The Smart Moving Average was originally developed as a core component of the
“Re-Entry Rule” The signal that tells us when it’s safe to get back into a stock that
had been previously stopped out. Our trend indicator distinguishes good bounces
off the bottom from bad ones. A “good” bounce is one that follows through to the
upside. A “bad” bounce is one that fails and is soon followed by new lows.
It is important to understand that the Smart Moving Average is unique to every
individual security that we are tracking in our database. It isn’t a “one-size fits all”
moving average like the popular 200-day or 50-day moving averages. We
engineered it to be the single best moving average at capturing bounces from the
trend for any security and it is based on the ever-changing volatility of the
The Smart Moving Average itself is a simple moving average tailored to each asset’s
For a security to trigger a new Health Indicator Entry Signal, several things must
- The security’s price must bounce more than 1 VQ from the lowest low
since it was stopped out.
- The Smart Moving Average must be in an up-trend, with a strong rising
This specific combination of factors maximizes risk-adjusted returns. It helps ensure
a stock is truly healthy and beginning a sustainable move higher before you buy.
However, it also means that in some cases, a stock will rise significantly off its lows
before the Health Indicators triggers an Entry Signal.
To see the Smart Moving Average, on the Position Card select the Chart Settings tab. Then, click the green bar to the left of the chart to open the settings. Check the bubble for Smart moving Average.
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