Liquidity Sentiment Profile
Jun 27, 2023
The Liquidity Sentiment Profile is a cutting-edge trading indicator designed to provide traders with insights into market liquidity and sentiment by analyzing PRICE and VOLUME data over certain anchored periods. By visualizing the distribution of liquidity and market sentiment at different price levels, this tool empowers traders to identify significant market factors such as support and resistance levels, supply and demand zones, and liquidity gaps.
Liquidity in trading terms refers to the market's ability to facilitate transactions smoothly, with sufficient availability of orders at various price levels. Thus, understanding liquidity distribution on the Liquidity Sentiment Profile assists traders in making informed decisions.
How to Use the Liquidity Sentiment Profile
A Liquidity Sentiment Profile integrates both liquidity and sentiment analysis, displayed uniquely on a chart. The right side of the profile shows the distribution of trading activity at various price points, while the left side depicts market sentiment for those levels. This tool is visually represented using different color schemes, each with specific connotations, assisting traders in quickly assessing market conditions.
This indicator also aims to display Value Areas, highlighting the significance of certain price levels. These value areas can be recurrent within a single profile range, aiding in identifying potential buying or selling zones.
Traders can also observe the Level of Significance Line, which indicates changes in price levels with the highest trading activity (developing Point of Control or POC).
Adjusting Settings for Optimal Use
The Liquidity Sentiment Profile allows customization through various user-defined settings. Each input parameter comes with a tooltip for detailed usage insights.
Customizing Liquidity Sentiment Profiles
- Anchor Period: Determine the resolution of the indicator using the Anchor Period setting, with a default of AUTO.
Fine-Tuning Liquidity Profile Settings
- Liquidity Profile: Toggle visibility on or off.
- High Traded Nodes: Set thresholds and color preferences.
- Average Traded Nodes: Choose color options.
- Low Traded Nodes: Set thresholds and color preferences.
Tailoring Sentiment Profile Settings
- Sentiment Profile: Toggle visibility as needed.
- Bullish Nodes: Select color preferences.
- Bearish Nodes: Select color preferences.
Additional Settings
- Level of Significance: Toggle the visibility on or off.
- Profile Price Levels: Control the visibility.
- Number of Rows: Specify how many rows each profile histogram should contain. High settings may limit historical data view.
- Profile Width %: Adjust the relative width of histogram rows.
- Profile Range Background Fill: Toggle visibility.
Be Aware of Limitations
This tool has a limit on drawing objects. Consequently, using a high number of histogram rows may restrict the visibility of historical profiles and occasionally result in incomplete data portrayal.
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FAQs on Liquidity Sentiment Profile
How can I access the Liquidity Sentiment Profile?
You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.
What is the main benefit of using Liquidity Sentiment Profiles?
This indicator helps traders uncover vital market levels and sentiment, facilitating better trading strategy decisions by enhancing visibility on liquidity and sentiment distribution at key price levels.
Trading is risky and many will lose money in connection with trading activities. All content on this site is not intended to, and should not be, construed as financial advice. Decisions to buy, sell, hold or trade in securities, commodities and other markets involve risk and are best made based on the advice of qualified financial professionals. Past performance does not guarantee future results.
Hypothetical or Simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, including, but not limited to, lack of liquidity. Simulated trading programs in general are designed with the benefit of hindsight, and are based on historical information. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.
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