Market Structure (Range) & Internal Liquidity

20 Mac

This indicator will simplify the price-action reading of any trader/investor by decluttering his/her charts from un-important & confusing candles to highlight the true momentum candles which are usually formed by institutional buying/selling.

The indicator will be a good tool in the arsenal of the following styles of Trading/Investing

• Smart Money / Liquidity Concepts
  *Price Action Concepts
  *Demand & Supply Concepts
  *Support & Resistance Concepts

UNIQUE FEATURES:
1. Market Structure - Range & Internal Liquidity:
Unlike other liquidity indicators, this indicator only highlights liquidity levels of significant importance. Not every intermediate high & low in a chart are worthy of noticing, hence by enabling the 'Swings' & 'Range (BoS)' feature in the indicator settings, the structure highs and lows (external liquidity) in a chart can be identified.
Any other liquidity levels within a market range (Range between structural High & Low) is known as internal liquidity which price targets to collect enough orders before heading towards the external liquidity levels.



2. Gaps (Fair Value Gaps / Imbalance):
Not every imbalance / gap between candles are important & trade-worthy. This feature of the indicator is different from the other widely available imbalance indicators & only highlights gaps formed by true momentum candles. Gaps between unimportant inside bars are not highlighted, as these bars occur in the absence of momentum.



3. True Price Action:
Looking at the two charts below, we can clearly observe the difference between price action of a confusing normal chart & the simplified price action highlighted by the indicator. This feature declutters the charts by only highlighting the candles a trader / investor should notice in a chart.
This feature when used in confluence with the liquidity levels feature & gap feature of the indicator, helps identify the true demand & supply zones (order blocks) in a chart.

Before


After


4. Zig Zag Lines:
This unique feature which is useful to Identify & Backtest different entry types taught by Smart Money Traders. This feature helps the trader understand the True Fractal Nature of price. This can also be seen as an alternate to the default line chart feature.



Examples of Entry Types taken by Smart Money Traders



ADDITIONAL FEATURES:
(These features are essential addons to trade liquidity. However, these are derived from publicly available indicators from the Tradingview library, but with a different interpretation for a better visualization of charts & or to time better trade entries without cluttering the charts)
a. Inside Bar & Outside Bars:
Identify not just a single Inside Bar as highlighted by other indicators, but to highlight a series of candles which are within a master candle range and are exhibiting unimportant sideways price action.
Outside Bars only relevant to momentum candles are highlighted, ignoring candles that occur within a master candle range. Highs & Lows of such Outside Bars are used by aggressive traders to identify liquidity levels in the charts.



b. Highs & Lows of previous Monthly / Weekly / Daily & Hourly Candles:
This feature draws Highs & Lows of previous Monthly / Weekly / Daily & Hourly Candles on the extreme right hand side of the chart to keep the charts clean.
Additionally for Hourly time frame, the indicator includes a setting to select the hourly candle time frame (60 min / 75 min / 240 min), which are personal and different for each trader.



UNDERLYING CONCEPT:

In the image below we see how a large majority of Traders / Investors incorrectly mark Structure markings, mistaking a raid of internal liquidity as a Break of Structure, thereby taking trades opposite to the broader trend of the markets



However, this indicator has a higher accuracy of identifying the correct price structure by only marking a structure high or low, when a subsequently opposite side liquidity is taken/raided. Further the broader trend of the markets can be easily identified by looking as to which side the Break of Structure has happened. (This is visible in the indicator in the form of 'Range' feature, so if a Range High is broken then it is understood to be in an uptrend & vice versa)
The underlying core functionality of the indicator is best displayed by the image below




USECASE OF THE INDICATOR:

Before taking any Buying/Selling position in the markets, a Trader / Investor must analyze the price action on the following parameters

• HTF & LTF Trend Identification (To judge if trade is Pro-Trend or Counter-Trend)
  
• Is Price at a High Probability Area of Interest?
  
• Is Price satisfying the trade entry conditions?
  

Let us see how this indicator can be used as a complete trading system in itself and addresses each of the above parameters

Disclaimer: Illustrations shown below are just for understanding the features of the indicator & does not guarantee profitability. Every trader must back test their setups to arrive at a setup with an edge (positive expectancy) before they start actively trading the setup.

1. HTF & LTF Trend Identification (Pro-Trend / Counter-Trend) using 'Range (BoS)' feature of the indicator

Let's assume a Day Trader, uses hourly chart (75 min) to frame his Higher Time Frame (HTF) ideas & 15min charts (LTF) for trade entries

Looking at the chart below the Trader concludes that the HTF has most recently broken the structure to the downside and is considered Bearish till price action is below the range high of 48600 levels. It can also be concluded that the price is currently in a Bullish retracement.


The Trader can choose to take both Pro-Trend or Counter-Trend Trades, timing the trade entries using the LTF charts.
Looking at the LTF chart below, it is evident that price on LTF has also broken structure to the downside and is now aligned with the HTF Bearish Trend. The Trader will now look to get into short trades, to take trades both in line with HTF & LTF trend.


2. Let's identify if Price is at a High Probability Area of Interest, using either single or combination of the 'Swings' / 'Gaps' / 'Outside Bars' / 'HL of previous M,W,D, H candles' features of the indicator

Definition of High Probability Level / Area differs from each Traders perspective depending upon which of the Trading Styles (mentioned in the beginning) does one use.

• Smart Money Traders
  

SMC Traders are known to get into trades early and their high R:R trades are taken mostly at a High Probability Area of Interest which are identified by them on HTF, by looking for candles with imbalance (gaps) & or candles which have taken out a previous liquidity and then having creating imbalance (gaps).


Also Turtle Soups is one of the favorite setups for SMC traders, where a trader enters a trade on LTF (typically 1 min/3min & 5min) after grabbing HTF liquidity lying at H/L of outside bar / previous monthly, weekly, daily or hourly candles.

• Demand & Supply Traders
  

Some of the Best Demand & Supply Traders have the patience to wait for trades and take trades at the extreme Demand & Supply Zones within a market Range.
As illustrated below, the extreme hourly supply zone just below the structure high, which has the confluence of imbalance and Bearish HTF confirmation resulted in a good R:R trade.

• Price Action Traders & Support & Resistance Traders
  

From the illustration below we can see how the 15 min Range breakdown confirms the breakdown of the Inverted Cup Pattern for Price Action Traders & Support & Resistance Traders using the same area of breakdown as the new Resistance to enter Short trades


3. Let's identify if Price is satisfying the Trade Entry Conditions using the 'Zig-Zag Lines' feature

Statistics say that majority (> 80%) of Traders blow up their accounts multiple times or completely give up and never achieve profitability.
One of the primary reasons for this is Traders punching trades randomly and without having proper Setup or rules for entering Trades.
Also in order to arrive at rules or execute the different entry models (couple of examples highlighted earlier) taught by different Trainers, a Trader needs to learn to visualize charts in a similar format to what the trainers are teaching.

The Zig-Zag lines feature is a form of line chart that joins the swing high points to the swing low points on the chart to represent the True Price action & a proper fractal nature of the markets, unlike the line chart which is formed by only by joining the closing value of each candle.

From the image below we can see that the Zig-Zag lines feature eliminates the randomness visible in the line chart and is a more smoother chart. Using this feature one can back test the various entry models widely available on the internet or arrive at a user specific model which he/she is comfortable with.



CONCLUSION:

Trading with a deeper understanding of Price Action allows a Trader/Investor to enter or exit trades with ease. Price Action trading allows individuals to keep their charts clean and stay away from the other lagging technical indicators and enter trades much earlier than other technical indicators.
This indicator attempts in simplifying the understanding of price action for every one and identify potential high probability areas / levels where one should enter / exit trades.
This indicator will be an important tool in the arsenal of any Trader / Investor to take better informed trades, however it does not guarantee profitability of a Trader, due to the randomness of the markets & external factors that influence each trader.

GET ACCESS:

Refer Author's instructions below to get access to the indicator

1 Okt

Nota Keluaran

Bug Fixes: Indicator Loading Issues across some time frames resolved

Update:
1. Market Structure & Liquidity (External, Internal & Fractal):

Market Structure is the most widely recognized method for Traders to understand the Trend & Price Direction of the Market.

In a Bullish Market, price moves making Higher Highs (HH) & Higher Lows (HL), similarly in a Bearish Market, price moves making Lower Highs (LH) & Lower Lows (LL).
Identifying these HH & HL in a Bullish Market or the LH & LL in a Bearish Market, is key to know the important Swing points of a Price Chart.

Trend Following Traders have their stops, just below these Structure Swing Points which results in a lot of Liquidity resting below these Swing Levels & is identified as 'External Liquidity'.

Illustration below explains the presence of 'External Liquidity' below the higher lows in a Bullish Market & above the lower highs in a Bearish Market.


Real Chart Illustration wherein the Market Structure & External Liquidity is highlighted in Purple when 'Structure Swings' are enabled in the indicator.


In Trending Markets, Price moves alternatively between Impulse Leg & Retracement Leg. In the Impulse leg, price makes fast Impulsive moves in the direction of the Trend & in the Retracement Leg, price takes a breather & makes short retracements before again continuing in the direction of the Trend as shown in the Illustration below.


For Traders it is important to know beforehand if Price is in the Impulse Leg or Retracement Leg. This enables them to understand if they are taking Pro Trend or Counter Trend Trades & adjust their trade expectations accordingly.

In an Ideal textbook scenario, price would move in straight lines, however, in reality price movements are quite choppy as shown in the illustration below.
The minor Swings between an Impulse Leg & Retracement Leg are known as 'Interim Swings' & the liquidity resting at these Interim Swings is known as 'Internal Liquidity'


To know if Price is in the Impulse Leg or Retracement Leg, simply enable the 'Interim Swings' option in the indicator, which will highlight these Interim Swings in 'Blue'


As seen in the image above, the Interim Swings indicate the Short Term Range, within which Price is operating.

The fractal price moves between the Interim Swings known as 'Fractal Swings' when enabled are shown by Black dotted lines in the Chart as seen below.

1 Okt

Nota Keluaran

Upd: Version Number Updation

14 Nov

Nota Keluaran

Updates:
1. Interim Swings Bug Fix
2. Streamlining Settings