Asset Liquidity Meter by Funded Relay

Asset Liquidity Meter by Funded Relay

This indicator estimates the liquidity of any asset by calculating the volume traded per unit of price movement (volume / (high - low)).

Higher values generally indicate better liquidity (more volume in a smaller price range → easier to enter/exit positions with less slippage).
Lower values suggest thinner liquidity (higher risk of price impact and volatility).

The indicator displays:
• Histogram: raw liquidity per bar (green = above SMA, red = below SMA)
• SMA line: smoothed liquidity trend
• Real-time info table in the top-right corner
• Built-in alert conditions

How to Use – Step by Step

1. Adding the Indicator
- Open any chart on TradingView
- Click the "Indicators" button at the top
- Search for "Asset Liquidity Meter v6" (or find it in Community Scripts / My Scripts)
- Click to add it to the chart
- It will appear in a separate pane below the price chart

2. Customizing Settings
Double-click the indicator name in the pane (or right-click → Settings):

• SMA Length (default: 14)
- Controls the smoothing period of the liquidity trend line
- Smaller values (5–10) → more responsive, good for intraday/scalping
- Larger values (20–50) → smoother trend, better for swing/position trading

• Epsilon (default: 0.00000001)
- Tiny value that prevents division-by-zero errors on flat bars (high = low)
- Almost never needs to be changed

• Colors
- High Liquidity Color: histogram bars when liquidity > SMA
- Low Liquidity Color: histogram bars when liquidity < SMA
- SMA Line Color: color of the smoothed trend line

• Show Alert Conditions in Menu
- Keep enabled (true) to see the built-in alert options when creating alerts

3. Reading & Interpreting the Indicator

• Histogram Bars (Raw Liquidity)
- Height = amount of volume per unit of price range
- Tall bars = high liquidity (market is "thick")
- Short bars = low liquidity (market is "thin")
- Green = current liquidity is stronger than the average (SMA)
- Red = current liquidity is weaker than the average

• Blue SMA Line
- Shows the average liquidity over the selected period
- Rising line → liquidity improving (more participants, easier trading)
- Falling line → liquidity decreasing (thinner market, caution advised)

• Info Table (top-right corner)
- Displays current raw liquidity, SMA value, and status ("High Liquidity" / "Low Liquidity")
- Updates in real-time on the last bar

• Zero Line (dotted gray)
- Visual reference — everything above zero is positive liquidity

4. Practical Trading Applications

• High Liquidity Zones (green bars + rising SMA)
- Favorable conditions for entering or scaling into positions
- Lower expected slippage
- Better for large orders

• Low Liquidity Zones (red bars + falling SMA)
- Higher risk of slippage and exaggerated price moves
- Consider smaller position sizes or waiting for better conditions
- Common during session opens/closes, holidays, or low-volume periods

• Crossovers
- Liquidity crossing above SMA → potential increase in market participation
- Liquidity crossing below SMA → potential drying up of interest

5. Setting Up Alerts

1. Right-click on the chart → "Add Alert"
2. In "Condition", select "Asset Liquidity Meter v6"
3. Choose one of the available alert conditions:
- Liquidity ↑ Crosses Above SMA
- Liquidity ↓ Crosses Below SMA
- Very High Liquidity (2× SMA)
- Very Low Liquidity (<30% SMA)
4. Set frequency (Once Per Bar Close is usually best)
5. Configure notification (email, popup, sound, webhook, etc.)
6. Create the alert

6. Tips for Best Results

• Works on all markets: stocks, forex, crypto, futures, indices
• Best on timeframes with meaningful volume data (5 min and higher usually give clearest signals)
• Compare liquidity across different assets or timeframes using multiple charts
• Combine with support/resistance, volume profile or order flow tools for confirmation
• Not a standalone signal — use in context with your overall strategy

Limitations & Notes
• This is an estimation based on OHLCV data — it does not show real order book depth
• Results vary significantly between centralized exchanges, brokers and instruments
• Zero-volume bars will show zero liquidity (expected behavior)

Enjoy safer and more informed trading!

Questions or suggestions? Feel free to comment below.