Liquidity Levels/Voids (VP) [LuxAlgo]

2023年8月18日

The Liquidity Levels/Voids (VP) is a script designed to detect liquidity voids & levels by measuring traded volume at all price levels on the market between two swing points and highlighting the distribution of the liquidity voids & levels at specific price levels.

🔶 USAGE



Liquidity is a fundamental market force that shapes the trajectory of assets.

The creation of a liquidity level comes as a result of an initial imbalance of supply/demand, which forms what we know as a swing high or swing low. As more players take positions in the market, these are levels that market participants will use as a historical reference to place their stops. When the levels are then re-tested, a decision will be made. The binary outcome here can be a breakout of the level or a reversal back to the mean.

Liquidity voids are sudden price changes that occur in the market when the price jumps from one level to another with little trading activity (low volume), creating an imbalance in price. The price tends to fill or retest the liquidity voids area, and traders understand at which price level institutional players have been active.

Liquidity voids are a valuable concept in trading, as they provide insights about where many orders were injected, creating this inefficiency in the market. The price tends to restore the balance.



🔶 SETTINGS

The script takes into account user-defined parameters and detects the liquidity voids based on them, where detailed usage for each user-defined input parameter in indicator settings is provided with the related input's tooltip.

🔹 Liquidity Levels / Voids

• Liquidity Levels/Voids: Color customization option for Unfilled Liquidity Levels/Voids.
  
• Detection Length: Lookback period used for the calculation of Swing Levels.
  
• Threshold %: Threshold used for the calculation of the Liquidity Levels & Voids.
  
• Sensitivity: Adjusts the number of levels between two swing points, as a result, the height of a level is determined, and then based on the above-given threshold the level is checked if it matches the liquidity level/void conditions.
  
• Filled Liquidity Levels/Voids: Toggles the visibility of the Filled Liquidity Levels/Voids and color customization option for Filled Liquidity Levels/Voids.
  

🔹 Other Features

• Swing Highs/Lows: Toggles the visibility of the Swing Levels, where tooltips present statistical information, such as price, price change, and cumulative volume between the two swing levels detected based on the detection length specified above, Coloring options to customize swing low and swing high label colors, and Size option to adjust the size of the labels.
  

🔹 Display Options

• Mode: Controls the lookback length of detection and visualization.
  
• # Bars: Lookback length customization, in case Mode is set to Present.
  

🔶 RELATED SCRIPTS

Liquidity-Voids-FVG
Buyside-Sellside-Liquidity
Swing-Volume-Profiles