The Absorption indicator, available on the Volbook platform, allows you to identify price areas where the market shows a strong ability to absorb buy or sell orders, indicating the presence of significant liquidity that can slow or temporarily halt price movement. Although absorption does not always cause a reversal, it provides important information about the availability of liquidity and possible market reactions in those areas.

INDICATOR

• Settings-of-Use
  • How-To-Set-Absorption
• What's an Absorption
• GENERAL
  • Max Tick
  • Max Number of Orders
  • Max MS
  • Vol. Min. Absorption

Settings-of-Use

How-To Set the Absorption Indicator

Clicking on the indicator settings icon will open its configuration window, within which you can make several choices regarding the indicator's functionality.

What is an Absorption

We note that, at a given price level, there are numerous sell orders. If several large buy orders are executed and the price still remains unchanged at that level, we could interpret this phenomenon as a possible absorption (absorption). This suggests that sellers are absorbing the buying pressure without allowing a rise. However, absorption does not necessarily imply price locking in: in some cases, after initial absorption, price may continue its movement. By analyzing DOM and Time & Sales, we can better understand the participation of traders and their potential influence on the market. On VolBook, the "Absorption" indicator directly shows these situations, making it easier to identify them on the chart. 

GENERAL

1. Tick Maximums

   Maximum number of ticks for which an absorption area is considered valid.

2. Max Number of Orders

   Max number of orders for the absorption calculation, this will determine the weight of the trader(s) involved in this market response.

3. Max MS

   Set the maximum duration in milliseconds for the detection of an absorption. The faster the absorption operation in the market, the more likely a significant response is at that price level.

4. Vol. Min. Absorption

   Set the minimum volume required to qualify an area as absorbed. This will allow minor absorptions to be filtered out and give importance only to absorptions of a given volume value. Low-volume settings can also be useful for high-frequency scalpers to search for small locations based on a few ticks of response.

VISUALIZATION SETTINGS

5. Display Mode

   It can be set to "Text," "Diamond," or "Square" to change the representation of absorption on the graph.

6. Color Ask

   Color to highlight ask (demand) side absorption.

7. Color Bid

   Color to highlight bid (supply) side absorption.

8. Marker-Thickness

   Defines the thickness of the absorption marker.

TEXT-SETTINGS

9. Enable Text

   Enable or disable the display of text associated with absorption.

10. Color Text

    Defines the color of the displayed text.

11. Size Text

    Adjusts the size of the text for display.