SLSI – Simple Liquidity Sweep Index

What Makes SLSI Unique?

The Simple Liquidity Sweep Index detects institutional liquidity grabs by identifying when price sweeps beyond key levels only to reverse direction. It uses ATR-based thresholds that adapt to volatility and requires confirmation bars to reduce false signals, helping traders catch smart money moves.

How SLSI Works

Institutional players often “sweep” liquidity by pushing price beyond support/resistance to trigger retail stops before reversing. The SLSI detects these patterns by finding local highs/lows over a specified period, calculating dynamic thresholds using ATR, then identifying when price exceeds these levels but closes back inside with proper confirmation.

Detection Logic:

• Bullish Sweep (+1): Price drops below local low by threshold amount but closes back above
• Bearish Sweep (-1): Price rises above local high by threshold amount but closes back below
• No Sweep (0): Normal price action within expected ranges

Parameters & Configurations

Period (Default: 10) – Lookback for local highs/lows. Range: 2-500.

Threshold (Default: 0.5) – ATR multiplier for minimum sweep distance. Range: 0.1-5.0.

ConfirmationBars (Default: 2) – Bars needed to validate sweep. Range: 1-50.

Presets:

• Aggressive: Period=10, Threshold=0.5, ConfirmationBars=2
• Balanced: Period=20, Threshold=0.3, ConfirmationBars=2
• Conservative: Period=30, Threshold=0.2, ConfirmationBars=3

Trading Applications

Use SLSI to identify stop hunt reversals at key support/resistance levels, detect false breakouts, and find trend continuation entries during pullbacks. The indicator works best when aligned with higher timeframe trends and confirmed by volume spikes.

For optimal results, combine SLSI signals with price action analysis, use appropriate parameters for your timeframe (shorter periods for intraday, longer for daily/weekly), and always implement proper risk management with stops beyond swept levels.

Conclusion

The Simple Liquidity Sweep Index helps traders identify institutional liquidity events and position alongside smart money. Its ATR-based volatility adaptation and confirmation requirements make it effective for detecting high-probability reversal setups at key market structure levels.

Use SLSI as part of a comprehensive strategy with proper risk management and thorough backtesting. The indicator works best when combined with market structure understanding, volume analysis, and multiple timeframe confirmation.

Indicator Availability:
This indicator is implemented for MT4, MT5, TradeStation, and MultiCharts.

Using Custom Blocks for Conditions:
You can easily define your own conditions in StrategyQuant X using Custom Blocks. This allows you to set up parameters such as periods or steps to fine-tune the indicator to your strategy. For more detailed information, refer to the following resources:

• StrategyQuant Documentation: Custom Blocks

• StrategyQuant Documentation: Strategy Templates & Custom Blocks

• StrategyQuant YouTube Tutorial: Custom Blocks Overview

Importing Custom Indicators into SQX:
To import custom indicators into StrategyQuant X, follow the step-by-step instructions provided here:
Import & Export Custom Indicators and Other Snippets