Liquidation Heatmap: Analyzes price levels where large-scale liquidation events may occur and provides signals on the chart based on the concentration of these levels.

A liquidation event happens when a trader’s positions are closed due to insufficient margin or account balance. To prevent further losses for both traders and exchanges, most exchanges offer a liquidation level.

These levels represent the price areas where leveraged positions will be closed or liquidated.

Traders who can view liquidation levels on the heatmap may gain an advantage similar to understanding high liquidity in the order book.


How traders can use it:

The liquidation heatmap allows traders to identify areas of high liquidity, which can be helpful in various ways:

Magnet Zone: A concentration of potential liquidation levels within a specific price range may indicate that the price is likely to move toward that area. Some traders use these liquidation levels to gauge the potential direction of price movement and combine them with other indicators for additional signals.

Support/Resistance Zone: In high liquidation areas, larger traders or "whales" may execute trades quickly at favorable prices. When they enter or exit orders within this liquidity, the price may reverse.
Additionally, liquidation levels can exert significant pressure on either the buy or sell side of the order book, causing a natural price reversal.