Chapter 5
What is Liquidation Heatmap?
89-day liquidation map and tier system
What is Liquidation Heatmap?
Liquidation Heatmap is a map that visualizes at which price levels leveraged positions will be forcefully closed (liquidated). Cloud Craft analyzes 89-day historical liquidation data to show potential liquidation clusters on the map.
Liquidation levels act as price magnets: price tends to gravitate toward levels with large liquidation clusters because forced sell/buy orders are triggered at these levels, creating liquidity.
Liquidation levels act as price magnets: price tends to gravitate toward levels with large liquidation clusters because forced sell/buy orders are triggered at these levels, creating liquidity.
Why does Liquidation Heatmap matter?
- Liquidation cascades create the sharpest moves in the market: long liquidation = sharp drop, short liquidation = sharp rise
- Levels with large liquidation clusters act as magnets
- Because these levels contain high liquidity, a tendency for price to move toward these areas is observed
- Levels with large liquidation clusters act as magnets
- Because these levels contain high liquidity, a tendency for price to move toward these areas is observed
How does Liquidation Heatmap appear in the CloudCraft terminal?
The liquidation map is displayed with color density over the price chart. Dense red/orange areas represent large liquidation clusters, lighter colors represent less dense areas.
How to use Liquidation Heatmap?
Liquidation Magnet: Use the nearest large liquidation cluster level as a target. Price generally gravitates toward these levels.
Post-Liquidation Reversal: After a large liquidation cascade, a strong reversal can be expected once all forced orders are completed. Monitor order flow after the cascade.
Post-Liquidation Reversal: After a large liquidation cascade, a strong reversal can be expected once all forced orders are completed. Monitor order flow after the cascade.
Key points
The liquidation map is not an exact prediction of the future. As market conditions change, liquidation levels also change. Also, not all exchanges' liquidation data is public: displayed data is based on available sources.
Tier System
Cloud Craft divides liquidation levels into three tiers. Each tier represents a different leverage group and is shown with different line styles on the chart:
Tier | Line Style | Description
Tier 1 | Thin, dotted | Liquidation levels of low-leverage positions: more distant, triggered less frequently
Tier 2 | Medium thickness, dashed | Liquidation levels of medium-leverage positions: commonly seen liquidation zones
Tier 3 | Thick, solid | Liquidation levels of high-leverage positions: closest to price, most frequently triggered zones
You can toggle each tier on and off individually from terminal settings. Tier 3 levels are generally the most critical because high-leverage positions have the closest liquidation levels to price and cascade movements start there.
Tier | Line Style | Description
Tier 1 | Thin, dotted | Liquidation levels of low-leverage positions: more distant, triggered less frequently
Tier 2 | Medium thickness, dashed | Liquidation levels of medium-leverage positions: commonly seen liquidation zones
Tier 3 | Thick, solid | Liquidation levels of high-leverage positions: closest to price, most frequently triggered zones
You can toggle each tier on and off individually from terminal settings. Tier 3 levels are generally the most critical because high-leverage positions have the closest liquidation levels to price and cascade movements start there.
This content is for education and analysis only, not investment advice. Market tools offer probability and context, not certainty; the decision is the user responsibility.