SMI and Fast RSI Reversal Signals with a Candle-Body Filter

Summary

This two-way trading approach combines the Stochastic Momentum Index (SMI), a seven-period RSI, and a candlestick-body filter. The document describes overbought and oversold thresholds for both oscillators and uses candle direction to distinguish long and short setups: oversold readings with a bearish candle can trigger a long, while overbought readings with a bullish candle can trigger a short. The body filter requires a candle body larger than a fraction of its recent average. Signals from either enabled indicator can initiate trades, and an opposite signal closes the existing position before entering the other direction.

The source also describes exits on a qualifying candle in the position’s favor and an optional martingale sizing mode that doubles after a losing exit. These mechanics make sizing and implementation material to risk, especially because the text’s claims of improved accuracy are unsupported by reported results. The published BTC/USDT futures backtest covers a short period but includes no performance statistics. The document notes whipsaws, crowded signals, and extreme-market risk, and suggests parameter testing and volatility-based stops.

Key ideas

• The strategy combines SMI and fast RSI thresholds with candle direction to form long and short signals.
• A candle-body filter rejects some signals when the body is small relative to its recent average.
• An opposite qualifying signal closes an existing position and may open a position in the other direction.
• The source includes optional martingale sizing, which can increase exposure after a loss.
• The published test configuration reports no performance results, so the strategy’s effectiveness is unverified.

Tags

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