Key takeaways
- It beats the indicator it derives from. +1.8 points at a 1:2 target on daily charts, against about a point for the plain stochastic.
- The short side is weak but not dead. Unlike the ordinary stochastic bear cross, the SMI bear cross shows a small positive edge.
- The 4-hour sample is huge and significant on both sides. And, as everywhere else, the edges there are under one and a half points.
- Double-smoothing costs you timing. The trade-off for the cleaner signal is that it arrives later.
What it does
The SMI measures where the close sits relative to the midpoint of the recent high-low range rather than relative to its bottom, then smooths that distance twice with exponential averages before scaling it. The result oscillates around zero from roughly -100 to +100, where the ordinary stochastic runs 0 to 100 around a midpoint of 50.
Because it is centred on zero and smoothed twice, the SMI whipsaws less than the indicator it derives from. The signals measured here are the crosses of the SMI through its own signal line while stretched: a bull cross below -40 and a bear cross above +40.
How this was measured
Every figure below comes from our own tick-derived archive, not from a vendor summary. The method is identical to the one behind our indicator signal study, so the numbers here are directly comparable to every other signal we publish.
- Data. Dukascopy bid-side OHLC for 93 instruments — major and cross FX pairs, gold, silver, stock indices and crypto — from 2010 to August 2026.
- The trade. Enter at the open of the next bar. Stop at 1.5 × ATR(14), targets at 1:1 and 1:2, walking forward up to 40 bars.
- Ties go against you. A bar holding both stop and target is scored a loss every time.
- Real costs. Per-instrument median spreads from our own bid/ask measurement.
- The control. For every signal, a trade with the same direction and the same stop distance at a random bar — five draws each. The gap between the two columns is all the signal is worth.
The result
Breakeven is a 50% win rate at a 1:1 target and 33.3% at 1:2. "Matched random" is a trade in the same direction with the same stop distance, opened at a random bar.
| Signal | Target | Trades | Win rate | Matched random | Edge | Significance | Beats breakeven? |
|---|---|---|---|---|---|---|---|
| SMI bear cross >+40 | 1:1 | 10,002 | 47.6% | 46.4% | +1.2 pts | * | No |
| SMI bull cross <-40 | 1:1 | 7,971 | 52.9% | 51.7% | +1.2 pts | not significant | Yes |
| SMI bear cross >+40 | 1:1 | 48,820 | 48.7% | 47.8% | +0.9 pts | *** | No |
| SMI bull cross <-40 | 1:1 | 40,482 | 50.1% | 49.2% | +0.9 pts | *** | Yes |
| SMI bull cross <-40 | 1:2 | 7,564 | 35.7% | 33.9% | +1.8 pts | ** | Yes |
| SMI bull cross <-40 | 1:2 | 38,977 | 32.9% | 31.8% | +1.2 pts | *** | No |
| SMI bear cross >+40 | 1:2 | 47,316 | 31.4% | 30.4% | +1.0 pts | *** | No |
| SMI bear cross >+40 | 1:2 | 9,682 | 30.0% | 29.1% | +0.9 pts | not significant | No |
Comparing this table against the stochastic oscillator page is the useful exercise: same data, same engine, same control method, and the double-smoothed version comes out ahead on both sides. That is a genuinely informative result, because most indicator "improvements" do not survive being measured against the original.
The caveat is the one attached to every other signal here. Beating the plain stochastic still means an edge under two points, and the 4-hour rows repeat the familiar pattern of overwhelming significance attached to trivial size.
How to use it
- Prefer it to the plain stochastic. On this data it is the better of the two on both sides, for the same effort.
- Daily bars, 1:2 target, long side. Where the largest measured edge sits.
- Accept the lag. The double smoothing is why the signal is cleaner and also why it is later. If you need the turn early, this is the wrong tool.
- Use the ±40 bands, not zero. We measured crosses while the indicator was stretched, not every crossing of the signal line.
What does not work
- Expecting a big number. Better than the stochastic is not the same as good; the edge is still under two points.
- Trading every signal-line cross. The measured signals require the indicator to be beyond ±40. Crosses near zero are untested here.
- Using it for precise entries. Double smoothing trades timing for reliability by construction.
Limitations
- Default parameters only. Tuning them on this same data would be curve-fitting.
- One stop rule (1.5 × ATR) and two fixed targets. Trailing stops, time exits and scaling are untested.
- Signals are taken in isolation, with no trend filter or confluence — which is how the isolated value of each is measured, but not how most people trade them.
- Bid data with modelled ask. Spread is a measured median, not a replayed tick-level ask feed.
- Spread only — no commission or swap. Both would push results further down.
- A statistically significant edge of one point is still only one point. Large samples make small effects certain; they do not make them large.
Cite or republish this data
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Frequently asked
What is the difference between SMI and the stochastic oscillator?
The ordinary stochastic measures where the close sits within the recent high-low range, on a 0 to 100 scale. The SMI measures where the close sits relative to the midpoint of that range and smooths the result twice, producing a line centred on zero from about -100 to +100. On our data the SMI outperformed the plain stochastic on both the long and short side.
Is the SMI better than the stochastic oscillator?
On this evidence, yes. Measured identically across 93 instruments and sixteen years, the SMI bull cross produced +1.8 points at a 1:2 target on daily charts against about a point for the plain stochastic bull cross, and the SMI bear cross showed a small positive edge where the plain stochastic bear cross showed none at all.
What are the best SMI settings?
We tested the common 14,3,3 configuration with signals taken at crosses beyond plus or minus 40. We did not search for better parameters, because tuning them on the same data used to evaluate them would be curve-fitting and rarely transfers to new data.
Does the SMI lag?
Yes, by construction. The double exponential smoothing that makes the SMI less prone to whipsaw is the same thing that makes it arrive later than the raw stochastic. That trade-off is the whole design of the indicator, and it is why it suits daily bars and wider targets better than fast scalping.
How were these SMI numbers produced?
Enter at the open of the bar after the cross, stop 1.5 x ATR(14) away, targets at 1:1 and 1:2, walking forward up to 40 bars. Bars containing both stop and target are scored as losses. Real per-instrument median spreads are applied. Every signal is compared against five random-entry draws in the same direction with the same stop distance. Data is Dukascopy bid OHLC for 93 instruments, 2010 to August 2026.