Strength Index of the close with a long length of 20 and a short length of 5, drawn with a 5-bar exponential signal line and a histogram of the gap between them. The line is the indicator and the histogram is the oscillator, both in one pane.
The indicator above zero means smoothed up moves have outweighed down moves; below zero, the reverse. Crossings of the signal line, which flip the histogram between green and red, show momentum turning against its recent average. Treat these as context and confirm them with price.
It is plotted between -100 and +100, the same scale as the True Strength Index in Altrady Charts. Some descriptions give the ratio between -1 and +1 instead. The difference is a fixed multiplier, so crossings and turns happen on the same bars either way.
Yes. The indicator declares three inputs: Long Length, default 20; Short Length, default 5; and Signal Line Length, default 5, each with a minimum of 1. The close is always used as the price. Open the indicator's settings on the chart to change them.
Values on bars that have already closed are not revised. The current candle's values move while that candle is live and settle when it closes. Because the exponential averages need a starting point, scrolling back to load older history recalculates them and values near the very start of the loaded range can shift.
Use the Add to chart button at the top of this page. It opens BTC/USDT on Binance in the Altrady Charts terminal with the built-in SMI Ergodic Indicator/Oscillator already applied. On any other market, open the indicator picker on the chart and choose SMI Ergodic Indicator/Oscillator from the Momentum group.