Liquidity drives the price, everything else is a delusion. But how can we find a reliable source to see how buyers and sellers react to changes in the price of a security and position accordingly? There are many services out there that provide details on market participants’ positions in different asset classes though they are limited to a few assets. To overcome this, we have developed two unique indicators for MetaTrader 4 and 5 Platforms, providing you with the liquidity condition of many markets. As long as the asset has enough dataset and a unique recognizable symbol, it will work, even on emerging market symbols or Cryptoes.
Accessing the indicator
To get the indicator files, you need to rent or request snapshots based on your need.
How to use the data provided by the indicator?
After requesting for an analysis, we will send you a chart like this.
It is highly recommended to learn what each line is showing on the chart so you can understand the market dynamic.
- This line shows the liquidity equilibrium, where the price should be if we have equal buying and selling pressure. When the price is above this line, we can assume that there is higher buying pressure, and when the price is below this line, we can assume that there is higher selling pressure in the market.
When the price is below this line and attacks it, it tells us that there are sellers above the equilibrium line, and if the price manages to go above it and stays there, buyers will be in charge.
When the price is above this line and attacks it, it tells us that there are buyers below the equilibrium line, and if the price manages to go down and stays there, sellers will be in charge.
In simple words, when we are above it, there are more buyers, when we are below it, there are more sellers.
- This line shows the median open position price for buyers. We know that buyers have different entry-price for their positions. This line shows the average entry price for their positions weighted by their position size.
- This line shows the price where 90% of sellers will be in loss.
- This line shows the median open position price for sellers. We know that sellers have different entry-price for their positions. This line shows the average entry price for their positions weighted by their position size.
- This line shows the price where 90% of buyers will be in loss.
- This is the liquidity condition indicator, the most crucial part of your chart. You cannot interpret the liquidity band without understanding and incorporating this indicator. It basically shows the current level of participation of Retail traders in the asset.
A drawdown in liquidity, while the price is contracting and moving to the downside, indicates the continuation of an up move. However, if the price goes up in an uptrend and liquidity conditions fall, it means that all the retail traders have closed their shorts and it indicates the start of a reverse trend.
The same idea is also valid in a bearish market.
What timeframes do we recommend?
We have tested this indicator in many timeframes and the timeframes that we recommend are Weekly, Daily, 4-Hour, and 1-Hour. Timeframes lower than 1-hour are not supported by this indicator due to a lack of sufficient data and unbearable computational power consumption.