Smart Money Volume Index

The Smart Money Volume Index tool measures buying and selling interest by analyzing price behavior relative to volume expansion and contraction to identify market participant dominance.

Usage

The Smart Money Volume Index can be used to gauge trend strength and identify potential exhaustion points through two distinct display modes:

• Net Mode: Displays a single oscillator representing the net difference between buying and selling interest. Values above zero indicate bullish dominance, while values below zero indicate bearish dominance.
• Compare Mode: Separates buying and selling interest into two distinct lines (Green and Red). This allows traders to observe periods where both sides might be rising or falling simultaneously, providing a more nuanced view of market participation.

Values pushing beyond the High Interest Threshold indicate elevated participation, often preceding significant price moves or reversals. The indicator also includes a candle coloring feature that reflects the current interest state directly on the price chart.

Details

The indicator logic is based on the Positive Volume Index (PVI) and Negative Volume Index (NVI).

• PVI is used to track "uninformed" activity during volume expansions.
• NVI is used to track "smart money" activity during volume contractions.

By detrending these indices with a long-term EMA and passing them through an RSI calculation, the script determines relative pressure. These pressures are then compared as ratios to estimate buy-side and sell-side interest. The final output is normalized against historical peaks within a rolling window to ensure the oscillator remains bounded and comparable across different asset classes.

Settings

Settings

• Display Mode: Switches between "Net" (combined oscillator) and "Compare" (separate buy/sell lines).
• Index Period: Sets the length of the summation period used to calculate the interest index.
• Volume Flow Period: The period for the RSI calculation applied to the volume flow streams.
• Normalization Period: The lookback window used to find historical peaks for normalizing the index values.
• High Interest Threshold: Determines the level at which participation is considered "High," affecting visual highlights and alerts.

Colors

• Up Color: The primary color used for buying interest.
• Secondary Up Color: The color used for net buying layers in Net mode.
• Down Color: The primary color used for selling interest.
• Secondary Down Color: The color used for net selling layers in Net mode.

FAQ

How do I interpret the zero line in Net mode?

In Net mode, the zero line acts as a pivot. When the index is above zero, buying interest outweighs selling interest. When it is below zero, selling interest is more prominent.

What does the High Interest Threshold signify?

This threshold marks extreme levels of interest. When the index crosses into these zones, it suggests that market participation is significantly higher than average, which can often signal the climax of a trend or a strong breakout.

How can I access Smart Money Volume Index?

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