Unlocking Trading Insights with Data Visualization - TOKEN2049 Singapore 2024

thank you for joining me today I'm Venit luthra co-founder of high block capital and today I'm going to be discussing with you how you can use data visualization to unlock insights in the crazy world of crypto trading so the crypto landscape is overwhelmed with a lot of data we have multiple coins multiple exchanges and so many different metrics to shuffle through and in trading when time is of the essence shuffling through all these different metrics can lead to missed opportunity but I have a solution for you today I'd like to show you how you can utilize the power of data visualization to uncover insights in all this chaos we're going to be discussing things like how do you find Trends in the market how do you create metrics so that you can save time and be more efficient and on top of that how do you put it all together and validate some of the things that you found so let's get started every Trader has his favorite metric that he likes to look at that to use to study the market however looking at that metric from every coin to coin to coin can be a very long and tiring process and can lead to many missed opportunities what I'd like to show you today is how you can use visualization to get a broader Outlook of the market in my example I going to be using open interest or oi open interest is a gauge of how positions are entering or exiting the market at any time large shifts in open interest can be a good gauge of liquidity that's entering the market and a good gauge of future liquidity so how do we visualize this well we can make a screener on the left axis xaxis you have all your coins coins and on or sorry the y- AIS you have all your coins and across your left a uh x axis you have time the color represents the open interest value now the goal of this chart is to say how is open interest trending across the entire Market but when you look at this you really don't get too much information because there's three rows that stand out Bitcoin ethereum and salana due to their dominance in the market the color represented is going to only show these three coins and you're not going to get a perspective of the broader market so how do we transform this data to really answer the question how is the broader Market shifting well we can normalize the data and boom just like this now you can compare all coins in one single graph in the middle of the graph you have the darker layer which showing the lower amount of open interest across the market and as time has gone on it has shifted and here you have a much brighter view saying that open interest is increasing there's more liquidity coming into the market now you can analyze each coin one at a time to see how it's shifting or the whole market and clearly there's a regime change now that's all great how do we take this to the next level right so now we know that open interest is a good gauge of liquidity both entering and future liquidity that's going to exit and from our previous uh chart we saw that there was a lot of open interest entering the market liquidity was coming in so what can we do with that can we create an indicator or a metric to help us predict where this exit liquidity is going to come in right exit liquidity can come in many different Fashions it could be take profits it could be stop losses and the most interesting it could be liquidations and that's where the liquidation levels comes in now this is a tool that helps you predict where future liquidity can lie this is our proprietary metric where we predict where uh liquidation liquidity is at different price levels however you can be creative with the data and make any of your own metrics the indicator is just one layer the main thing is the visualization looking at it in a way to give you an edge you can see on the bottom there was some short uh long liquidity that was gathering down here and some long liquidity that was gathering down here price came down hit it and and then reversed price came down hit it and then reversed this would been a great R RR opportunity up here we see a lot of short liquidity gathering on the top we see price come Cascade through it and just go right through now what have we done we've taken open interest we've taken liquidation levels and now we've created our own proprietary metrics using data visualization to find volatility zones so now you can stay ahead of the curve and anticipate some of these things rather than reac to it so let's now move on to a different flow we talked about lick levels which is an indication of future liquidity what's another indication of future liquidity well that would be orderbook right order book data can be very noisy as we see oops sorry as we see on the top right right this is the order book imbalance across all coins and you can't really get too much information from this data right so how do we transform our data to make this cleaner to reduce the noise right understand what is the broader Trend that's happening in the market well one way is to take a global average right here here we're taking the average of our order book indicator across all of our coins and we can see now very clearly that the imbalance is trending downwards right this technique is not specific to order book this could be done across any indicator but it gives you a great understanding of where momentum is going across the entire market now there's two things we can do now right we know now the trend of the market is trending downward so we can trade with the trend or we can more interestingly counter Trend it right we can go against the grain sometimes finding these opportunities where coins are moving away from the prer trend can be the market telling us that people are pricing coin in a different way which could lead to different opportunities either diverse price movement or sometimes even larger right but there's a sea of data how do we shuffle through all this information to find this outlier how do we find this opportunity that's going against the grain well we can build another visualization a scatter plot so here we have our xaxis which is our we're going we're staying with the same order book information the order book depth 2% and order book depth 5% and all the points here are all of your coins now when I say 2% and 5% what do I mean I mean how far up and down the book the order book are you looking at what is the pressure 2% up and down and your bids and your asks which means you're closer to your current price or 5% up and down the book which means you're a little bit farther away from your current price and we can see that all the coins are clustered around this one area right here similar to the trend that we saw because if you look at the top right this is going to be uh increased buy pressure on the 2% depth and the 5% depth if you look at the bottom left quadrant this is going to be increased cell pressure on the 2% depth and the 5% depth so all the coins are clustered around this one region but clearly there's an outlier right there F and we found it now we know that this is a bullish this is um increased by pressure across our two dimensions so we would think this is a buying opportunity but let's confirm it and here we go so now we've opened up the chart this is also the same same ticker F and we have our two indicators the order uh the order book in Balance 2% and the order book in Balance 5% and what I've done I've highlighted the same areas of the scatter plot that showed that increased by pressure across both indicators and on top on the pricing chart we're finding Confluence just like in the scatter plot we want to find that opportunity on the chart and you can see there's not many times where it happens in fact we can filter by two main instances this instance right here and this instance right here and our bullish assumption was correct price did go up in both of those instances now everything I've talked about today is focused on data visualization and that's really what I want to want everyone to take take away from this however let's just put some icing on the cake let's add one more layer to this presentation and let's put it all together because what's the point of visualizing all this data finding all these Trends and doing all this analysis if we don't know how to action on it well that's where a back tester comes in right so here we have a back tester and we're going to use the same example we're going to use f usdt as our coin and we're going to back test for the last three months of data right and we're going to be using price in every five minute increment or for anyone who trades with charts we'll be using five minute candles right so to run any sort of back test you need a benchmark how is the strategy you're running compared to a benchmark in the market and that Benchmark is going to be right here which is essentially just holding F if you were to just buy fat at every 5 minute increments what would be the change in price at different durations and those durations are 5 minutes in the future 15 minutes in the future 1 hour all the way to 7day and you can see yes they're all green but the numbers are much smaller when you go shortterm 5 minutes your average percentage change is about 0.007% all the way up to .9% now instead of trading all the 5 minute increments let's filter our opportunities let's filter it by all the things that we discussed today so let's remind ourselves of what were the flows that we talked about in the first part of the presentation we talked about about open interest and how open interest combined with liquidation levels can lead to Opportunities so if I want to take a a a long position I want to see liquidation levels above price an increase in short liquidity above price so in this Benchmark or in this back test I've added an increased amount of short liquidations at a current time and then the second part of our presentation was order book imbalance having increased amount of buy buy pressure across different orderbook depths so I've added that to the back T back tester as well so if you now what we're looking for is Confluence amongst liquidations and order book and we can see the number of opportunities has significantly decreased but the price percentage change in The Future Has Changed dramatically we're seeing a lot more volatility and much more push to the upside both on the lower duration and significantly on the higher duration we in the 7-Day average your increase increase in price is 27% versus your benchmark which is 0.9% now again this is not Financial advice everyone needs to do their own research but at least we've done some process to validate our results so let's bring it all together right what have we done today we've found Trends in the market we've discovered signals from a lot of noise we've created new metrics to find Opportunities and we validated all results all these different ways to visualize a data is is ways to give you an edge in the market and in this market Edge is everything but let's be real some of you don't want to go through this process of validating and creating all these visualizations and that's where High block comes in and here's my one minute plug at high block we have hundreds of indicators and visualizations for you to see across order book order flow long short sentiment data we have plenty of visualizations like the ones I showed you today in fact all the visualizations I showed you today came from high block capital we talked about spaghetti graphs we talked about uh Scatter Plots we talked about heat Maps we also have histograms 3D charts correlation graphs all these things to give you an edge so if you don't want to go to the manual labor we're an analytics platform that can provide the whole entire solution for you so you can focus on what's most important and that's trading thank you very much