Shows actual liquidations on a per-candle basis by using the difference in volume between spot and futures markets.
i.e. volume on a futures market will be much higher if there are many liquidations.
Long liquidation data should in theory be more accurate than short liquidation data due to the inability to short on a spot market.
This indicator should be able to help identify trends by determining liquidation points in the chart.
Release Notes
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- Script now removes any negative values, these values are not relevant to the indicators purpose - Added an option to remove below average values to help indentify high points on the histogram - Added options to plot both market volumes seperately
niceee, does it work with other markets besides crypto, fx stocks? thanks
XanaDuckX
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Thank You, maybe as a noob I'll need much more detailed explanation / more example to be able to understand & use it. I Must improve a lot.
Kao_5MIN
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Thanks for share you’re genius ✨
tartigradia
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Awesome ingenious idea and indicator, it seems to work very well in practice despite being an approximation, thanks a lot for sharing, and under open-source as a cherry on the top!
cooney_s
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I love your concepts! Thanks for sharing! Please keep posting!
Sorry if this is a silly question, but how might one interpret negative histogram bars relevant to liquidation? For example, a large green candle, accompanied by a large green negative histogram bar.
Thomas_Davison
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@thereisnospoononlyzuul, No question is silly :) The indicator above doesn't show any negative histogram bars. All of them are positive because within a candle, not ALL of the liquidations occuring will be either long or short. The colour of the bar is set by the colour of the candle it is linked with and thus is a suggestion as to either majority 'long' liquidations, or majority 'short' liquidations in that time period.
A large green histogram bar would indicate that there have been many liquidations during that period, and that most likely the majority of them would have been 'short' positions by traders. By contrast, a large red histogram bar indicates the same but with 'long' positions by traders.
Another example which you will see is when the market is moving in a 'trading channel' for a period of time, followed by a 'break out' to the upside. You will see that traders who have been going 'short' during that time period and are still holding their positions waiting for price to drop will be liquidated when price moves out of the zone. This is reflected with a large green histogram bar.
Personally, its not the histogram colours that are important for me, but the values of the large bars can be helpful to determine possible false moves.
EDIT: another thought to add - the best use is not when there are large liquidations with a large candle, but large liquidations with a small/stop hunt candle would indicate a reversal as you can see @ "19:00 26 Jan 22" on the chart above.
thereisnospoononlyzuul
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@Thomas_Davison, thanks very much for the explanation of how to interpret and use the readings of your indicator. I think I’m implementing it incorrectly then if there are not supposed to be negative bars. I applied it to the Sandusd chart and changed the settings to account for this. However, there are instances of bars extending below zero on the histogram.
Thomas_Davison
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@thereisnospoononlyzuul, okay, can you send me the ticker symbols you used for spot and futures markets? It may be the case as i have only tested with major coins which show no negative bars. I may have to make an adjustment to the script :)