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Smart Money Concepts

The Smart Money Concepts category displays multiple features related to the concept of smart money. These concepts assume the existence of informed (smarter) traders in the market such as institutions, banks, funds, and more who trade in more calculated ways. The Lux Algo SR toolkit include different features focusing on the smart money concept by taking into account existing methods and our research in this field.

Each features is described below:

Smart Swings

Smart swings highlight swing high/low points, and indicate when a level made from these points is broken, this occurrence can result in the two following possibilities:

  • BOS (break of structure) : price breaks a level established by a previous swing high, leading to a potential higher high, or break a level established by a previous swing low, leading to a potential lower low.
  • COC (Change of character) : price breaks a level established by a previous swing low while in a uptrend, or break a level established by a previous swing high while in a downtrend. This often indicates the confirmation of a reversal.

The smart swings make use of our smart money detection method to highlight strong swings (these are indicated with the letter S prior to the swing label). Strong swings occur when smart activity is found neighboring a swing high/low.

Break of levels constructed from strong swings can lead to strong break of structures (labelled as SBOS) or strong change of character (labelled as SCOC). This allows the user to potentially see if a breakout might have been caused by smart players, and might highlight situations such as stop hunting.

The area above the swing high and low reflect the amount of smart activity that occured at a precise candle, with more significant areas indicating a larger amount of smart activity.

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Note that the swings high/low are offset in the past, and were not detected at the bar location they appear on.

Order Blocks

Order blocks highlight price areas where informed market participants are placing/accumulating orders. It is difficult for these partipants to open a large market order at once, as such they accumulate smaller orders within certain price areas.

Liquidity Sweeps

Liquidity sweeps display real time horizontal support and resistances lines on the chart.

Liquidity sweeps provide dynamic supply and demand areas. These can be used to determine regions in the market to place orders. This feature consists of 2 main zones; the irregular cloud and live supply/demand zones. The clouds will appear in real time and provide a zone where the price may find support/resistance. The cloud will appear green when acting as a support and red when acting as a resistance.

The live supply demand zones appear 25 bars after the cloud appears and provide real time areas of supply and demand in the market. A trader may wish to use these levels to identify breakouts of market structures or price action.

Example of supports cluster
Example of supports cluster
Example of resistances cluster
Example of resistances cluster

Lux Profile

The Lux Profile is an indicator inspired by the classic volume profile, and is calculated from the most recent 100 bars using 100 price intervals.

This profile is made of two components, a weighted volume profile on the left showing the accumulated weighted volume within price intervals. A point of control (POC) solid line indicate the price level with the most accumulated weighted volume, which can highlight accumulation/distribution areas. This POC can be used as a potential support/resistance level.

The component on the right indicates the degree of variations of the prices within their respective intervals. A dashed line highlights the price level with the highest degree of variation.