Institutional Activity Index [AlgoAlpha]

10 maj

🌟 Introducing the Institutional Activity Index by AlgoAlpha 🌟

Welcome to a powerful new indicator designed to gauge institutional trading activity! This cutting-edge tool combines volume analysis with price movement to derive a unique index that shines a spotlight on potential institutional moves in the market. 🎯📈

Key Features:

• 🔍 Normalization Period: Adjust the look-back period for normalization to tailor the sensitivity to your trading strategy.
  
• 📊 Moving Average Types: Choose from SMA, HMA, EMA, RMA, WMA, or VWMA to smooth the index and pinpoint trends.
  
• 🌈 Color-Coded Trends: Instant visual feedback on index trend direction with customizable up and down colors.
  
• 🔔 Alerts: Set alerts for when the index shows increasing activity, decreasing activity, or has reached a peak.
  

Quick Guide to Using the Institutional Activity Index:

1. 📝 Add the Indicator: Add the indicator to favorites. Adjust the normalization period, MA type, and peak detection settings to match your trading style.


2. 📈 Market Analysis: Similar to volume that reflects the amount of collective trading activity, this index reflects an estimate of the amount of trading activity by institutions. A higher value means that institutions are trading the asset more, this can mean selling or buying as the indicator does not indicate direction. Look out for peak signals, which may indicate that institutions have already secured positions in preparation for a move in price.


3. 🔔 Set Alerts: Enable alerts to notify you when there is a significant change in the activity levels or a new peak is detected, allowing for timely decisions without constant monitoring.


How It Works: 🛠
It is common knowledge that institutions trade with high amounts of capital, but employ tactics so as to not move the price significantly when entering on positions. This can be done by entering in times of high liquidity so that when an institution buys, there are enough sellers to cancel out the price movements and prevent a huge pump in price and vice versa. The Institutional Activity Index calculates liquidity by measuring the volume relative to the price range (close-open). This value is smoothed using median and a user defined moving average type and period, enhancing its clarity. If normalization is enabled, the index is adjusted relative to its range over a user-defined period, making the data comparable across different conditions.

Embrace this innovative tool to enhance your trading insights and strategies! 🚀✨