The indicator works as following:
- The underlying assumption (as with all liquidation calculations) obviously is that traders used fixed margin or go "all in" on their cross-margin account.
- You then can configure a minimum trade and a minimum price change in percent for a candle to start computing liquidation levels from that candle
- Additionally: configure the price base for the liqudation level: Candle high or low (default) works well, but you can also set "candle close" or "median high/low"
- The indicator will then plot horizontal lines on the main chart showing price levels where many positions opened at the configured "start candle" will likely get liquidated.
It works for all BitMEX contracts and while it has been optimized for BitMEX, it will work on other exchanges with the same leverage levels ( 25x , 50x, 100x) and maintenance margin requirements too.
This indicator uses the Smart indicator to compute the at the "start candle" setting where the liquidation level starts. This indicator can be found here: Smart Volume: