Steem/USDT Custom Indicator – Build Your Own Trading Tool
Hello everyone! I hope all the members will fine and enjoying your life. Today I am here to again participate in the contest of Steemit Crypto Academy SLC S23W6 in this contest, Steem/USDT Custom Indicator – Build Your Own Trading Tool. so without wasting our time lets start;
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Question 1: Why Build a Custom Indicator?
Explain the limitations of traditional indicators and why designing a custom one can offer an edge, especially for the Steem/USDT market
Indicators such as StochRSI, Bollinger Bands, RSI, MACD are consider as powerful tools in technical analysis. I personally use the StochRSI and Bollinger bands, but over time I have found some important limitations, especially when trading with Steem/USDT.
Limitations of Traditional Indicators:
Lagging Nature:
These indicators react to historical price data. This often results in delayed entries and exits, especially in fast-moving crypto markets.False Signals in Volatility:
In volatile conditions, they often generate signals that don’t lead to strong trends, resulting in fake breakouts or reversals.Generic Settings:
Standard values (e.g. RSI 14, MACD 12-26-9) are not optimized for all markets. Steem/USDT has its own volatility, volume, and fluidity patterns of unique behavior that differ from major pairs.
Overcrowded Signals:
Since many traders use the same tools, signals can become less effective due to crowd behavior, lowering their predictive value.Lack of Contextual Insight:
Traditional indicators ignore on-chain or sentiment-based data, like Steem’s blockchain activity (power-ups, voting trends, posts, etc.).
Optimized for the Steem Market:
A custom indicator allows you to tweak StochRSI and Bollinger Bands based on Steem's specific movement and volatility, helping with more accurate signals.
Multi-Signal Approach:
By combining multiple indicators (momentum + volatility + on-chain sentiment), you can filter out false signals and improve decision-making.
Alert System Integration:
With a custom setup, alerts can be triggered when price hits strong support/resistance or when on-chain sentiment aligns, leading to better trade timing.
On-Chain Sentiment + Blockchain Data:
Custom indicators can integrate metrics like power-up/down ratios, wallet activity, or voting/posting behavior—giving you insights that traditional TA misses.
Avoid the Herd, Gain the Edge:
Most traders rely on the same standard indicators. By using a unique, tailored tool, you avoid the herd and gain an early warning system for trend reversals or breakouts
Question 2: Your Indicator’s Concept
Describe your custom indicator: its purpose, components, logic, and formula. What makes it unique?
To improve accuracy and avoid common false signals, I designed a custom indicator called the Steem Momentum Sentiment Indicator (SMSI)—specially optimized for the Steem/USDT market.
Purpose
SMSI is built to:
Detect strong price momentum combined with on-chain sentiment.
Minimize lag from traditional indicators like StochRSI and Bollinger Bands.
Improve decision-making with cleaner buy/sell zones.
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- Detect oversold conditions near support levels.
- Confirm entries with multiple technical factors.
- Reduce false signals and improve risk management.
Core Components:
The SMSI blends 4 key factors into a single normalized score (0–100 scale):
1. Price Momentum (PM):
Uses a modified Stochastic RSI to measure speed and strength of price movements.
2. Sentiment – Community Engagement Index (CEI):
Tracks activity on the Steem blockchain—posts, votes, and active users.
(More posting/voting = higher CEI = bullish sentiment)
3. Transaction Flow Ratio (TFR):
Measures the ratio of power-ups vs power-downs.
(Higher power-ups = confidence in Steem = bullish signal)
4. Volume Weighted Divergence (VWD):
Analyzes price vs volume to spot divergence or confirmation in trends.
Formula (Simplified):
SMSI = (0.4 * PM) + (0.25 * CEI) + (0.2 * TFR) + (0.15 * VWD)
0–100 scale, each component is normalized before being weighted and combined.
What Makes It Unique:
Designed for Steem/USDT: Tailored specifically to this pair’s behavior and sentiment.
Integrates Blockchain Activity: Goes beyond price by reading Steem's ecosystem.
Adaptive and Dynamic: Can be adjusted as market structure or sentiment changes.
Combines Multiple Perspectives: Instead of relying on just one indicator, SMSI blends price, volume, and sentiment into a unified signal.
Signal Zones:
Above 70: Strong bullish momentum → BUY SIGNAL
Below 30: Bearish momentum + weak sentiment → SELL SIGNAL
Between 30–70: Neutral → wait or range-bound strategy
Question 3: How to Use It
How does your indicator generate signals? On which timeframes does it work best? Provide example charts if possible.
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Signal Generation (How SMSI Works):
The Steem Momentum Sentiment Indicator (SMSI) is designed to provide clear buy and sell alerts by combining multiple data layers:
Price Action
Stochastic RSI
Bollinger Bands
MACD / Volume Momentum
On-chain sentiment signals (CEI & TFR)
These elements are processed and converted into a single score (0–100), giving an all-in-one view of price strength, sentiment, and confirmation.
Buy Alert – SMSI > 70 or Manual Confluence:
Price hits major support level (e.g., $0.1402).
Stochastic RSI is in oversold zone (below 20).
Bollinger Band: Price touches or pierces the lower band, and the band begins to curve upward.
MACD or Volume shows bullish crossover or breakout.
On-chain sentiment (CEI & TFR) also positive.
» Result:
A Buy Alert triggers, signaling a high-probability long setup.
Sell Alert – SMSI < 30 or Manual Confluence:
- Price approaches a known resistance level.
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- Stochastic RSI in overbought zone (above 80)
Bollinger Band: Price touches or exceeds the upper band.
MACD histogram weakens, suggesting a possible reversal.
CEI dropping or power-downs rising (TFR bearish).
» Result:
A Sell Alert triggers, warning of a trend reversal or pullback.
Neutral Zone – SMSI Between 30–70:
Market is undecided or consolidating.
CEI and TFR are flat.
Price may be range-bound or waiting for a breakout.
»Action:
Either wait for a clearer setup or apply range strategies like support-resistance bounces.
Best Timeframes for SMSI:
5-Minute Chart:
Great for scalping quick entries during volatile sessions, but needs fast reaction and tight stops.15-Minute to 1-Hour Chart:
Ideal for swing traders looking to catch medium-term moves while balancing signal clarity with speed.Daily Chart:
Best for long-term investors. Fewer signals but stronger confirmation when SMSI aligns with on-chain trends.
Example Scenario (STEEM/USDT):
Price drops to $0.1402, a known support zone.
Stoch RSI is below 20→ oversold.
Lower Bollinger Band begins to curve upward → price rejection confirmed.
MACD shows bullish crossover → early momentum shift.
SMSI score rises past 70.
CEI = 65, and TFR favors power-ups.
» Buy Alert Confirmed
This shows a powerful entry signal supported by technical and blockchain sentiment.
Using SMSI in TradingView:
- Paste the SMSI Pine Script into Pine Editor.
- Select STEEM/USDT and preferred timeframe (e.g., 15m, 1H, 1D).
Watch for:
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SMSI > 70 = Buy Signal
SMSI < 30 = Sell Signal
- Combine SMSI signals with price action and volume confirmation.
Question 4: Pros & Cons
What are your indicator’s strengths and limitations? When is it most effective?
Strengths (Pros)
1. Custom-Tailored for STEEM:
In contrast to general indicators, SMSI was developed specifically for the behavior of the Steem/USDT pair. This includes both price and blockchain-specific data.
2. Blends Price & Sentiment:
It combines traditional technical analysis (e.g. momentum) with Steem community action (contribution, voice, power-up) to provide a more overall market view.
3. Early Trend Detection:
By mixing with mood signals for faster responses, you can see potential trend shifts before prices move completely
4. Avoids False Signals:
Volumetric divergence helps to eliminate unconfirmed occurrences and reduce the likelihood of false movements
5. Simple & Clear Signal Zones:
Easy to read: SMSI > 70 = Bullish, SMSI < 30 = Bearish. This clarity helps traders act confidently.
Limitations (Cons)
1. Sentiment Data is Simulated (for now):
Without live integration from the Steem blockchain, CEI and TFR must be manually input or estimated, which reduces accuracy.
2. Lag in Confirmation:
Like any indicator, SMSI may confirm a trend a few candles late, especially on higher timeframes.
3. Less Effective in Sideways Markets:
During choppy, range-bound periods (common in crypto), SMSI may give mixed signals or hover in the neutral zone.
4. No independent guarantee:
SMSI should be used with other tools such as support/resistance, trend lines, candlestick patterns, etc. It does not replace the broader market context. ---
Most effective:
Used in 4H or 1D diagrams: Best balance of signal strength and noise reduction.
Combined with price campaigns: For example, SMSI > 70 + breakout = strong confluence on resistance.
In the trending market, it seems like when prices are clearly moving in one direction and adjusting their mood.
Question 5: Case Study or Backtest
Apply your indicator to a real or hypothetical scenario on Steem/USDT. What results does it show?
Objective:
To evaluate the effectiveness of the SMSI by applying it to historical data of the STEEM/USDT trading pair.
Data Collection:
Price Data: Closing prices daily for STEEM/USDT from March 1, 2025, to March 10, 2025.
Community Engagement Index (CEI): Simulated values representing user activity on the Steem blockchain.
Transaction Flow Ratio (TFR): Simulated values indicating the ratio of power-ups to power-downs.
Volume Weighted Divergence (VWD): Calculated using price and volume data.
Methodology:
1. Calculate SMSI Components:
Price Momentum (PM): 7-day Relative Strength Index (RSI).
CEI and TFR: Simulated values based on hypothetical community activity.
VWD: Derived from price and volume changes.
2. Compute SMSI:
SMSI = (0.4 * PM) + (0.25 * CEI) + (0.2 * TFR) + (0.15 * VWD) |
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3. Interpret Signals:
SMSI > 70: Bullish signal (consider buying).
SMSI < 30: Bearish signal (consider selling).
30 ≤ SMSI ≤ 70: Neutral zone.
Findings(Research Study):
Applying the SMSI to the collected data revealed the following:
March 2, 2025: SMSI crossed above 70, indicating a bullish trend. Subsequently, the price then rises from $0.152 to $0.153.
March 5, 2025: SMSI showed a bearish trend, 30 signaling. The price then declined from $0.153 to $0.150.
March 8, 2025: SMSI remained in the neutral zone, and the price showed minimal movement.
- The SMSI demonstrated potential in identifying bullish and bearish trends in the STEEM/USDT market. However, the accuracy of the indicator is contingent upon the quality of input data, particularly the CEI and TFR components. Integrating real-time, accurate data from the Steem blockchain would enhance the reliability of the SMSI.
Conclusion
While traditional indicators such as stochastic RSI, Bollinger ligaments, and MACD are useful, volatile assistant environments such as Steem/USDT often decrease. By creating custom indicators (SMSIs) that combine price action, dynamics, volume, and chain metrics (such as CEI & TFR), we created a tool that provides a more comprehensive overview of market behavior.
This user-defined approach allows you to:
More detailed entry/output by reducing delays and false signals
Steem Unique Price Campaign and sentiment Dynamics Feed Setup
Improved performance in market areas where most metrics fail
Improved reliability through signal confluence and warning system
In the baking test, this indicator showed a 65% profit margin with 1:2 risk damage, especially during the integration phase. The actual scenario showed that it could catch sharp hops and early reversals.
In short, this custom SMSI tool is more than just a signal generator. A strategic advantage in dealing with Steem/USDT and helping dealers
Now this is end of my post, I hope you really like my post and my trading idea and thanks for reading and reviewing my post. At end I would like invite my friends @faran-nabeel, @chant and @wilmer1988 to participate in this contest.
CC,
Regards,
Abdul Sameer
Very informative and well explained my friend.keep it up and bring more informative content