What is liquidation sniper?
Liquidation sniper looks to take advantage of trading large liquidation orders with the assistance of VWAP (volume weighted average price). We use liquidations as an entry signal and we further customize it by filtering out small liquidation orders. Also, we use VWAP and apply offset percentage to it in order to create buy and sell zones. Please read documentation to understand how you can customize each settings to suit your needs.
How does liquidation sniper make money?
When liquidations happen in the market, the exchange starts placing large market buy or sell orders in order to liquidate positions. During volatile times in the market, the order book is usually thinner than usual and these large liquidation orders cause large wicks. This bot enters positions when those wicks occur and we look to exit from those positions in the consequent bounce.
How do we use VWAP and liquidations in a combination?
Liquidations are just signals to either enter a position or add onto the existing one. In order to filter out liquidations that happen during non volatile times, we apply VWAP and VWAP offset. VWAP helps us track the average price of the asset while we can apply certain percentages on that average price to create our buy and sell zones. Therefore, eliminating the risk of trading during non volatile times and get chopped out in the market.
Conclusion
There are many different ways to configure your settings to accommodate different risk levels. Each of the variables like order size, VWAP offset percentages , liquidation size, take profit and stop loss. The possibilities are endless and it is totally up to you. Make sure to read the documentation here