However, please note that any indicator which to some extent predict a future trend has its issues as it can be misleading.
But, in some datasets in a selected timeframe the leading properties of as an indicator are useful.
So this script is not too complicated. It shows a numeric which resembles the 'effectiveness of volume' in moving price.
For example, if a small creates a large price change - the Effectiveness indicator will be high and show a spike
Whereas, if a large creates a small price change - the Effectiveness indicator will be low
I used 3 metrics to represent Effectiveness (these are different colors on the bar chart)
One price difference is the absolute(high - low) for each bar
Another is the absolute(open - close)
The 'open-close' is smaller than the 'high-low', so note this when viewing the bar charts
The final metric depends on if the open is greater than the close or vice-versa
But it considers the 'absolute( high-low )' and the difference between the open and the high (or low) and the close and the low (or high)
So the final metric is the largest of the 3 metrics and is generally the most useful of the 3 however, the other 2 are displayed to provide a better understanding of what 'Volume Effectiveness' displays
Note, I use absolute values so they are only positive, i.e. there are no negative values to represent a price drop within a bar
So, why is this indicator useful - its because is a leading indicator
A decreasing tends to suggest a price change is coming
Also, when the within a bar is very small, its Effectiveness tends to go very high
That means a small trade creates a relatively large change in price
This is ideal conditions for a big pump (or big dump - although this indicator seems to work better before pumps)
A large spike in the Effectiveness is commonly/sometimes preceding a big pump
So watch this indicator - and if there is a big spike - evaluate other market conditions to consider getting into position
Large spikes in the Effectiveness can precede big price changes and therefore can provide a leading indication before a pump or dump
Timeframe is important - I found on the this indicator did not provide sufficient lead to be useful. Similarly on the <15min timeframe the spikes were not highly correlated with pumps/dumps
However, in medium timeframes (15mins, 1hour, 4hours) this indicator can be useful for predicting sizeable price changes.
Với tinh thần của TradingView, tác giả đã xuất bản tập lệnh theo mã nguồn mở, vì thế trader có thể dễ dàng hiểu và tùy chỉnh được. Bạn có thể sử dụng miễn phí, hoặc tùy chỉnh lại mã đã được cấp phép bởi Quy tắc Chung. Bạn có thể sử dụng nó trên biểu đồ.