Smart Money Concepts Probability (Expo)

30 mar 2023

█ Overview
The Smart Money Concept Probability (Expo) is an indicator developed to track the actions of institutional investors, commonly known as "smart money." This tool calculates the likelihood of smart money being actively engaged in buying or selling within the market, referred to as the "smart money order flow."

The indicator measures the probability of three key events: Change of Character (CHoCH), Shift in Market Structure (SMS), and Break of Structure (BMS). These probabilities are displayed as percentages alongside their respective levels, providing a straightforward and immediate understanding of the likelihood of smart money order flow.

Finally, the backtested results are shown in a table, which gives traders an understanding of the historical performance of the current order flow direction.

█ Calculations
The algorithm individually computes the likelihood of the events (CHoCH, SMS, and BMS). A positive score is assigned for events where the price successfully breaks through the level with the highest probability, and a negative score when the price fails to do so. By doing so, the algorithm determines the probability of each event occurring and calculates the total profitability derived from all the events.

█ Example
In this case, we have an 85% probability that the price will break above the upper range and make a new Break Of Structure and only a 16.36% probability that the price will break below the lower range and make a Change Of Character.


█ Settings

• The Structure Period sets the pivot period to use when calculating the market structure.
  
• The Structure Response sets how responsive the market structure should be. A low value returns a more responsive structure. A high value returns a less responsive structure.
  
  

█ How to use
This indicator is a perfect tool for anyone that wants to understand the probability of a Change of Character (CHoCH), Shift in Market Structure (SMS), and Break of Structure (BMS)
The insights provided by this tool help traders gain an understanding of the smart money order flow direction, which can be used to determine the market trend.


█ Any Alert function call
An alert is sent when the price breaks the upper or lower range, and you can select what should be included in the alert. You can enable the following options:

• Ticker ID
  
• Timeframe
  
• Probability percentage
  

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Disclaimer

The information contained in my Scripts/Indicators/Ideas/Algos/Systems does not constitute financial advice or a solicitation to buy or sell any securities of any type. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.

All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on an evaluation of their financial circumstances, investment objectives, risk tolerance, and liquidity needs.

My Scripts/Indicators/Ideas/Algos/Systems are only for educational purposes!