Liquidity Pools [ValiantTrader_]

Liquidity Pools Indicator Explanation
This "Liquidity Pools" indicator by ValiantTrader is designed to help traders visualize potential areas of liquidity in the market. Here's how it works and how traders use it:

Core Functionality
Anchor Price: The indicator uses the opening price of each new bar as its anchor point (base reference price).

Liquidity Levels: It creates multiple price levels above and below this anchor price based on:

User-defined number of levels (default 24)

User-defined price range percentage (default 2%)

Liquidity Size Calculation: For each level, it calculates a "size" value (between 100-500) based on the distance from the anchor price.

How Traders Use It
Identifying Potential Support/Resistance: The horizontal lines mark price levels where liquidity might pool, which can act as support or resistance zones.

Order Placement: Traders may place limit orders near these levels anticipating price reactions.

Breakout Trading: When price breaks through multiple levels with conviction, it may signal a strong trend.

Mean Reversion: The indicator helps identify how far price has moved from its anchor point, which can be useful for mean-reversion strategies.

Size Interpretation: The numeric labels show relative "size" values - higher numbers indicate levels farther from anchor, potentially representing stronger liquidity zones.

Visualization
The indicator draws horizontal lines at each liquidity level

On the last bar, it displays numeric size values at each level

A table at the bottom right summarizes the levels and their sizes

Key Settings
Liquidity Levels: Controls how many levels to display (more levels show a wider price range)

Price Range: Determines how far apart the levels are spaced (percentage from anchor)

This tool is particularly useful for traders who incorporate liquidity concepts into their trading strategies, helping them visualize where resting orders might cluster in the market