Crypto Liquidation Heatmap
Apr 23, 2024
The Crypto Liquidation Heatmap is a powerful tool designed to provide traders with real-time insights into the liquidations of leading cryptocurrencies by market capitalization. By presenting this data in a visually accessible format, traders can easily grasp the current market condition and make informed trading decisions. Cryptocurrencies are organized in descending order based on liquidation values, with those experiencing higher rates of liquidation prominently displayed at the top.
Colored boxes represent these assets, where you can hover to see a detailed breakdown of long and short liquidation values, and up-to-date pricing information.
How to Utilize the Crypto Liquidation Heatmap Effectively?
The Crypto Liquidation Heatmap provides invaluable, real-time insights spanning all timeframes for the top 29 cryptocurrencies by market capitalization. In this heatmap, cryptocurrencies are visually represented in descending order, with assets showing the highest liquidation values prominently highlighted at the top.
Color coding is utilized to signify whether long or short liquidations are prevailing for each asset. Green boxes denote a higher number of long liquidations compared to short ones, while red indicates short liquidations are more predominant. By simply hovering over any box, additional information comes into view, such as current asset prices, a detailed breakdown of long and short liquidation values, and the timeframe for these liquidations.
Understanding the Concept of Crypto Liquidation
What is Crypto Liquidation?
In the crypto market, liquidation is the act of forcefully closing a trader's positions. This often happens when a trader's account cannot support their trading positions due to incurring significant losses or insufficient margin to meet necessary maintenance requirements. Liquidations are categorized as long or short, depending on the type of position closed.
Long vs. Short Liquidation
- Long Liquidation: Occurs when traders have opened long positions anticipating price increases, but the asset's price drops sharply, causing forced closure of these positions.
- Short Liquidation: Happens when traders engage in short selling believing the asset's price will fall, only to see it spike, compelling an involuntary closing of these positions.
Interpreting Liquidation Data
Complete liquidation data is not readily available on platforms like TradingView. Instead, there is a strong relationship between liquidation data, trading volumes, and price movements, which this tool analyzes to offer precise estimations. Users should interpret these trends and correlations rather than depend solely on exact liquidations figures.
Adjusting Your Settings for Optimal Usage
Customizing the Cryptocurrency Asset List
To ensure accurate readings, it's vital to select instruments from the same exchange and using the same currency type, as trading volumes may differ significantly across platforms. Acceptable currencies include USD, USDT, USDC, USDP, and USDD. Selecting uniform currency types for all assets is essential for reliable data.
- Crypto Asset Options: By default, this tool showcases the top 29 cryptocurrencies by market cap as listed on the Binance Exchange. Remember, this tool only processes crypto assets; other types are unsupported.
Configuring the Liquidation Heatmap
- Position: Decide where the heatmap will appear on your chart.
- Size: Adjust the dimensions of the heatmap for better visibility.
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FAQ
How can I access the Crypto Liquidation Heatmap?
You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.
What is the importance of using the same currency when selecting assets?
Using the same currency ensures consistency and accuracy, preventing discrepancies in trading volume assessments across different exchanges.
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