The NinjaTrader SMT Divergence Indicator is designed for analyzing divergences between the price movements of a primary asset and a correlated instrument using the Smart Money Technique (SMT).
The concept of SMT Divergence involves comparing the behavior of two interconnected assets with fundamental or technical correlation to identify situations where these assets, typically moving in sync, begin to exhibit opposing price movements. These divergences highlight discrepancies in correlated price action, helping traders identify a potential shift in market momentum—if one asset forms a new high or low while the other does not, a divergence occurs, reflecting a decoupling of price action between assets. Such divergences often reflect institutional accumulation or distribution, providing key confluence for intermarket analysis and the study of market dynamics.
The NinjaTrader SMT Divergence Indicator is designed to identify SMT divergences, which highlight potential shifts in momentum or trend continuation scenarios. It detects instances where the price movement of a primary asset diverges from that of a correlated instrument, identifying a significant market context for further analysis.
The indicator comprises two main components: the primary chart, displaying the price movement of the main asset, and a secondary window, showing the price movement of the correlated instrument. The primary chart serves as the foundation for analyzing the main asset’s price behavior, while the secondary window facilitates comparison with the correlated instrument. This dual-chart setup simplifies the process of observing and comparing the behavior of both assets, making the analysis more structured and visually accessible.
The indicator automatically detects both standard SMT divergences and inverted SMT divergences, expanding its applicability to a broader range of market conditions.
In standard SMT scenarios, divergence occurs when one asset makes a new high or low that is not confirmed by the other.
Inverted SMT divergence describes the opposite scenario: the correlated asset updates an extreme (high or low), while the primary or leading asset fails to confirm it.
By detecting both types of divergence, the indicator captures a wider range of intermarket dynamics and enables more comprehensive market structure analysis.
On the charts, classic SMT divergences are marked with a solid line, while inverted SMT divergences are indicated with a dashed line, providing clear visual differentiation.
To improve the precision of correlation analysis between assets, the indicator includes customizable filters. These allow adjustment of the minimum bar distance between divergence points to avoid overly short divergences and the setting of a minimum price difference between the extreme points of a divergence. These filters help reduce market noise by focusing on structurally significant intermarket divergences, allowing for a more systematic interpretation of data.
The indicator has the following parameters:
Alerts – Configure various types of alerts.
Swing Strength – Defines the number of bars the indicator considers when identifying local highs and lows based on fractal logic. A higher value increases the strictness of the swing definition, as the extreme must be surrounded by more bars with lower highs (for a top) or higher lows (for a bottom). This parameter directly influences the detection criteria for discrepancies between assets.
Correlated Instrument – Specifies the instrument to be used for comparison against the primary chart. SMT divergences are calculated by analyzing the relative price behavior between the main asset and this correlated symbol.
Allowed SMT Type – Determines which types of SMT divergence are displayed on the chart. The available options include standard SMT divergence, where the leading asset makes a new high or low and the correlated asset does not; inverted SMT divergence, where the secondary asset makes the move while the primary one does not; or both types simultaneously.
SMT Min Bar Distance – Sets the minimum number of bars that must exist between the two extreme points that form a divergence. This helps filter out short-term fluctuations, ensuring that detected divergences reflect systematic decoupling between assets rather than minor price noise.
SMT Strength Calculation Type – Defines the method used to evaluate the required price difference between the two swing points forming the divergence. The strength can be measured either in ticks or in percent (%), allowing the trader to choose the preferred format for filtering divergences based on their magnitude.
SMT Min Strength – Sets the minimum value (in ticks or percent, depending on the selected calculation type) required to confirm a divergence.
We can customize this indicator to your needs — adding functions, modifying logic, or integrating it with other tools for your workflow.
We also convert indicators into Automated Trading Strategies with advanced functions (trailing stops, risk management, filters) tailored to your trading style strictly according to your specifications.
Request a free consultation to discuss the technical scope and timeline of your project.
We are committed to the ongoing development and refinement of our indicators. If you’ve spotted a bug, feel that something essential is missing, or have ideas that could make the indicator even better, just send us a message. Your feedback helps us improve and deliver tools that truly meet traders’ needs.
The indicator provides a set of exposed analytical plot outputs designed for structured integration with third-party strategy builders and automation tools such as BloodHound and BlackBird (SharkIndicators), as well as other algorithmic trading environments.
| Analytical Plot Name | Output Values | Description |
| Secondary Open | Value | |
| Secondary High | Value | |
| Secondary Low | Value | |
| Secondary Close | Value | |
| Short | > 0 | Bearish directional detection condition. |
| Long | > 0 | Bullish directional detection condition. |
Plot output names and descriptions are technical identifiers intended solely for software integration purposes and do not constitute trading advice, signals, or recommendations.
Nordman Algorithms is a trade name of Nordman Algorithms OÜ (Reg. No. 14435535), registered in Tallinn, Estonia.
Software Nature & User Responsibility — Nordman Algorithms provides algorithmic software tools for technical analysis. Nordman Algorithms is not a financial advisor and is not liable for any losses. All trades conducted based on the software’s output are executed at the user’s sole discretion and risk.
Visual Markers & Signal Disclosure — This software may display visual markers (such as arrows, dots, or alerts) when predefined mathematical conditions are met. These markers are provided for educational and analytical purposes only, must not be interpreted as financial guidance, and do not constitute a recommendation to buy, sell, or hold any financial instrument. Users must independently validate all visual cues within their own trading methodology.
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