Liquidity Compression MT4
- Indicators
- Vincent Jose Proenca
- Version: 1.0
- Activations: 5
Institutional Liquidity Compression Indicator
This indicator measures real-time liquidity tightening using the normalized width of Bollinger Bands, trading volume, and average spread to identify compression phases preceding price breakouts.
Display:
Professional-style separate window with a histogram showing the “Compression Score” and a threshold line.
Key Features
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Early Detection: Identifies contraction zones before major price impulses.
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Multi-Factor Measurement: Combines normalized Bollinger Band width, volume, and average spread.
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Real-Time Calculation: Updates on every tick for the current bar.
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Clear Visualization: “Compression” histogram with a dotted “Threshold” line.
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Compatibility: Fully functional MT4 and MT5 versions.
How to Use
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Attach the indicator to the target instrument’s chart.
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Adjust the threshold and weighting parameters according to volatility and trading session.
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Interpretation: A high score indicates a liquidity compression phase. Monitor price action for a potential breakout.
Parameters
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BB_Period / BB_Dev: Bollinger Bands width calculation.
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Norm_Period: Normalization window for recent volatility regime.
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Vol_Period: Normalization window for tick volume.
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Spr_Period: Normalization window for average spread (historical spread in MT5, instant proxy in MT4).
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Weight_Width / Weight_Volume / Weight_Spread: Weights of each factor in the overall score.
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Smooth_Period: Smoothing period for the final score.
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Threshold: Reference level (displayed as a dotted line).
Best Practices
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Adjust periods according to the asset type (FX, indices, crypto).
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Combine with a directional or contextual filter (market structure, support/resistance levels).
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Watch for volatility expansion following compression to confirm trade setups.

Thank you for a great product. Your efforts and achievements are evident. I'm convinced this is a true indicator of liquidity. What I've noticed: when a new candle opens, liquidity increases, as some traders open and close orders at the opening of a new candle. Look at the stock chart – every day, the last candle before the close. Liquidity increases. This also makes sense: carrying an order over to the next day is dangerous, and many traders close their positions.