Liquidation Level Screener

The Liquidation Level Screener indicator maps out potential market liquidation zones by aggregating open interest data from multiple leading exchanges. It provides traders with a multi-tiered visualization of where significant forced position closures might occur, offering a unique perspective on market liquidity and leverage dynamics.

Usage

The tool is designed to highlight specific price levels where traders using various leverage amounts (5x, 10x, 25x, 50x, 100x) are likely to be liquidated.

• Liquidation Levels: When the Open Interest (OI) delta exceeds a specific threshold, the script plots horizontal lines representing estimated liquidation prices. Higher levels (Level 3) represent larger surges in positions and are plotted with thicker lines.
• Leverage Tiers: The levels are color-coded by leverage. For example, the 100x leverage level is much closer to the entry price than the 5x level.
• Histogram: The right-side histogram visualizes the density of active liquidation levels. Areas with a high concentration of levels indicate potential "liquidity pockets" that the market may gravitate toward.
• OI Parameters: Users can toggle a display to monitor the underlying Open Interest delta values and thresholds, helping to identify when volatility or position-opening activity is spiking.

Details

The script functions by pulling data via request.security from major exchanges such as Binance, Bitmex, Kraken, and Bitfinex. By summing the Open Interest changes across these platforms, it creates a "global" view of market commitment.

The indicator uses a Moving Average (MA) of the Open Interest delta to establish a baseline. When the current delta significantly exceeds this MA (based on user-defined multipliers like 1.8, 2.2, or 3.4), it identifies a "liquidation event" and projects the potential liquidation prices based on the asset price at that moment.

Settings

Plotting Parameters

• Show lines: Toggles the visibility of the projected liquidation levels on the chart.
• Show histogram: Enables or disables the right-side density histogram.
• Show Liquidations Level 1/2/3: Filters which tiers of liquidation events are displayed based on their magnitude.

Moving average

• Length: The lookback period used to calculate the baseline Open Interest delta.
• Type: Selection of various MA types (VWMA, SMA, EMA, etc.) for smoothing the OI data.

Histogram settings

• Number of histograms (density): Controls the vertical resolution of the histogram.
• Number of bars to lookback: Determines the historical range of levels included in the histogram calculation.
• Histogram distance from last candle: Offsets the histogram to the right of the price action.

Line settings

• Number of lines to plot: Limits the total number of lines visible to manage chart performance.
• Large/Middle/Small Liquidation Level: Multipliers that define the threshold for Level 3, 2, and 1 events respectively.

FAQ

How do I interpret the different line colors? Each color represents a different leverage amount. Typically, the levels closest to the price at the time of the event represent 100x leverage, while the furthest levels represent 5x leverage.

Why are some lines thicker than others? The thickness corresponds to the magnitude of the Open Interest surge. "Level 3" events involve the highest concentration of opened positions and are shown with the thickest lines.

How can I access this tool? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.