The

[Grim @grimy_trades]

Midwit cope season is here

[The @Mmnt92]

تذكير خفيف لطيف

[Hsaka @HsakaTrades]

@theirish_man we lost another one on this breakout sadly

[Cred @CryptoCred]

Open Interest & Liquidations

Open Interest

Open interest (OI) refers to the sum total of all open positions in a contract.

Important: For every buyer there is a seller/for every seller there is a buyer, so OI is always comprised of 50% longs and 50% shorts.

OI increases/decreases based on net open positioning.

When you see price up + OI up you might infer that "there are more longs than shorts", but technically the ratio is always 50/50 (a buyer for every seller/vice versa).

The more appropriate inference is that buyers are more aggressive than sellers and market participants are increasing their net positioning - and even that comes with caveats and nuances.

When OI increases, we can infer that on net balance, market participants are increasing their positioning.

When OI decreases, we can infer that on net balance, market participants are decreasing their net positioning.

From a trading perspective, it's usually best to view OI in the context of some of the other tools we'll discuss in order to have a better idea of what type of participation is responsible for the OI increase/decrease.

Some general, back of napkin places to look for ideas:

i) Large OI increases through a breakout level
ii) Large OI increases X days/weeks ahead of [news/event]
iii) Large OI increases into key S/R
iv) Large OI decreases on dumps into support/pumps into resistance
v) Divergences: Large increases in OI after impulsive price move without any follow through in price
vi) Daily outlier increases/decreases in OI (more for trading watchlists)

Liquidations

Liquidations occur when the trading venue forcibly closes your position when you fall below the required maintenance margin for your position(s).

With the preceding OI context, we can infer that liquidations typically - but not always - reduce OI as closing trades decreases net positioning in a contract.

There are obvious exceptions to this, in particular instances where a lot of OI is added on a breakout/breakdown which pushes the other side of the market offside - e.g. OI increase in breakout candle + additional OI increase from breakout traders chasing > OI decrease from shorts getting liquidated.

Liquidations are typically mean-reverting, but they can also be trend-forming.

Liquidations are messy, especially if they happen en masse or in a cascading fashion.

Specifically, they form dislocations in the market by creating a flurry of market orders (and/or aggressive top of book limit orders) around the same price, and by extension, around the same time.

This one-sided demand for liquidity will push price however high/low it needs to go through the order book until those orders are filled - priority is in execution, not pricing.

This creates inefficiencies - the liquidated participants didn't voluntarily buy/sell at those prices, but they have no choice - the orders are executed at whatever prices can fill them, even if it means 'skipping' large chunks of the book.

As a result, savvier traders sensing this can voluntarily provide liquidity at prices where they wouldn't ordinarily get filled, simply because their counterparties don't have the luxury of choice.

This results in good prices for those providing the liquidity to forced traders, and bad prices for the forced traders (they don't have a say in the matter per se).

In essence, this is where the milquetoast version of 'scalping liqs' comes from as a setup: liquidations = forced traders, forced traders = price insensitive/trade at bad prices, bad prices for them = good prices for you as their counterparty.

It is worth noting that liquidations can, however, be trend-forming.

Same logic, but without the mean-reverting properties.

For example, in a rangebound market you'll have participants running [assortment of mean-reverting/buy high, sell low meme strategies] operating on the assumption that the market will remain within some general boundaries.

As the market starts to break out, those sellers will quite frequently have overlapping invalidations (via stop market orders or instructions to rebalance more broadly).

If the break is fast and forceful enough, those mean-reverting systems generate 'GTFO' signals around the same price and time.

Shorts that close aggressively become (market/top of book limit) orders to buy + breakout traders piling in = significant price dislocation.

In crypto you also get some weird nuances where post-breakout stubborn sellers will step in and get run over continuously/post-breakdown stubborn buyers will step in and get run over continuously, but perhaps that's a post for another day.

From a trading perspective, combining OI + liquidations can highlight inefficiencies and areas of present or future dislocation:

i) Large OI decreases + long liquidations on dumps into support
ii) Large OI decreases + short liquidations on rallies into resistance
iii) Large OI increases + short liquidations on breakouts
iv) Large OI increases + long liquidations on breakdowns

There are also nuanced cases of 'stubborn OI' where chunks of freshly-added OI (presumed to be more directional than not) are offsides and are insensitive to that in the short-term but end up puking at the same time once the first chunk of OI is lifted - kind of like a game of chicken.

Again, perhaps for another post on another day.

I appreciate this isn't my usual format and is less structured & detailed than my other stuff, but hope it's a decent introduction.

Let me know if you want a part 2 on CVD + funding.

Thanks.

[The @Mmnt92]

وش الحل؟

[Elon Musk @elonmusk]

@WSBChairman Sigh

[Khalid Al-Otaibi @AljareerMJO]

أكثر من مليون مشاهدة لمعلومة خاطئة
تويتر منصة المعلومات الخاطئة بامتياز

أحد أسباب انفصال أوائل مؤسسي تويتر عن الشركة، تحوّل تويتر إلى ما أسموه "آيسكريم، طعم ممتع ولكن بلا فائدة"

بعد خروجهم، طوّروا عام 2012 منصة Medium وهي منصة ذات طرح متّزن ورائع وعظيم

https://t.co/ozVDplYIMk

[The @Mmnt92]

@7sn10i ❤️

[The @Mmnt92]

@Gladitor_92 هشام 🤣🤣🤣🤣🤣🤣
وش يعرفك انت يحرك السوق هذا

[The @Mmnt92]

@cryptoarc_ الخليج يعيش نهضة غير مسبوقة الحمدلله، ماحنا حولهم

[The @Mmnt92]

@1kasssab 🤣🤣🤣

[The @Mmnt92]

@proud1990 وليتك تتعظ 👍🏼

[STILL K.A.P.O @KAPOTHEGOAT01]

Hsaka shilling rollbit vs gainzy shilling rollbit

[The @Mmnt92]

تقبل الله منا ومنكم صالح الأعمال، عيد أضحى مبارك وكل عام وأنتم بخير

[حمد @HamadAlMajidi]

مستثمر دخل بفلسفة استثمارية بسيطة:

طبق عكس كل ما يجده على غلاف مجلتي @TIME و @TheEconomist

إذا تحدثوا عن انهيار البتكوين، اشتراه
أخطاء الصين و فشلها؟ اشترى في مؤشر سوق الصين
عن انهيار البنوك؟ اشترى بمؤشر البنوك

التزم بالبقاء سنة كاملة، و النتيجة:

حقق معدل عوائد بلغ 21%

[The @Mmnt92]

@Gladitor_92 شكله يحسب بيسكنونهم في 5 نجوم

[عبدالمجيد 𓃾 @Gladitor_92]

تويتر موبوء

[The @Mmnt92]

@Gladitor_92 هذا ملك المؤامرات