RT-Liquidation Engine-Delta

Introduction
The RT-Liquidation Engine-Levels is a liquidity mapping tool designed to highlight where leveraged long and short positions may be vulnerable to liquidation. It plots projected Liquidation Levels above and below price, grouped by leverage tiers, so traders can see where the algorithm estimates clustered liquidation zones might sit relative to current price. The RT-Liquidation Engine-Levels indicator is intended to be used in conjunction with the RT-Liquidation Engine-Delta indicator. This writeup will cover both indicators in depth and explain how they work together.
Liquidity Theory – What This Tool Is Looking At
Liquidity levels are a data point that advanced traders study to understand the price levels where positions may be forced out of the market. While exchanges can show open orders in an order book, they do not publish where traders will be liquidated. However, market participants who can estimate those zones often pay close attention to them, because a single wick can be enough to trigger liquidations and force positions to close into the market.

The RT-Liquidation Engine is built around this concept. It uses on-chart information and volume to approximate where these potential liquidation areas may be and displays them directly on the price chart so traders can see the projected levels they may want to monitor.
How It Works
Because real Liquidation Levels are not published by exchanges, the indicator cannot read them directly. Instead, it uses an internal algorithm that studies current prices, direction, and volume to estimate where common leveraged positions might be at risk.

Conceptually, the algorithm:

• Uses the visible data on the chart to approximate where typical leveraged long and short positions may be clustered.
  
• Projects those estimates as horizontal levels above and below current price.
  
• Keeps those projected levels on the chart until price action trades into them and the level is considered “touched.”

The result is a set of dynamic levels that act as an estimated map of where liquidation events might be more likely, based on the chart’s own history and current structure.Trader Math And Leverage Levels
Traders using perpetual futures often use different leverage levels for their positions. The higher the leverage, the more vulnerable those positions are to being liquidated by relatively small moves in price.

While the exact leverage of individual traders is unknown, the Liquidation Engine focuses on four commonly referenced leverage tiers:

• 5x Leverage
  
• 10x Leverage
  
• 25x Leverage
  
• 50x Leverage

Each tier can be displayed as its own set of projected Liquidation Levels on the chart so traders can see a structured view of where different leverage groups may be sensitive.

The Liquidation Levels can be displayed with Multi Color options or in Red/Green depending on the trader's preference.
The above chart shows the Liquidation Levels being displayed with Multi Colors.The above chart shows the Liquidation Levels being displayed in Red/Green.

Reading The Levels
Above and below the candles you will see projected Liquidation Levels. These levels appear at the prices where the algorithm estimates that leveraged positions for each tier could be vulnerable, and they remain drawn until price has traded through them.

In the default view:

• Thickness of the level – Indicates the estimated size of the position. Thicker lines represent larger projected positions.
  
• Color of the level – Indicates which leverage group the level belongs to (5x, 10x, 25x, or 50x).
  
• Length of the level – Indicates how long the estimated leveraged position has been open according to the algorithm.
  

This combination provides a visual profile of which zones have more concentrated projected liquidation interest and which have been standing in the market for longer.
Tuning Options
The Liquidation Engine includes a focused set of tuning options so traders can adjust how much information is plotted and how it appears on their charts.Custom Tuning Options Include:

• Sensitivity Filter – Adjusts the overall threshold the algorithm uses when estimating positions. Increasing this value reduces the number of plotted levels and focuses on larger estimated positions. Decreasing it allows smaller estimated positions to be considered, increasing the number of displayed levels.
  
  
• Leverage Level Toggles – Individual toggles for each leverage group (5x, 10x, 25x, 50x).
  These allow traders to show or hide specific tiers depending on which groups they want to monitor.
  
  
• Color Settings – Controls the colors and transparency of the levels.
  Traders can adjust these settings to match their chart theme and highlight or soften specific leverage groups.
  
  
• Summary Table Options – Controls the on-chart table that tracks the estimated number of Long versus Short positions.
  • Table On/Off – Toggles the table on or off.
    
  • Table Position – Moves the table to different corners of the chart.
    
  • Table Background Color / Table Text Color – Customizes the table’s appearance.
  Liquidation Engine – Delta
  In addition to plotting projected Liquidation Levels, the RT-Liquidation Engine-Levels Indicator is to be used in conjunction with the RT-Liquidation Engine-Delta Indicator. This tool displays the Liquidation Delta data that the algorithm estimates on the imbalance between long and short exposure.Conceptually, the RT-Liquidation Engine-Delta Indicator computes the following items:
  
  • Aggregates the estimated long and short positions from the projected Liquidation Levels.
    
  • Calculates a net difference (delta) between those two estimates.
    
  • Displays that difference so traders can see when the projected open interest appears skewed to one side.
  When the estimated order book is heavily skewed in one direction, the market may sometimes move in the opposite direction as conditions rebalance. The delta view is designed to provide context for those potential rebalancing moves, not to predict exact turning points.
  Tuning options for the RT-Liquidation Engine-Delta Indicator are aligned with the RT-Liquidation Engine-Levels Indicator settings. If you change filters, toggles, or colors in the Levels tool, it is recommended to mirror those settings in the Delta tool so both views remain synchronized.
  
  Best Practices
  Some common usage patterns include:
  
  • Timeframes – Many traders prefer to use Liquidation Engine on intraday timeframes under 60 minutes. Timeframes such as 30-minute candles or smaller are often used when monitoring leveraged flows.
    
    
  • Load Times – The algorithm performs a significant amount of calculations to project these Liquidation Levels and Deltas. On some symbols and timeframes, this can take noticeable time to load the chart. When changing settings, keep an eye on the loading indicator in the chart header to confirm calculations are still running. In normal conditions, these calculations are completed in less than 30 seconds.
  • Market Sessions And Levels Out Of Range – If projected levels appear far from current price or do not align with visible action, check the chart’s session settings in the bottom-left of the chart (for example, ETH vs RTH sessions). Ensuring the correct session is active can help keep the displayed levels in a more relevant range.
    
  These guidelines are intended to make the tool easier to work with and to keep expectations realistic when interpreting the projections.
  
  What Makes This Tool Different
  While many indicators focus on price alone, the Liquidation Engine Levels and Delta tools are designed specifically around estimated liquidation behavior:
  • It concentrates on where leveraged positions may be at risk, rather than only where price has been in the past.
    
  • It segments projected levels by leverage tier so traders can distinguish between different risk profiles on the chart.
    
  • It includes both a level-mapping view and a delta view, providing context for both where levels sit and how imbalanced the estimated positioning might be.
    
  Important Note
  The RT-Liquidation Engine-Levels and RT-Liquidation Engine-Delta tools provide an approximation of where leveraged positions might be vulnerable based solely on chart data. They do not access actual exchange liquidation feeds, does not reveal real trader positions, and cannot guarantee that a projected level will cause price to react.
  
  This indicator is intended to provide additional context around potential liquidation zones and positioning imbalances. It is not a standalone signal generator and should always be used together with your own analysis, testing, and risk management. Historical interactions with projected Liquidation Levels, including any illustrative examples, do not guarantee future results.
  
  🐋 Tight lines and happy trading!