Quantitative analysis is the power that allows you to look beyond surface prices and traditional Japanese candlesticks. This power comes from using modern data and tools that reveal deeper details, such as liquidation maps, heatmaps, and futures and perpetual data. Hereâs how these tools can help you:
1.A Heatmap Filter: Identify high leverage locations and market maker actions đ”ïžââïž
đ What is Heatmap Filtering?
This tool shows you where traders are using high leverage, and therefore more likely to be liquidated if the price moves suddenly.
As you can see in the first image, we can see that there are high liquidation levels at certain price points, such as $60,152. These are the points that market makers target, because they know that most traders use high leverage in these areas.
đš Why is it important?
When you know where large concentrations of highly leveraged traders are located, you can expect that market makers will try to push prices towards those levels to liquidate traders and create large volatility.
How can you act?
- If you are a trader, you can avoid these traps by staying away from obvious liquidation levels, or even taking advantage of them by entering the market after the liquidation has occurred to take advantage of the expected price movement.
strategy:
â Wait for the big liquidation moment: When you see that the price is approaching a big liquidation level, you can plan to enter a trade after the liquidation occurs, as the market often reverses direction after the liquidation.
2.B Leverage Map: Leverage Map and Liquidation Risk đ
đ ïž What is Leverage Map?
The leverage map, as in the second image, shows you the amounts of leverage used on major platforms such as Binance.
Analysis: The more traders use high leverage, the riskier the market becomes. Why? Because if the price moves against their expectations, a mass liquidation may occur.
đš What do I learn from this?
1. Risk perception: If the market is full of high leverage, it means that a small price movement can cause huge fluctuations due to liquidations.
2. Make wise decisions: If you notice that most traders use high leverage, you can be careful and reduce your risks, because the market may witness a sudden movement.
strategy:
â Avoid high risks: When you see that the market is full of high leverages, it is better to reduce your risks, especially if you are trading with leverage as well.
3. Heatmap Perpetual vs. Futures: The Difference Between Markets and Where the Money Is Going đ°
đ§ Accurate analysis of perpetual and futures contracts:
As shown in the third image, we can see how the movement of perpetual contracts differs from futures contracts.
This tool allows you to compare the positions of traders in these two types of contracts, helping you understand the large money flows and where market makers are placing their bets.
đš Why is it important?
1. Comparing Markets: When you see a significant difference between perpetual and futures contracts, it can indicate potential changes in market direction.
2. Identify reversal opportunities: If the futures market indicates more optimistic or pessimistic conditions than perpetual contracts, you can anticipate price movement based on that.
strategy:
â Comparative Analysis: Monitor the differences between the two markets and take advantage of opportunities that arise based on price or forecast differences. Market makers often use these differences to take advantage of price gaps.
4. Why is data key to your protection and increased accuracy? đđ
đ Using quantitative analysis:
Quantitative analysis relies on big data to provide accurate insights into the market. Instead of trading based on sentiment or news alone, you can use these tools to get a clearer picture of the market.
đš Main benefits:
1. Accurately identify entry and exit points: Filter charts help you see ideal entry and exit levels based on market makersâ behavior.
2. Reduce Risk: When you see data that shows the use of high leverage, you can make a decision to reduce your risk.
3. Know where the market is going: Comparing perpetual and futures contracts gives you an idea of ââwhere market makers are going and where they are putting their money.
đ ïž Important notice:
Mastering quantitative analysis is no longer just an added bonus, it has become a must-have for anyone looking to survive in the volatile crypto markets. It is the right arm of fundamental and technical analysis, and the difference it makes can be the difference between profit and loss.
a summary:
With these tools, you can transform the way you see the market. Data is your best friend, helping you protect your money and increase your decision-making accuracy.
Remember, market makers are data-driven, so why not use the same tools to stay ahead of the trading curve? đ
Did you learn something new today? Share this thread with your friends so they can also benefit from the power of quantitative analysis in the world of trading. đ
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