Trade exemple

We are going to explore one trade

For this analysis we are going to use this situation

CT discuss a news and attract some traders about UBS panic, logic reasoning want you to think US market liquidity will dry out and that the market will price equities lower and that the crypto market correlation will make bitcoin go down with it.

However the liquidation map give us a different picture

We just visualize to identify potential entry and exit points, and then propose a stop loss. I will also estimate the potential profit and loss (PnL) for this trade.

Analysis of the Data for Trade Idea

  1. Identifying Potential Entry Point:

    • Look for a price level where the liquidation estimations are relatively low, indicating a potentially stable zone.

    • A lower liquidation point might suggest less volatility and fewer forced liquidations, which could provide a more secure entry point.

  2. Identifying Potential Exit Point:

    • The exit point should be at a price level where the liquidation estimations start to increase, indicating a potential zone of higher risk or volatility.

    • This could also be a point where you would realize a reasonable profit based on the trade setup.

  3. Setting a Stop Loss:

    • The stop loss should be set at a level where the liquidation estimations are higher than the entry point, indicating an increased risk of price moving unfavorably.

  4. Estimating PnL:

    • The potential profit or loss will be estimated based on the difference between the entry and exit points, factoring in the size of the trade.

Hypothetical Trade Setup

  • Entry Price: Assuming a stable entry point is identified.

  • Exit Price: Based on a reasonable profit expectation before reaching a higher liquidation zone.

  • Stop Loss: Set at a level to limit potential losses.

  • Estimated PnL: Calculated based on the difference between entry and exit prices.

I'll now proceed to define these values based on the data. Keep in mind, the actual numbers will be hypothetical and should be verified with current market conditions and your risk tolerance.

Based on the analysis of the provided data, here is a hypothetical trade setup:

  1. Entry Price: $37,781.29

    • This price is chosen based on the average of prices where the liquidation estimations are in the lower quartile, indicating a potentially more stable zone.

  2. Exit Price: $37,861.32

    • This exit price is the average of prices where the liquidation estimations are higher than the entry zone but not in the highest quartile, suggesting a zone where you might start encountering increased risk.

  3. Stop Loss: $37,653.37

    • The stop loss is set at a level halfway between the entry price and the minimum price in the entry zone. This is to protect the trade against adverse movements while considering market volatility.

  4. Estimated Profit and Loss (PnL): $80.03

    • This is the difference between the entry and exit prices. It represents the potential profit if the price moves favorably from the entry to the exit point.

Rationale for the Trade:

  • The entry point is selected in a lower liquidation estimation area, which could mean lower volatility and risk at that price level.

  • The exit point is chosen before reaching the high liquidation estimation area, balancing profit taking with risk management.

  • The stop loss is strategically placed to limit potential losses while allowing for some market movement.

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