Liquidation Heatmap with Volume Profile [MarktQuant]

The Liquidation Heatmap with Volume Profile is an advanced visualization tool designed to help traders identify key price levels where significant trading activity and potential liquidation events are concentrated. This indicator combines volume profile analysis with liquidation zone estimation to provide a comprehensive view of market structure and potential support/resistance areas.


Key Features
📊 Dual Profile Modes


Total Volume Profile: Displays the distribution of trading volume across price levels, helping identify high-activity zones and the Point of Control (PoC)


Long/Short Liquidations: Separates and visualizes estimated liquidation zones for long positions (below current price) and short positions (above current price)

🎨 Visual Components
Volume/Liquidation Bars

Horizontal bars extending from the current price showing volume or liquidation intensity at each price level
Gradient coloring indicates concentration - darker colors represent higher activity
Bars scale proportionally to show relative importance of each level

Background Gradient Heatmap

Vertical gradient bands spanning the entire lookback period
Provides instant visual feedback on high-volume zones
Adapts colors based on selected profile mode (volume or liquidations)
Creates a "heat" effect highlighting the most significant price levels

Point of Control (PoC) Lines

Dashed horizontal lines marking the price level with maximum activity
Single PoC for Total Volume mode
Dual PoC lines for Long/Short mode (one for each side)
Helps identify the most important price levels for potential support/resistance

⚙️ Customizable Settings
Analysis Parameters

• Lookback Length (1-3000 bars): Controls the historical period analyzed
  
• Number of Price Levels (15-100): Determines the granularity of the profile
  
• Volume Width (20+ bars): Adjusts the maximum horizontal extension of profile bars
  

Display Options

• Toggle volume labels on/off
  
• Show/hide background gradient
  
• Show/hide PoC lines
  
• Choose between Total Volume or Long/Short Liquidations view
  

Color Themes

1. Classic: Green longs, red shorts, blue volume
   
2. Ocean Blue: Deep blues and turquoise tones
   
3. Sunset: Warm reds and oranges
   
4. Forest: Natural green palette
   
5. Purple Magma: Purple and violet scheme
   
6. Custom: Full manual color customization
   

How It Works

Volume Profile Calculation
The indicator analyzes each historical bar within the lookback period and distributes its volume across relevant price levels. Volume is weighted based on proximity to the bar's center, ensuring more accurate distribution.


Long liquidations accumulate below the current price (where long positions would be stopped out on downward moves)
Short liquidations accumulate above the current price (where short positions would be stopped out on upward moves)


Point of Control (PoC)

The PoC identifies the price level with the highest trading activity or liquidation potential. In trading, the PoC often acts as a magnet for price action and can serve as strong support or resistance.

Practical Applications
1. Support and Resistance Identification

• High-volume nodes (darker areas) often act as strong support/resistance
  
• PoC lines mark the most significant price levels
  
• Price tends to react when approaching these zones
  

2. Liquidation Zone Trading

• Identify where leveraged positions are vulnerable
  
• Anticipate potential liquidation cascades
  
• Plan entries/exits around high liquidation zones
  

3. Market Structure Analysis

• Understand where most trading activity occurred
  
• Identify value areas vs low-volume zones
  
• Spot imbalances in market structure
  

4. Entry and Exit Planning

• Use high-volume zones as potential reversal points
  
• Avoid entering positions in low-activity areas
  
• Set targets at significant liquidation clusters
  

Best Practices

Timeframe Selection: Works on all timeframes, but effectiveness varies

Lower timeframes (1m-15m): Best for intraday scalping and day trading
Medium timeframes (1H-4H): Good for swing trading setups
Higher timeframes (1D+): Useful for major support/resistance identification


Lookback Period:

• Shorter lookbacks (50-100) for recent activity and short-term trading
  
• Longer lookbacks (200-500) for broader market context
  
• Adjust based on your trading style and market volatility
  

Profile Levels:

• Fewer levels (20-40) for cleaner, broader zones
  
• More levels (60-80) for detailed, granular analysis
  
• Higher levels work better on higher timeframes
  

Technical Notes

• Maximum of 500 boxes, labels, and lines can be displayed
  
• Requires sufficient historical data (minimum = lookback length)
  
• Volume data must be available for the indicator to function
  

Conclusion
The Liquidation Heatmap with Volume Profile is a powerful tool for understanding market microstructure and identifying key price levels. By visualizing both volume distribution and potential liquidation zones, traders gain valuable insights into where significant market activity is concentrated and where price is likely to react.
Whether you're a scalper looking for precise entry points, a swing trader seeking key levels, or an analyst studying market behavior, this indicator provides the visual clarity needed to make informed trading decisions.

Disclaimer: This indicator is for educational and informational purposes only. It does not constitute financial advice. Always perform your own analysis and risk management before making trading decisions.