Derivative exchange reserve vs liquidation
This Quicktake shows the relation between derivative exchange reserve and market liquidation and volatility.
When the derivative exchange reserve increases the market tend to be highly volatile which this relation does not always exist when it comes to spot exchange as liquidating funds in spot exchange only occurs when traders close their position in a lose due to fear.
When the market is highly volatile the price's fluctuation will increase which cuz the market to drop suddenly by 20% to 30% for liquidation purposes. therefore, in long term uptrend or long term downtrend you will see a sudden change in trend direction by about 25%. knowing this information can be useful in some ways.
- 1st when the market is at bullish trend you can take advantage over these liquidation to buy some bags.
- 2nd you need to keep in mind that fake outs will occur a lot, so not every trend direction change means a change in the whole market direction.
