Harmony Oscillator
Trendmaster - Liquidations is a Crypto Specific Indicator that shows liquidation levels depending on the leverage of positions entered within a certain period.
A liquidation level is expressed as a percentage value of the assets in a trader's margin account. If a Crypto trader's positions go against them, their account will eventually reach the liquidation level, unless the trader injects additional funds. Another name for liquidation level is liquidation margin.
These levels become exacerbated by high leverage. High leverage such as 100x or 50x traders has a high probability of being liquidated within intraday trading. The lower the trader's leverage can decrease the probability of liquidations.
This means that using the Liquidations Indicator, users can see other traders’ liquidation levels based on several periods. The liquidation levels shown by the Indicator are 100x, 50x, 20x, 10x, 5x, 3x, and 2x in the periods Daily, Weekly, Monthly, and Yearly.
This means that within a certain period users can see the liquidation positions of other traders at all of those periods and use that information to predict price movements and reversal points.
Liquidations Functions and Settings
- Name
Liquidation Data- Type
- mode
- Description
Liquidation data can be plotted as horizontal lines on the chart or as moving bands that coincide with the movement of Price Action.
- Levels: This is the default setting for the Liquidations Indicator, it shows the liquidation levels as plotted lines on the chart and is shown for each timeframe selected.
- Bands: This shows a moving average of the liquidation levels as it coincides with the current Price Action.
The Liquidation Levels are effective at showing higher timeframe movement of Price Action as other traders' positions are liquidated from high leverage to low leverage The Liquidation Bands are effective at showing lower timeframe movement of Price Action as liquidation levels are constantly recalculated to the movement of price.
- Name
Timeframe Settings- Type
- mode
- Description
This tickable function show allows the user to choose which timeframes of liquidation data they wish to plot on their chart. This timeframe option only affects the Liquidation Levels and not the Liquidation Bands.
- Daily: Default on, plots Daily liquidation levels.
- Weekly: Default on, plots Weekly liquidation levels.
- Monthly: Default on, plots Monthly liquidation levels.
- Yearly: Default on, plots Yearly liquidation levels.
For intraday/week traders we recommend focusing on lower timeframe liquidations such as the Daily and Weekly For higher-timeframe traders and investors, we recommend looking at the Monthly and Yearly levels as a general reference for price movement.
- Name
Leverage Liquidation Settings- Type
- mode
- Description
- 100x Leverage: Default Orange color, can be changed.
- 50x Leverage: Default Yellow color, can be changed.
- 20x Leverage: Default Teal color, can be changed.
- 10x Leverage: Default Teal color, can be changed.
- 5x Leverage: Default Blue color, can be changed.
- 3x Leverage: Default Dark Blue color, can be changed.
- 2x Leverage: Default Purple color, can be changed.
This allows the user to choose between showing only Long Trades or Short Trades and is the default.
The color change options are default Orange but can be changed to any color the trader wishes to utilize
The Style option allows the user to choose between Solid, Dotted, or Dashed Lines to show the timeframe of liquidation levels
- Name
Style- Type
- style
- Description
Allows the user to choose between Solid, Dotted, or Dashed Lines to show the timeframe of liquidation levels.
Examples of Liquidations Use
Being able to see other traders' liquidation levels gives the user a “Bird’s Eye” view of the market.
These levels are aggregated across several high-volume exchanges to show the average liquidation level of those leverage positions for that Crypto trading pair.
One of the most effective methods for using the Liquidations Indicator is to focus on the 100x and 50x liquidations. These have a very high probability of being liquidated within an intraday period of trade and are suitable for low timeframe trading. Combining 100x and 50x liquidations with other Key Levels, users can see the potential targets for market makers to push the price to grab that liquidity from those traders. These can also be suitable reversal points or profit targets if the user is already in a trade.
- Another example of using liquidations is looking at “Liquidity Zones”. Liquidity Zones are areas with several liquidations stacked on top of each other. The more liquidations build up in the zone the higher the probability of a volatile move that results in the breaking of these zones.
- An example of how the breaking of these Liquidity Zones works is if a trader takes a Long position of $100 at 100x Leverage resulting in the actual position size of $10,000. This is a very high leverage position that also incurs very high risk. Say price reverses and triggers this trader's liquidation position, this causes the exchange/broker that is being used to “market exit” that position. The exchange will always protect its assets as it is in a sense “loaning” that trader $9,900 to take the position. The only way to exit a Long position is to Sell which has the same effect as taking a short position in the equal amount of the original long position, which in this case is $10,000. This means that as more liquidations stack in a “Liquidity Zone” it increases the probability of high volatility moving into that zone as many positions are liquidated. This causes a market phenomenon we refer to as “Cascading Liquidations” where many positions are liquidated forcing price into other liquidations that also in turn become liquidated. This is the catalyst for every extreme Pump or Dump that is experienced within the Crypto market and even any other margin-traded market.