Liquidation Estimates (Real-Time)
Oct 31, 2023
The Liquidation Estimates (Real-Time) indicator is a powerful tool for traders, providing insights into real-time long and short liquidations across all timeframes. By understanding this process, where a trader's position is forcibly closed, users can gain valuable insights into market sentiment, potential support and resistance levels, trend reversals, and make informed decisions on entry and exit points.
How to Trade with Liquidation Estimates Indicator
Liquidation is a crucial concept in trading, referring to the closure of a trader's position when their margin account no longer meets the requirements due to significant losses. The indicator identifies both long and short liquidations, marked by different colored bars, which give traders a visual representation of market movements.
Green bars indicate long liquidations; these occur when there is a sudden decrease in the asset's price, affecting those who held bullish visions. Conversely, red bars highlight when short positions are liquidated due to a sudden price increase, impacting bearish traders. Recognizing these patterns can inform traders about potential trend reversals.
Analyzing Liquidation Dominance
Dominance Analysis
Liquidation dominance is showcased by the difference between long and short liquidations, thus highlighting which side holds the market majority.
Understanding Total Liquidations
Total liquidations represent the sum of short and long liquidations, providing a consolidated view of the current trading conditions.
Assessing Cumulative Liquidations
Cumulative liquidations reflect the ongoing accumulation of the differences between short and long liquidations, helping traders confirm and gauge the trend's strength and direction.
Critical Insights
This indicator is designed with the limitation that TradingView's platform does not provide direct liquidation data. By analyzing trading volumes and underlying price movements, it gives a well-researched estimate of liquidation scenarios.
The visual accuracy of the script's default outputs has been cross-verified with charts from coinglass.com, ensuring its reliability.
Configuring the Indicator Settings
Liquidations Input Parameters
- Mode: This option defines the visual representation of the liquidations chart as described in the tooltip.
- Longs Reference Price: Base price for calculating long liquidations.
- Shorts Reference Price: Base price for determining short liquidations.
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FAQ
How to access the Liquidation Estimates (Real-Time) indicator?
You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.
What is the main benefit of using liquidation data in trading?
It helps in identifying market sentiment and potential reversals, which is crucial for strategic entry and exit decisions.
Can the indicator be used across different timeframes?
Yes, the Liquidation Estimates indicator is versatile and applicable to all trading timeframes, offering real-time analysis.
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