T3 Smoothing for the Stochastic Momentum Index

Summary

The Stochastic Momentum Index (SMI), attributed to William Blau, measures the closing price relative to the midpoint of the recent high-low range. This differs from the standard Stochastic Oscillator, which expresses the close’s position within that range. The document describes a modified SMI that uses T3 smoothing in place of the exponential moving average used in the original calculation.

The stated purpose of the substitution is to produce a smoother indicator without adding lag. No calculation details, parameter settings, charts, market examples, or backtest results are supplied, so the claimed smoothness and lag characteristics cannot be assessed from this text alone. It also does not explain how to interpret SMI values or turn them into entry, exit, or risk rules. The material is therefore a brief description of an indicator variation rather than a complete trading strategy.

Key ideas

• The SMI measures the close relative to the midpoint of a recent high-low range.
• The standard Stochastic Oscillator instead relates the close to the full recent range.
• This variant replaces EMA smoothing with T3 smoothing.
• The document claims the substitution smooths the output without adding lag, but gives no supporting tests.

Tags

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