SMI and Fast RSI Signals with a Candlestick Body Filter

Summary

This two-direction strategy combines the Stochastic Momentum Index (SMI), a fast RSI, and a candlestick-body filter. It proposes long entries when SMI is below its negative threshold or RSI is below 20, provided the candle closes down and its body exceeds one-third of the recent average body size. Short entries use the corresponding high SMI or RSI readings and an up-closing candle that passes the same filter. The listed SMI settings are a 5-period K length, 3-period D length, and threshold of 50; RSI uses a 7-period calculation.

The source also describes position sizing, optional martingale behavior, and an exit rule tied to candle direction and whether the position is profitable. These details qualify the overview’s simpler account of exits. The published test uses BTC/USDT futures on a six-hour interval over about one month, but supplies no performance results. The document flags false signals, parameter sensitivity, trading costs, and limited trend capture as risks. It recommends testing settings and considering stop-loss and position-management rules; none of those proposed changes is shown to improve results.

Key ideas

• SMI and fast RSI can each trigger a signal, while a candle-body condition filters it.
• The long setup uses low SMI or RSI below 20 with a down-closing candle; the short setup uses high readings with an up-closing candle.
• The body filter compares the current candle body with one-third of its 10-period average.
• The source includes optional martingale sizing and a separate exit rule based on candle direction and trade profitability.
• The short BTC/USDT futures backtest settings are given, but no results establish the strategy’s performance.

Tags

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