Smart Money Stop Hunt Detector

The Smart Money Stop Hunt Detector indicator identifies potential liquidity sweep events where price moves beyond recent swing highs or lows before reversing, helping traders spot institutional "stop hunts" or liquidity grabs.

Usage

The Smart Money Stop Hunt Detector is used to find reversal opportunities based on liquidity rejection. Traders can use the visual markers and zones to identify where large market participants may have triggered resting orders before driving price in the opposite direction.

• Bullish Stop Hunt: Occurs when price sweeps below a recent swing low but closes back above it. This suggests a "sell-side sweep" where sell stops were triggered to facilitate buy orders.
• Bearish Stop Hunt: Occurs when price sweeps above a recent swing high but closes back below it. This suggests a "buy-side sweep" where buy stops were triggered to facilitate sell orders.
• Liquidity Rejection Zones: When a stop hunt is detected, a box is drawn on the chart highlighting the wick area of the sweep. These zones remain active until price closes through them, acting as potential areas of interest for future price action.

Details

The script functions by monitoring price action relative to the highest high and lowest low of a user-defined lookback period (Swing Length).

The detection logic relies on "displacement," which is calculated using the Average True Range (ATR). For a sweep to be valid, the distance between the candle's extreme (high/low) and its close must exceed a specific ATR-based threshold. This ensures the indicator only highlights significant rejections rather than minor fluctuations. Additionally, an optional volume filter can be enabled to ensure that the sweep event occurred with high relative participation, adding further confluence to the institutional activity hypothesis.

Settings

Detection Settings

• Liquidity Swing Length: The number of bars used to determine the recent swing highs and lows that define liquidity pools.
• ATR Length: The period used to calculate the Average True Range for displacement filtering.
• Minimum Displacement ATR: A multiplier applied to the ATR; the candle wick (rejection) must be larger than this value for a signal to trigger.

Volume Filter

• Use Volume Confirmation: Toggles whether volume must be higher than its moving average for a signal to appear.
• Volume MA Length: The period for the Volume Moving Average.
• Volume Threshold: A multiplier for the Volume MA; volume must exceed this threshold (e.g., 1.2x the average) to confirm the sweep.

Zone Settings

• Show Liquidity Rejection Zones: Toggles the drawing of boxes at the price levels where stop hunts occurred.
• Zone Extension Bars: Defines how many bars into the future the rejection zones will extend.

FAQ

How do I use the volume filter effectively?

The volume filter is best used on assets with centralized volume (like stocks or futures) to confirm that the liquidity sweep was backed by significant market participation.

Why do some zones disappear?

The zones are designed to be "violated" or mitigated. If price closes beyond the extreme of the zone (the high of a bearish sweep or the low of a bullish sweep), the zone is invalidated and removed from the chart.

How can I get access to the Smart Money Stop Hunt Detector?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.