The Captain and the Kingfisher
The Kingfisher, king of fishermen, knows exactly where the fish is — the “fish,” as we like to call it in poker. So to land a good catch, all that’s left to do is watch where this wonderful bird dives and cast our nets there. This little metaphor is meant to make one thing clear: the fish I’m after, thanks to the Kingfisher, is liquidity — the big liquidity pools!!!
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TheKingfisher.IO | Definition
It’s an order execution management system that comes with liquidation maps.
Kingfisher prides itself on offering its users “the most accurate and most popular liquidation maps in the cryptocurrency industry.”
As traders, Kingfisher.io lets us use its maps in our day-to-day trading, or use its KF-OEMS system to boost our trading returns in a partially automated and optimized way.
The software’s real strength lies in its liquidation maps. They help us quickly find the profitable trades that match our risk profile. Using these maps, a trader can place their entry, their exit, and their stop-loss with great precision by identifying support and resistance zones.
The Kingfisher: Off to Fish for Liquidations?!
Kingfisher’s liquidation maps let us visualize where the hidden “liquidation-related liquidity” sits.
When a trader opens a leveraged position, it comes with a liquidation price that triggers an automated market order to close the position once that price is hit, or that lets the position gradually reduce its exposure (deleverage) as price nears that level.
The other advantage of Kingfisher is that it maps liquidation levels across the entire market. This gives a big-picture view of where some of the hidden liquidity sits.
Background
Traders operating in low-volume, unregulated derivatives markets take on an extra risk: liquidations that trigger others in a chain reaction!
When the liquidation price of a trader’s position is reached, the exchange’s automated risk-management system liquidates their entire position to cover the trader’s loss.
When it’s only positions worth a few bitcoin, the market impact is negligible. But if hundreds of positions have liquidation prices close to one another, the closing orders stack up and the market impact can be enormous.
What’s more, one liquidation can trigger another, and so on, cascading — moving price just enough to set off “massive chain liquidations” worth several hundred thousand or even millions of dollars.
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The Kingfisher: Introduction
The Kingfisher shows you the zones where a high density of liquidations will take place.
These are price zones where liquidity is high, and price action can be fast there because of the general confusion created by those who aren’t expecting it.
By using Kingfisher’s liquidation maps, we can improve our trading. They let us:
- Take trades based on a breakout
- Scalp profitably
- Place our stop-loss precisely and spare ourselves a stop hunt
- Take profit in high-liquidity zones
- Optimize the execution of large-size orders by finding liquidity and avoiding needless slippage.
Here’s an example showing liquidity spikes on the BNB/USDT pair in Kingfisher:
In yellow/orange, you can spot the short positions at risk of being liquidated. In blue, those are the longs.
The Kingfisher: Conclusion — Part 1
This tool lets us quickly detect the critical levels that suddenly shift volatility. From them we can infer certain logical behaviors — for example, when pumps or dumps are about to start or end.
Never go fishing for liquidity on your own: the Captain and your friend the Kingfisher, king of fishermen, are here to show you where the big fish are hiding.
To support my work, feel free to click the following affiliate link: The Kingfisher
Happy trading, everyone.
In the second part of this tutorial, we’ll dig into how to take advantage of the information the platform offers. So I’ll see you soon on our trading blog!
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