Volume Grid Heatmap [LuxAlgo]

The Volume Grid Heatmap indicator provides a two-dimensional visualization of volume distribution across both price and time, allowing traders to identify areas of high liquidity and intense trading activity within a specific lookback period.

By partitioning the historical price action into a customizable grid, this tool maps volume data onto specific price-time coordinates, using heatmap color gradients to highlight "hot zones" where the most significant market participation has occurred.

🔶 USAGE

The indicator is primarily used to identify institutional activity, support/resistance zones, and liquidity clusters that might not be visible on a standard volume histogram.

🔹 Identifying High Activity Zones
Brightly colored cells in the heatmap represent areas where a high volume of shares or contracts changed hands at a specific price during a specific time interval. These zones often act as significant magnets for future price action or areas where price may find temporary friction.

🔹 Volume Distribution
Unlike a standard Volume Profile which only shows volume by price, the Grid Heatmap shows how that volume was distributed over time. Users can see if a high-volume price level was formed by a single massive spike (a single bright cell) or by consistent trading over a longer duration (a horizontal row of highlighted cells).

🔶 DETAILS

The script operates by dividing the recent price range (Highest High to Lowest Low over the lookback period) into a user-defined number of rows and columns.

For every bar within the lookback:

• The script calculates the volume for that bar.
  
• It distributes that volume across the grid rows based on the price overlap of the bar's high and low relative to the grid cell boundaries.
  
• The volume is then aggregated into the corresponding time column.
  
• Finally, the grid is normalized against the maximum volume found in any single cell, and colors are applied using professional perceptually uniform colormaps.
  

🔶 SETTINGS

🔹 Grid Settings

• Lookback Bars: Determines the historical window of bars used to calculate the price range and volume data.
  
• Rows (Price): Defines the vertical resolution of the grid. More rows provide more precise price-level analysis.
  
• Columns (Time): Defines the horizontal resolution of the grid. More columns provide more precise timing of volume spikes.
  

🔹 Visuals

• Heatmap Theme: Selects the color palette used for the gradient (Viridis, Inferno, Magma, Plasma, Cividis, or Turbo).
  
• Transparency: Adjusts the visibility of the grid cells to ensure the underlying price action remains clear.