Smart Money Index: Measuring Intraday Sentiment from Price Patterns

Summary

The Smart Money Index (SMI) is presented as an intraday indicator for interpreting market sentiment through price behavior at different points in the trading session. Its premise is that news-sensitive traders may react strongly near the open, while more experienced investors trade later, after they have had time to assess overnight information and economic releases. The indicator is intended to capture how price action evolves after the session begins.

The SMI has two settings: the opening hour that anchors the measurement and the session length measured from that point. Users can adjust these to define the interval being assessed. The document explains the intuition and basic parameters but supplies no calculation formula, tested markets, performance evidence, or guidance on thresholds and trading rules. It is therefore a description of an indicator concept, not evidence that the measure reliably identifies informed activity or predicts returns.

Key ideas

• The SMI uses intraday price patterns to represent investor sentiment.
• Its premise contrasts early reactions to overnight news with later trading after investors assess information.
• The opening hour and session length determine the measurement interval.
• The document provides no empirical validation, calculation details, or standalone trading rules.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.