Liquidity : 𧡠Full Guide
Here's what's covered :
β’ Meaning of Liquidity
β’ Liquidations
β’ Tracking liquidity
β’Β Stop Hunting
β’Β Pivot Gaps
β’ Psychological Effectiveness
β’ Meaning of Liquidity
β’ Liquidations
β’ Tracking liquidity
β’Β Stop Hunting
β’Β Pivot Gaps
β’ Psychological Effectiveness
Meaning of Liquidity :
Liquidity refers to how easy an asset is to buy and sell from a market.
In trading, areas of high liquidity refer to lots of passive orders in an order book.
Low liquidity environments refers to thin order books and often leads to slippage of positions.
Liquidity refers to how easy an asset is to buy and sell from a market.
In trading, areas of high liquidity refer to lots of passive orders in an order book.
Low liquidity environments refers to thin order books and often leads to slippage of positions.
Liquidations :
Occur when there is no longer enough margin to cover for the size of loss of a position, so the exchange force closes your position.
Leverage sizes effect volume of liquidations as means positions require less movement to get liquidated.
Exocharts Ex:
Occur when there is no longer enough margin to cover for the size of loss of a position, so the exchange force closes your position.
Leverage sizes effect volume of liquidations as means positions require less movement to get liquidated.
Exocharts Ex:
Tracking Liquidity :
Tools such as heat maps are one way of finding areas of high or low liquidity.
They do this by calculating zones where positions become liquidated based off factors of the...exchange, leverage and position size used.
CoinAnk.com Example:
Tools such as heat maps are one way of finding areas of high or low liquidity.
They do this by calculating zones where positions become liquidated based off factors of the...exchange, leverage and position size used.
CoinAnk.com Example:
Stop Hunting :
Price may be drawn to areas of high liquidity in order for larger institutional trades to enter into large positions.
Larger positions are filled at lower spread if they know there will be an increased demand for their order to become filled, reducing costs.
Ex:
Price may be drawn to areas of high liquidity in order for larger institutional trades to enter into large positions.
Larger positions are filled at lower spread if they know there will be an increased demand for their order to become filled, reducing costs.
Ex:
Pivot Gaps :
This is when price has a series of lows or highs compiled closely, then separated by a break before seeing the next pivot high/low.
The last high or last low before a gap in pivots, can act as key support and resistance levels, especially if the level is SFP'd.
This is when price has a series of lows or highs compiled closely, then separated by a break before seeing the next pivot high/low.
The last high or last low before a gap in pivots, can act as key support and resistance levels, especially if the level is SFP'd.
Psychological effectiveness:
Faster price movement into stop hunt areas leads to panicked closing positions.
Longer accumulation periods following a trend, increase stop-outs as more one-sided positions accumulate stronger.
Faster price movement into stop hunt areas leads to panicked closing positions.
Longer accumulation periods following a trend, increase stop-outs as more one-sided positions accumulate stronger.
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As always, stay smart. Trade Safe.
Exotick.
As always, stay smart. Trade Safe.
Exotick.
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