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 may serve as indicators of a potential change in market structure—if one asset forms a new high or low while the other does not, a divergence occurs, signaling a weakening of the current trend and a potential reversal. Such divergences often reflect the actions of major market participants, such as institutional investors or hedge funds, which may influence price movements preceding reversals or trend continuations, and serve as a significant signal for analyzing market dynamics.
The NinjaTrader SMT Divergence Indicator is designed to identify SMT divergences, which may signal potential trend reversals or continuations. It detects instances where the price movement of a primary asset diverges from that of a correlated instrument, highlighting potential trading opportunities.
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 signal quality, 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 eliminate weaker signals, enabling traders to tailor the indicator to specific market conditions or trading preferences.
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 sensitivity of divergence detection.
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 signals that occur too close together in time and may not represent meaningful market shifts.
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 also turn the indicator into an Automated Trading Strategy with an extended set of custom functions (stop loss, take profit, trailing stop, risk management parameters, trading time limit, and others).
Request a free consultation from our team of professional programmers and find out the cost and timing of your project development.
| Signal Plot Name |
Signal Plot Values | Description |
| Secondary Open | Value | |
| Secondary High | Value | |
| Secondary Low | Value | |
| Secondary Close | Value | |
| Short | > 0 | SELL Signal |
| Long | > 0 | BUY Signal |
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