About this course

Let’s be honest, most retail traders end up failing and losing all of their
capital. The best strategy you can employ is one that directly aims to profit
from the losses of other retail traders. This course will help shape you into the
hunter, not the hunted.
What you will learn
Learn how to track how other retail traders are positioned to stay ahead of the
herd
Learn how to identify the realtime supply/demand relationship of a
cryptocurrency to project its likely future movements
Learn how to profit from the losses of other retail traders by identifying where
other traders are trapped
Learn how to identify how whales are able to manipulate the market
Learn how to use TRDR's arsenal of indicators optimally

Table of Contents
Glossary
Bull: one who expects the price to rise.
Bear: one who expects the price to fall.
Long Position: one who bought to establish a position that profits as the
market rises.
Short Position: one who sold to establish a position that profits as the
market falls.
Retail Trader: a trader who trades independently through a broker or an
exchange; typically trades with low volume and has limited access to
advanced market information. These traders typically lose money in the
market.
Institutional Trader: a trader who either trades with direct access to a
market (no intermediary broker/exchange), or sends trades to an exchange
independently in order to ensure the best execution price possible; typically
trades with high volume and has access to advanced market information.
These traders typically make money in the market.
Market Maker: a typically automated trader who takes on both long and
short positions on a coin at nearly all times. These traders make money from
exchange fee rebates/private agreements and from transacting at what the
market maker deems the most profitable prices possible. These traders
typically make money in the market.
Stop Loss: a market order to buy or sell when the market reaches a specific
point with the intention of limiting losses. A stop loss order to buy (used if a
trader entered a short position) becomes a market order when price reaches
the most available offer price at or above the stop price. A stop order to sell
(used if a trader entered a long position) becomes a market order when price
reaches the most available bid price at or below the stop price.
Altcoin: or ‘Alternative Coin’, a coin that isn’t Bitcoin, typically traded to BTC
or to another coin.
Bid: a request to buy at a specified price.
Ask: an offer to sell at a specified price (also known as an ‘Offer’).
Liquidty: the amount of volume that can be transacted at a price, either from
an asset being converted into cash (such as selling Bitcoin and receiving fiat),
or from cash (such as buying Bitcoin and selling fiat) being converted into an
asset. Institutional traders need high liquidity so that their trading activity will
not impact the market price.
High liquidity: large transactions tend to not cause a substantial change in
price on this coin. Large market cap coins tend to be highly liquid.
Low liquidity: large transactions tend to cause a substantial change in price
on this coin. Small market cap coins tend to be highly illiquid.
Support: a price level where price has historically had difficulty falling past.
Resistance: a price level where price has historically had difficulty rising
past.
Open Interest: the total number of open contracts that have not yet been
offset or settled. If a contract is equal to 1 US dollar and there are 100,000
contracts on a coin, then that means there are traders holding a combined
100,000 contracts long and 100,000 contracts short.
When open interest increases by 1 contract, that means that a long position
entered into a position of 1 contract or added to their position by 1 contract
and that a short position also entered into a position of 1 contract or added to
their position by 1 contract.
When open interest stays flat that means that either no trades are taking
place or that a long position who had exited was replaced by a new long
position or that a short position who had exited was replaced by a new short
position.
When open interest decreases by 1 contract, that means that a long position
exited its position of 1 contract or decreased their position by 1 contract and
that a short position also exited their position of 1 contract or decreased their
position by 1 contract.
Position Data: a representation of how many traders’ accounts of a certain
subset are long or short. The total long account % represents the percentage
of how many Binance Futures accounts hold net long positions on a specific
coin.
Another form of position data comes in the form of top traders’ accounts and
positions. The top trader long account % shows us what percentage of the top
20% are holding long positions. However, the top trader long position %
shows us the total positions held by the top 20% of traders, how many
contracts are long. For example, if 100 accounts made up the top 20% of
Binance Traders and 30 accounts were long then the top trader long account
% would be 30%. If of the total net positions held by 100 accounts, there were
1000 contracts long and 3000 contracts short, then the top trader long
position % would be 25%.
Market Order: a request to buy or sell at the best available current price.
Limit Order: an order to buy or sell a coin at a specific price or better.
Order Book Depth: the number of limit buy or limit sell orders that can be
transacted within the order book.
Order Book Depth Delta: the difference between the amount of bidded and
offered contracts within a specified % range. If within 1% range of the current
price there are 5000 contracts worth of bids and 4000 contracts worth of
offers, then there will be a positive order depth delta showing 1000 contracts.
This will be marked green on the order book depth histogram. If within 1%
range of the current price there are 2000 contracts worth of bids and 9000
contracts worth of offers, then there will be a negative order depth delta
showing 7000 contracts. This will be marked red on the order book depth
histogram.
Part 1: Framework Strategies
The Theory of LRA
The focus of this document is centered around a singular theory: that price
tends to take the path of most pain. Prices will move in ways that benefit the
minority at the expense of the majority. The reason why this occurs is
ingrained within both human psychology and the zero-sum nature of futures
trading.
In most asset classes, there is typically a well-informed minority that profits
from taking the opposite side of most retail traders. An example of why this
can occur is that there could be a large trader accumulating a 5,000,000 USD
long position on an altcoin. In order to buy, he needs to get many traders to
sell to him at a fair price. To do so, he could place multiple limit buy orders in
price areas where retail traders were convinced the market could only go
lower, and therefore many retail traders were enticed into selling and then
shortly after had regretted their decision to sell. However, the large trader is
likely quite happy as he was able to fill his large long position at the expense
of the liquidity of many smaller traders.
Tom Leksey wrote about this general phenomena in the Forex market here:
https://lratrading.com/roen. It can also be applied to the cryptocurrency
market, and this course will craft a blend between LRA and TRDR’s array of
indicators.
The main theory of LRA (Locked-in Ranges) is that periods of ranging act as
the impetus for price’s movements. Basically, price ranges for some time and
either the majority of retail traders lean toward a bullish breakout or a bearish
breakout. Once the majority of traders have made their bets, price moves
against them, trapping them in losing positions until they are liquidated or
stopped out. Then when they are liquidated or stopped out, price reverses.
Furthermore, the theory of LRA dictates that most of the market can be
separated into two main groups: retail traders and market makers. Retail
traders are typically individual traders who make trades based off of their
analysis of whether the market will rise or fall. Market makers are (typically
fully or partially) automated traders who maintain a goal of profiting from
buying as low as possible and selling as high as possible whilst typically
holding both long and short positions at the same time. Market makers tend to
use limit orders that they carefully place at price areas that will likely
generate the most profit.
Throughout this document, we will use a variety of indicators that yield
various insights about how various traders are interacting and interpreting the
market that they are speculating on. Some indicators grant us information on
how many traders are likely trapped, allow us to quantify the difference in
strength between the buyers and sellers, or can allow us insight into how
larger traders may be pressuring the market.
Whether you choose to use all of the methods listed in this guide or not is up
to you, however remember one thing specifically whenever you choose to
incorporate any strategy. Ask yourself: what part of the market is my strategy
exploiting? If you can’t come up with a specific part of the market that you are
exploiting, then you are simply the one being exploited.
Think Probabilistically
Famed trader Nassim Taleb once wrote in his book Fooled by Randomness,
“Probability is not a mere computation of odds on the dice or more
complicated variants; it is the acceptance of the lack of certainty in our
knowledge and the development of methods for dealing with our ignorance.”
This quote hones in the fact that probability is an invaluable tool we can use
to quantify our lack of certainty, and helps to distance ourselves from the
mindset that the market is destined to only rise or fall.
You should never think of entering into a trade with the belief that there is a
100% chance that the price will rise or fall. An example of this would be
entering short on an altcoin, convinced that its price will fall over the next few
days. After that altcoin begins to rise, you keep waiting for it to fall, but
instead the coin rises and you are left with a heavy loss.
Instead, it's a better mindset to look at that same altcoin before the trade and
assign a probability that the coin rises or falls. If you look at that altcoin and
believe that there is a 60% chance that it falls and then you find that the coin
instead rises in price, then there is no need to beat yourself up about the fact
that your trade went against you. Instead, when looking for trades to take, try
to enter multiple coins that look likely to move in your direction instead of
convincing yourself that any specific coin is destined to rise or fall.
Trading in this manner allows you to think probabilistically, and if you believe
that your indicators/analysis produce an edge in the market, then taking
multiple smaller trades can be a great method to spread that edge. For this, if
you enter trades on 10 coins with an equivalent payoff of 100 USD and a loss
of 100 USD and 60% of your trades are winners, then statistically speaking
you can expect to make a 200 USD profit from those 10 trades.
This previous paragraph is alluding to the calculation of expected value. The
expected value would be calculated with the information above by multiplying
the probability of success by the payoff of success and subtracting that value
from the multiplication of the probability of failure by the loss incurred by
failure, and that value times the number of trades taken. Thus, our probability
of success as stated above in the example is 60%, or .6 in decimal form. We
multiply this .6 by our payoff of 100, which gives us a value of 60. Then, we
take our probability of failure as stated above in the example, which is .4, and
multiply that by our loss if we lose on the trade. This is .4 times our loss of
100, giving us a value of 40. Finally, we can subtract our probability of success
* payoff vs our probability of failure * loss and we get a value of 20. Finally, we
can multiply that value of 20 by the number of trades taken which gives us
our final expected value of 20*10 = 200. Thus, across these 10 trades we
stand to make 200 USD from a statistical standpoint.
The reason that it is important to think about the expected value of your
trades is not because it is important to quantify your odds of success. It goes
beyond that. Thinking in terms of expected value and probability can and will
likely change your mindset from the irrational belief that the coin you trade
will only move in your favor toward a mindset that embraces the fact that the
coin can rise or fall despite your best analysis, and that even if the trade
doesn’t work out: you will live to fight another day.
Tools of Speculation
There are multiple instruments that you can use in order to trade the patterns
covered throughout this guide. Although nearly all of the examples covered
throughout this guide will be from Binance, you can use these methods on
coins from other exchanges.
There are multiple instruments you can use to speculate. The methods you
can use in order to bet on the market’s future direction is through spot
trading, perpetual/futures/margin trading, and options/volatility trading. There
are more instruments you can use for speculation, but the three methods
mentioned above are among the most popular.
The benefit of spot trading is that you will never have a liquidation price, as
there is no margin/collateral that you are using. One issue with spot trading is
that you can only enter into long positions on coins, which severely limits your
trading possibilities.
The main benefit of perpetual, futures, and margined contracts is the leverage
that you can use to speculate. Perpetual contracts are leveraged contracts
that you can trade that will never expire, these contracts also carry a funding
rate. Futures contracts are contracts that are set to expire at a certain date,
they do not carry a funding rate. Margin contracts can be thought of as a
blend between perpetual trading and spot trading. These margin contracts
allow for leverage (however typically less margin than perpetual and futures
contracts), however they typically charge the holder of a margin position an
interest rate in exchange for that leverage. However, leverage is famously
called a double-edged sword, as the more leverage you use: the more likely it
is that you will be liquidated and lose all of the margin that you used for the
trade.
The benefit of options/volatility trading is the possibilities they allow. These
contracts are typically thought of as the most advanced tool one can use for
speculation, and due to that, these instruments can scare off many retail
traders who are looking for simplicity. However, if you know how to trade
options, you can craft positions that will profit from the market staying at
standstill, from the market having massive fluctuations, or even from time
itself. Another benefit of options trading is the ways in which you can limit risk
and can put yourself in positions at which you will never lose everything
despite any market move while still using leveraged capital. Another popular
volatility contract you can use is a MOVE contract, which is a speculation on
how much unidirectional movement its underlying contract will expire to
within a given time period. A drawback to using options is there is limited time
for your trading thesis to play out when you buy options, and if you aren’t
careful, then there is unlimited loss potential if you short options.
The instrument you choose to trade is up to you. However, you need to also
remember the common pitfalls that are associated with each trading method.
Don’t fall prey to endlessly holding cryptocurrencies you buy at spot (non-
leverage trading). Don’t over-leverage your perpetual futures account and end
up getting liquidated. And finally, don’t sell options that carry the potential for
a total loss of your account. If you can avoid these common retail trader traps,
then you are far ahead of many others in your understanding of risk as a
trader.
Part 2: A Brief on Locked-in Range Analysis
Market Cycles
Indicators needed: Longs / Shorts Total Positions (set on longs’ percent in
style), Open Interest
Ticker: Any coin
Most traders must lose in the markets. This is a fact of the system, yet each
new entry to the game of trading believes that they will be the one who will
turn a $1000 into $1,000,000. The unfortunate reality is that many traders
follow the same types of market analysis, use the same technical indicators,
and are disadvantaged by the same biases. There might not be a holy grail to
the markets but there are undoubtedly patterns to human nature. These
patterns of human nature can be found within the very nature of the markets,
if you choose to look close enough.
A very common psychological pattern is that of a locked-in range. A locked-in
range describes a consolidation phase of a market in which traders make
trades within a flat range that conform to their trading thesis. This is where
many situations arise in which many retail traders might enter long positions
whereas larger traders and market makers might be taking the opposite side
of the trade, entering into short positions. In this type of market structure,
typically the price will move lower, essentially ‘trapping’ retail traders at
higher prices. A trading range can also form in which many retail traders enter
into short positions while larger traders enter into long positions, and typically
price will rise and end up leaving many short traders trapped at lower prices.
Retail traders mentally are trapped in a locked-in range in the first example
above as many traders who were convinced that the market was bound to rise
may choose to hold onto their long positions and not exit them at a loss. Due
to the fact that these traders choose not to exit their positions unless they are
in profit, the market tends to naturally move lower as any price move higher
would likely see many retail traders trying to exit their long positions around
their breakeven price. When many traders try to take breakeven profit at a
price level, then the forces of supply/demand tend to cause price to reverse
from that level and not allow them to exit at breakeven. This is why many
losing traders will continue to lose.
Whenever you look at a price range, do not think in terms of whether the
price will rise or fall. Go a level deeper within your analysis. From data that
you will learn about throughout this course, estimate whether you believe
there are likely more trapped long or trapped short trading accounts within
any given range. Furthermore, when you are analyzing a market uptrend and
you notice a price move lower and you are discerning whether it is likely to
turn into a trend reversal or instead act as a mere retracement, think about if
there is a significant quantity of trapped shorts (if there are many trapped
retail short positions, price will likely continue rising) or if instead the market
is seeing retail longs piling into the trend (if retail longs are buying during an
uptrend, the uptrend will likely fail and reverse).
Position data should never be analyzed just by itself. It must always be
compared to the relevant price action. The price action that is being referred
to can be categorized as within market cycles. There are three main types of
market cycles: an uptrend, a downtrend, and consolidation. Position data can
be interpreted differently for each specific market cycle.
During an uptrend, if you notice a rise in the total long account %, then this
could be a sign that the uptrend might not last much longer as uptrends tend
to top out when the majority enters in. Note that typically during an uptrend
you will see the total long account % either fall or remain flat. Remember that
if open interest rises while the long account % rises, then longs are entering, if
open interest falls while the long account % rises, then shorts are exiting.
In the picture above, we can clearly see that retail long accounts are mostly
entering into long positions as price rises. This is signified by the three arrows,
with one drawn on price, one on the long account %, and one on the change
in open interest. Due to the fact that many longs were entering as price rose,
and likely due to this, price struggled to rise any higher and eventually fell as
can be seen in the picture below.

During a downtrend, if you notice a drop in the total long account %, then this
could be a sign that the downtrend might not last much longer as downtrends
tend to bottom out when the majority enters into short positions. However,
typically during a downtrend you will see the total long account % either rise
or remain flat. If open interest rises while the long account % drops, then
short accounts are entering, if open interest falls while the long account %
drops, then long accounts are exiting.
In the picture above, retail short accounts have been mostly entering shorts
as price fell. This is signified by the two arrows, with one drawn on price and
the other on long position. Due to the fact that many shorts were entering and
catching onto the market cycle of a downtrend, price reversed.

Price rises from a low around 9400 up to the mid 9600’s after we observe a
period of many retail traders opening short positions. As price rises, we can
see these shorts exit (due to their stop losses getting hit, a liquidation, or
manual exit at a likely loss) as open interest falls each time we see a spike in
the long account %.
One of the easier ways to read position data is during the third type of market
cycle: consolidation and/or periods of low volatility. During this period,
typically open interest rises and we can see a clear pattern with the long
account %. This can allow you to see whether most retail traders are leaning
more bullish or more bearish.
During this phase of lowered volatility, we can see that retail traders are
mostly moving into short positions as open interest is rising with a slight drop
in the long account %. Retail traders have shown their hand, and now price
will likely inflict pain on them by rising.

Price spikes upward and open interest tanks. As price rises we can see that
shorts continue to try to add/open positions (look at 11:00 on the 27th to
15:00) and consequently price pushes up further and inflicts further pain upon
the short positions. The type of position data pattern that you are observing
on the chart above is one in which the market has cycled from consolidation
to an uptrend as retail traders have been successfully trapped.
Test
1. Within this price range, are there likely more longs or shorts trapped?
Consequently, would you rather enter into a long or short position at the
current price below?
Take a look at the three arrows on the chart above. We can see that open
interest rose during the consolidation phase and that the long % fell. This
indicates that we have had predominantly short retail accounts opening
positions just before the large price rise. However, once price rises we can see
a spike in the long %, and this was likely due to the many shorts who had
been stopped out and liquidated.
This type of setup is one of the better LRA-like patterns that you will find.
When you can clearly identify which side most of the retail traders are betting
(that allows you to counter-trade the crowd), you can then look for a price
region in which you can enter a position to bet against the retail trading
crowd. Many times in the past and likely many times in the future, what soon
occurs is a violent move in your favor (price move against the herd) in which
the profits you earn from your long position come in part from the losses of
the short positions who had just recently entered. This type of thinking is what
makes LRA so powerful, and profitable.
Click here to get the same type of indicators on your chart as the examples
above: https://www.trdr.io/u/Bennett-Stein/t/Simple%20LRA.
Look for
 Determine whether more retail traders are opening/closing long
positions or short positions within a market range
o From this, you can estimate where traders are likely to be
trapped
o Additionally, you can find whether traders are predominantly
entering or exiting their positions from the open interest
indicator
 Think about how future price moves will impact traders
o For example, if you notice that there are many new positions of
retail long accounts and you believe that the market will likely
flush them out, then look for price areas where this could
potentially occur
o Another example, if you notice that there are many new
positions of retail short accounts and you believe that the
market is likely to rise, then locate the price area where many of
the short positions will likely be trapped as this area could act as
a future support zone
Loss Cycles
Indicators needed: Longs / Shorts Total Positions (set on longs’ percent in
style), Open Interest
Ticker: Any coin
Let’s now go a step deeper into LRA with the loss cycle. The loss cycle is as
follows when price moves in an uptrend:
1. Price trades in a range with the majority of retail traders shorting in the
bottom half of the consolidation and the majority of retail traders
longing in the upper half of consolidation.
2. Price then moves beyond its range to the upside, trapping shorts in
positions with an unrealized loss.
3. After the initial price move to the upside, price begins to fall. Price falls
such that the majority of shorts are still trapped in losing positions BUT
 the longs who had entered in the same previous range of the short
positions take minimal profit or get out at breakeven even though
many of them had been holding previously profitable positions.
4. Therefore, even the retail traders who traded in the correct direction in
the range (the buyers) can only squeak out minimal profits. The traders
who traded in the wrong direction in the range (the sellers) remain
trapped in unprofitable positions.
5. It is precisely this type of efficient price movement that disadvantages
as many traders as possible, and you can determine when this is likely
happening by using the long account % and open interest in
conjunction.

The 5-minute timeframe is used here but this style of locating where traders
are in losing positions can also be used on higher timeframes such as the 1-
hour timeframe and higher.
The chart above features open interest as a blue line (later in this course you
will notice charts that use candlestick charts to display open interest). Open
interest represents the number of contracts that are currently in positions
both long and short. If an asset has an open interest of 1,000,000 contracts
and each contract is worth 1 USD, then that means that there are 1,000,000
USD worth of longs and 1,000,000 USD worth of shorts. When analyzing open
interest, note that an increase in open interest means that more positions are
entering rather than exiting. A decrease in open interest means that more
positions are exiting rather than entering. A flattening of open interest means
that around just as many traders are entering as are exiting, or that no trades
are taking place.
The chart above of ETH is a representation of this loss cycle. What happened
was price consolidated in the boxed portion above as open interest slightly
rose, indicating an increase in positions at that area. After price rose beyond
that price area, price dipped back down to the top of the previous range.
When this occurred, open interest fell then went flat and the long account %
continued to fall.
This indicates that the initial long positions had likely closed their positions on
the price wick lower as suggested by the drop in the long account % and the
drop in open interest (perhaps due to the fact that many traders do not want
winning trades to turn into losing trades). Then open interest went flat as the
long account % dropped, this indicates that positions were not mostly being
opened or closed, rather they were being transferred. It was likely here that
the longs who were exiting at slight profit or at breakeven were selling their
positions to better traders who were buying at a local market bottom.
This cycle of loss allows stronger traders to profit while weaker traders
perpetually lose money. The good news about this cycle is that these patterns
of loss can be exploited by those who know how to correctly identify it.
Now, let’s further deconstruct the retail trading that typically occurs in most
ranges. As stated previously, a good rule of thumb is that the majority of retail
longs enter in the upper half of consolidation and the majority of retail shorts
enter in the lower half of consolidation. This is a crucial fact that can help you
when trading broken price ranges.

Due to the fact that most retail longs enter in the upper half of consolidation
and most retail shorts enter in the lower half of consolidation, price tends to
move in such a way to scare as many trader as possible who are in profit in
order to give up their positions while giving trapped traders no chance of
exiting their position at breakeven. Take advantage of this by embodying the
clever trader who buys just at the price area at which enough retail long
positions have been shaken out while shorts still remain trapped at lower
prices.
Take a look at the period of ranging on BNB above. A pattern that occurs with
price is a trapping of the short positions at market bottoms. This is evidenced
by the initial rise in open interest with a rise and then a fall in the long
account %.

We can observe from the picture afterward that price kept short positions
trapped. After the rise above this range, open interest did not fall which
implies that many of the shorts there were incredibly likely to still be trapped.
With such a large quantity of actively trapped shorts at lower prices, it would
likely be best for you to be looking to buy and not to sell.
Take a look at the period of ranging on LINK above. Do you expect that there
is a greater probability that price rises or falls in the near future?

Even though we see an increase in open interest and in the long %, price
rises. Yes, there was likely a greater probability of price falling due to this
combination but price did in fact rise. This is an important lesson in risk
management here, as there will be trades that look perfect on paper but do
not always play out the way that we would like it to.
However, this fact alone should not worry you unless you are using an
incredibly large amount of leverage or you choose to never close out a losing
trade. A strong trader can and will take a loss and either choose to take a
break from trading for a short amount of time or will look for opportunities on
different coins as well. Not every trade will be a winner, and if you always try
to make every trade a winner then you will likely be eventually left with no
capital remaining in your trading account.
The LRA method is a great way that you can incorporate TRDR’s indicators
and analysis with a new innovative way of thinking about the cryptocurrency
market. I personally believe that the best way to forecast the future market’s
direction is to identify where the most traders are trapped and then to make a
trade that will profit from their continued losses. However, in our striving to do
so we must always be mentally aware of our own harmful biases so that we
don’t end up trading like the traders that we are actively trading against.
Test
1. At what prices are many traders likely to exit at breakeven (hint: check the
previous market range)? Does this mean that we should buy or sell at this
price area if it is reached again?
From the chart of YFI, we can glean that many shorts had likely entered
around the 32000 level at around 14:00 on September 10th. Notice the drop
in the long % that occurs around this time with a steady rise in open interest.
This made the area indicated by the arrow a natural future support zone as
when price reached this area again on a retest, many shorts took breakeven
profits which propelled the price higher.
Click here to get the same type of indicators on your chart as the examples
above: https://www.trdr.io/u/Bennett-Stein/t/Simple%20LRA.
Look for
 Try to be incredibly pinpoint in your analysis of the price areas at which
many retail long or short accounts are likely opening positions so that
you can take advantage of the loss cycle
o For example, if you find that during an uptrend that many
trapped shorts are located just below the current price then its
typically best to place limit buy orders just above where many
shorts might be trapped during an uptrend
o If you find that during a downtrend that many trapped longs are
located just above the current price then its typically best to
place limit sell orders just below where many long might be
trapped during a downtrend
 Be constantly cognizant of your own trading biases and always
prioritize the survival of your capital more so than the pain of closing
out a losing trade
TPSL
Indicators needed: Longs / Shorts Total Positions (set on longs’ percent in
style), Open Interest
Ticker: Any coin
When price gives a certain side (longs or shorts) too many chances to profit,
this is typically a sign that price will continue to move in that direction. An
example of this would be if price were ranging and upon each test of the lows
of the range we observe many short positions mostly taking profit at price
lows multiple times. If shorts are able to take profit multiple times, that is
because the market is bearish enough to let them do so. Price in this case will
likely fall far more than from where the shorts were initially taking profit.

Notice in the range above on XTZ, that price makes two significant lows in
which shorts take profit and some longs are likely getting stopped out of their
positions. However, more accounts are taking profit than longs are getting
stopped out as evidenced by the rises in the long account % alongside the
corresponding drops in open interest.
These price spots are known as TPSL’s. They are price locations at which
traders are exiting positions either manually or through take profits and stop
losses. When one side is able to use these TPSL’s to take profit more so than
the other side gets stopped out at a loss, the more likely it is that the price
will move in the direction of those who were previously taking profit.
A TPSL is a term that comes from the original Locked-in Range Analysis, and it
stands for ‘Take profit/stop loss’ price zones. It represents price areas at which
traders are mostly exiting their positions.
Another reason why price moves to TPSL’s is that market makers like to ‘test’
various price levels. When price moves to certain price levels that we call
TPSL, profitable traders tend to close out their trades in order to prevent their
positions from going into a loss. This way, stronger traders and market makers
can open positions at prices where previously profitable traders had closed.
This is a pattern that leaves the traders who had just closed out their positions
feeling as if they had taken profit too early, as price soon moves in what
would have been their favor shortly after (to the market maker’s rejoice).
Note that a rapid succession of tests by the market makers typically leads to a
continuation of price in that direction. For example, if you observe multiple
tests of the price highs of a price range, then this grants retail longs many
opportunities to get out of their positions which can indicate a price region at
which demand is stronger than supply and price will likely continue to rise
after many retail longs exit at breakeven or slight profit.

In the chart above we can see that there are multiple examples in which many
stop losses get triggered and then prices reverses. Take a look at the drop in
open interest that occurs when the price of XMR goes below a recent low (take
a look at the white arrow). Furthermore, we can see that the long % slightly
decreased. This indicates that this TPSL was a point at which more traders
were more likely than not taking a loss rather than taking profit and this is a
sign of a likely reversal.
The point that was previously indicated became a market low, and XMR rose
by around 12%. The previous TPSL would have been a perfect time to have
entered into a long position or to have closed a short position, and this was
evidenced by the fact that more retail long accounts had been taking a loss
than retail short accounts had been taking profit.
When analyzing TPSLs, always think of which side has been disadvantaged
and which side has had numerous opportunities to take profit. If you notice
that price has allowed many retail short positions to take profit while at the
same time you notice that many retail long positions are still very much
trapped, this is a typical pattern that can occur before the price falls lower. In
this example, price tends to fall as those who had wanted to take profit on
their short positions had already done so and longs remain trapped which
allows for both sides of retail traders to be in pain. For those who had taken
profit too early, it's the pain of regret. For those who chose to continue to hold
their unprofitable positions, it’s the pain of a monetary loss.
Test
1. Do you think that price will be more to test lower or higher prices from the
current price of around 236? A simplification of this question would be: do you
think that more longs would be harmed by a move to the downside or would
more shorts be harmed by a move to the upside?
Take a look at what happened at around 13:00 on July 12th. When price
moved rapidly to the downside, we didn’t see much of a drop in open interest
nor did we see a massive drop in the long %. This is a very strong indication
that this price move from around 239.5 down to a bit below 232 failed to force
many longs to close their positions, meaning that long retail traders look to be
quite committed to their position: so naturally the only price move that would
force them to exit would have to be an incredibly violent downmove. And as
evidenced in the chart below, price is more than happy to do so.
Notice that within the previous picture that this was another case in which
open interest and the long % were both rising: indicating many retail longs
entering positions. Therefore, a volatile move to the downside was likely to
inflict far more damage than any volatile move to the upside. Remember,
markets tend to move such that as many retail traders are disadvantaged as
possible.
Click here to get the same type of indicators on your chart as the examples
above: https://www.trdr.io/u/Bennett-Stein/t/Simple%20LRA.
Look for
 Locate price areas that could become TPSLs
o This typically includes price areas of resistance, support, the
price area just above resistance, and the price area just under
support
 Determine whether long or short positions have had more opportunity
to take profit
o If you notice many traders who had entered long have had
plenty of opportunity to profit, this is a typical sign that demand
is greater than supply and that price will likely rise
 Keep an eye on open interest when price reaches a TPSL
o Open interest declining upon price hitting a TPSL is a sign of
reversal
o Open interest hardly fluctuating or remaining flat upon price
hitting a TPSL is a sign that traders are continuing to hold their
positions and could be trapped
 o Open interest rising when price reaches a TPSL is a sign that
price will likely continue moving in that direction (ie. if a TPSL is
a price area just below support and price reaches this area and
we see open interest rise, it's more than likely that price will
continue moving lower)
Part 3: Trading against the Herd
Position Data
Indicators needed: Longs / Shorts Top Trader Positions (set on longs’ percent in
style), Longs / Shorts Total Accounts (set on longs’ percent in style), Open
Interest
Ticker: Binance Futures Bitcoin (timeframe of 5-minute, 1-hour), or any other
Binance Futures coin
The top trader positions’ indicator shows the % of positions that are long
among the top 20% traders by volume traded. Due to the fact that these
traders are using larger position sizes, a simple strategy can be constructed in
which one trades in a manner similar to top traders and opposite the total
long account % positions.

What do you notice from the picture above? Hint: take a look at the slight
divergence between top traders and total traders.
There is a prolonged period of low volatility after the price pumps from 9500
to 10500. During this period of low volatility, top trader positions are mostly
entering short positions and exiting long positions. At the same time, the
overall Binance Futures crowd is entering long positions and exiting short
positions. These are both indicated by the blue shadings on the chart above.
After top traders are able to sell and retail traders buy, price dumps from
10200 to 9250.
Price tends to make the rich richer and the poor poorer. Hence, it is typically
better to take positions that top traders are taking and at the same time
actively trade against the overall crowd. However, do remember that ‘top
traders’ do not always trade like top traders. Top traders are simply the top
20% of Binance Futures traders by account balance and therefore many of the
traders with more volume than other traders might chase the market and
accumulate large losing positions, making mistakes that many retail traders
typically make. Moreover, you may find that when trading off of the data from
smaller altcoins that betting against top traders can be a potentially viable
strategy. However, on larger cryptocurrencies, it’s typically better to bet on
price moving in the same direction as top traders are positioned.
Here is an example on a lower market cap coin on the chart above, QTUM.
Note that at the beginning of the recent upmove on the 16th that top trader’s
positions were leaning more toward short positions. Where many of these top
traders had entered into short positions would have actually been quite poor
short-term prices to enter at as price continued to rise about 5% higher.
After this picture was taken, QTUM continued to rise higher up to a high of a
little over 5.5 as top traders continued to mostly enter and add to their short
positions.
Would you rather enter into a long or short position at the current price of
COMP above? Hint: take a look at where open interest rose on the recent
downmove and look at long/short position data.

There is much to glean from this picture. The arrow marked 1 denotes the last
candle that you were given information of in the previous example. At point 2
in the chart above, notice that open interest begins to rapidly decline only at
the top of the uptrend. At point 3, notice how open interest begins to slightly
rise on the downtrend. At point 4, notice how retail long/short position data is
rising from around 50% long to almost 80% long, this is a strong sign of a
downtrend emerging soon.
Test
1. Taking a look at how larger positions are viewing the market, do you think
that it is a better idea to enter long or short at the current price on XTZ?
Notice the shaded area of the position data above. We see a large drop in the
top traders positions’ long %, which indicates either a large short entering or a
large long exiting. Overall, this can be seen as a bearish setup and it would
have been wise to have looked for price spots to enter short once you saw this
type of pattern.
To get this type of indicator setup, click here: https://www.trdr.io/u/Bennett-
Stein/t/Altcoin%20Whale%20Tracking.
Look for
 What type of price move would disadvantage as many traders as
possible
o Using the concept of TPSL, plot out points on a TRDR chart at
which you believe that price will reach points that will stop out
and liquidate as many traders as possible
 Using open interest, locate price points at which you believe a large
quantity of longs or shorts are trapped (more on how to do this in the
section below)
Trapped Traders
Indicators needed: Longs / Shorts Total Positions (set on longs’ percent in
style), Open Interest
Ticker: Any coin (timeframe of 5-minute)
What may be my favorite type of trading strategy is that of taking advantage
of trapped (also called underwater) traders. This method is what I use day in
and day out for scalping and swing trading.
The reason why I favor this strategy specifically is that it is a type of analysis
that illuminates the path of most pain. The path of most pain refers to how
price can move in such a way that it disadvantages as many people as
possible. I believe that taking advantage of these price moves can allow one
trader’s pain to become your profit.
The strategy involves a three part setup: identifying whether retail traders are
predominantly trapped in short or long positions, looking for spots of pullback,
and then executing a trade with a limit order. The benefit of this strategy is
that you are able to use other traders to your advantage.
You are able to use other traders to your advantage due to the breakeven
principle. The breakeven principle is the typicality of traders who were at a
loss to close their positions when they are back at breakeven again in order to
avoid the pain of taking a loss. This means that if we observe many retail
longs enter within a price range and then price falls, when price rises back to
the longs’ entry points and/or slightly above, heavy selling will likely occur as
they exit at breakeven.
Furthermore, if we observe that many retail traders have entered into long
positions and are now trapped, we can look to enter into a short position and
also use the longs’ entry points for the benefit of our own stop loss. We can do
this by placing our stop loss beyond the area where many longs are trapped.
An example of the point above: imagine that we observe many long traders
trapped at the prices of 9300-9320. We know that if price were to go to the
9320’s and 9330’s that nearly all long positions would have the opportunity to
take breakeven profit. Due to this, we can place a stop loss in the 9340’s or a
bit higher. The reason this works is because of how many longs will likely be
interested in selling in the 9320’s and 9330’s due to the breakeven principle.

What do you notice from the picture above? Hint: take a look at rises in open
interest with changes in the long account % at the same time to determine
where longs or shorts are more likely to be trapped.
The longs are clearly quite stubborn in their underwater positions. We can see
that the long account % barely drops and through the course of the picture
above, increases from far left to far right by 6% while open interest also rises.
The longs continue to increase and hold their positions regardless of how price
moves: this is a sign that there could be many trapped longs at higher prices.
Now, most importantly notice the price's complete inability to move higher
than the 9400’s. This occurred at the end of the day on the 17th.

The rectangle drawn shows the price area at which many longs had entered.
They had entered in the 9400’s and lower 9500’s. Not surprisingly, as stated
before, price is unable to move any higher than the 9400’s. Take a guess at
what this chart looked like in the near future.

The stubborn longs get crushed. First, notice that price drops again back to a
support area in the 9200’s. Then price tries once again to rise higher and we
see a high volatility top to the left of the arrow on the chart. Price at that point
in the mid 9400’s was unable to rise higher. After this upward attempt as
indicated by the arrow, price trades lower until we see a high volatility price
spike down to 9165 on the far right side of the chart above.
What can be gleaned from this chart is not just price’s direction. It is also
optimal stop loss placement, as mentioned in an example previously. If we
had shorted in the 9400’s upon the first test of the area at which many longs
were trapped then we could have placed a stop loss just above that price
area, in the lower to mid 9500’s. This would have worked well because of the
large amount of the trapped longs who would likely prevent price from rising
once they were breakeven or slightly profitable.

New example. Are most retail traders entering long or short? Also, what do
you predict will occur in the future of this picture due to the majority of
traders being trapped?
Take a careful look at the picture above. We can see that most Binance
accounts are entering into short positions, specifically from the prices of the
lower 9100’s up to the mid 9200’s during the phase of consolidation that
occurred after the strong bullish price move that occurred at 10:30 on the
27th.
With the increase in open interest accompanied by the drop in long account
%, we can see that there is likely a significant amount of trapped shorts within
that consolidation phase. Due to that fact, this will make it very hard for price
to push below 9200 (and remain below 9200) in the near future.
The shorts are slaughtered en masse. The absolute lowest that price moves
after leaving the consolidation phase is merely 9317. Price does not allow any
of the shorts to take slight profit or breakeven, and eventually price rises up to
10500, a price move that is around 15% higher than the original phase of
consolidation and is also a move that is likely to liquidate a large portion of
the remaining trapped shorts.
From this chart, we can also see that opening a long position and placing a
stop loss below where many trapped shorts had opened their positions would
have been most advantageous. This stop loss could have been in the 9100’s.
Test
1. Which side is more likely to be trapped? Due to this, do you think that price
will have an easier time rising or falling?
On ZRX, we can see open interest and the long % both rising. This is a strong
indication that many longs are trapped in their positions. Furthermore, notice
within the price action that very few opportunities have been given to the
longs to take profit. This is evidenced by the fact that price has failed to retest
any significant recent highs (especially the highs at the top of the chart
around .48 and the lower highs around .47). Due to the combination of an
indication that many retail longs might be entering as well as the fact that
many longs were not given an adequate chance at breakeven (thus trapping
them in unprofitable positions), price is likely to move lower with a high
probability.
There is a more advanced way in which you can also analyze total position
data. This strategy will help in times when price tends to be trending with the
majority of trader’s accounts (ie. when many retails longs enter but price
trends higher anyway).

Notice in the picture above that we have open interest rising with the long %
clearly rising a massive amount as well. However, focus on what happens
when price approaches the resistance area around the price of 23.5 once
again in the next picture.
It can be seen that just as the price rose to this high again, we finally see the
long % drop and we also actually see open interest rise. This implies that
retail traders began to short this area and its likely that any long position that
wanted to exit at or around breakeven has likely already exited (as seen from
the open interest being as high as it is).
Even though in the example above the retail account long % is quite high,
locating the relative changes of position data at key areas can help to reveal
how retail traders truly believe where price is going to go. Which in turn gives
us the opportunity to track and trade against them.
Click here to get the same type of indicators on your chart as the examples
above: https://www.trdr.io/u/Bennett-Stein/t/Simple%20LRA.
Look for
 A period of time in which there is an increase or decrease in the total
long account %
o It is a stronger signal if open interest is rising as well
 Price moves away from the prices at which many retail traders had
longed/shorted and they are trapped in losing positions
o This signifies that there are likely many trapped retail traders at
the prices that saw a change in the toal long account %
 Look for a good spot to enter a trade against the dominant long %
account side that are trapped
o If many longs have entered in a market cycle and price falls, this
can be an opportunity to look for a short to enter
o If many shorts have entered in a market cycle and price rises,
this can be an opportunity to look for a long to enter
Altcoin Whale Tracking
Indicators needed: Longs / Shorts Top Trader Positions (set on longs’ percent in
style), Longs / Shorts Total Positions (set on longs’ percent in style), Open
Interest
Ticker: Any Binance Futures Coin (timeframe of 5-minute)

What do you notice from the picture above? Hint: take a look at a sharp
change in sentiment from the top trader positions.

A large short had entered a little before the time of 4:00 UTC, as highlighted in
blue. The top traders’ long percent dropped from .532 to .525 and open
interest rose as well. This is a sign that a large short position had entered. The
position was likely entered on LINK around the prices of 4.396 to 4.404.
Later, upon the second blue shading at 12:00 UTC we can see a large increase
in top traders’ long percent from .525 to .532 and a corresponding drop in
open interest. This is very likely the same short exiting at around the prices of
4.299 to 4.324. That large short position achieved a profit of around 2.2%.
Had you noticed the whale’s position and taken the same trade, you would
have had a similar profit.
Finally, take a look at the indicator of longs / shorts (not top traders), which is
the indicator in green above. When the large short had entered, we can
actually see the total traders’ percent rise, displaying a divergence between
the top traders and the overall crowd. The retail herd is buying, larger traders
are selling.
This example is common among altcoins. A large position enters as can be
seen from a rise in open interest and either a rapid rise or drop occurs in the
top traders’ positions. The best trades are sometimes taken when the total
traders’ positions are moving opposite the top traders’ positions direction (as
exemplified previously). However, you should also use other indicators or
forms of analysis to supplement this strategy.
Test
1. Should we short or not take this trade?

Take a look at the large drop in top traders’ positions with a corresponding
increase in open interest. This signified a large short entering. However, at the
same time we can see the positioning for total traders initially indicate
confluence with top traders. This by itself is not a great short opportunity for
us. However, just shortly after the drop in the total traders’ positions, there is
a rise in total traders’ positions showing that the retail trading crowd might
not be in similar positions to the recent short whale. This would have made for
a successful short trade.

Within the blue shading you can now see that the short whale had likely
covered their position. This is evidenced by the large corresponding increase
in top trader positions at the local market bottom, just before BNB began to
rise in price. However, there is not a large drop in open interest. This may be
because the large trader who had likely exited their short could have been
buying orders that allowed other traders to enter short. From the fact that the
total positions’ percent had dropped, it might be the case that these other
newer shorts who were entering were retail traders.
When open interest is flat (or mostly flat), this occurs when old shorts are
supplying liquidity to new shorts and old longs are supplying liquidity to new
longs. Therefore, it can be best to enter upon a large rise in open interest in
the same direction of a large trader but do keep a close eye on changes in
open interest.
2. Should we short or not take this trade?
Take a look at the large drop in top traders’ positions with a corresponding
increase in open interest. This signified a large short entering on Bitcoin. With
a large short entering and plenty of untapped liquidity to the downside, this
would have been a great place to move short.

We see the increase in top trader’s positions with a decrease in open interest.
This signifies that the large short who had entered had just likely exited with
around a 2% profit. This is a likely sign that the current downtrend will stall or
will turn into an uptrend. Also notice during the initial phase that when the
large short had entered that there was also a slow rise in total long %
accounts as retail traders were betting on the market rising while the large
short was betting on price falling. Again after price fell and the large top
trader short had exited their position, we see that many retail traders had
changed their positions to bet on the market falling, however they ended up
selling the bottom.
Throughout these sections on position data and tracking how many retail
traders make trades, we have so far exclusively used Binance Futures.
Another data source you can use is the open interest of Bitmex’s BTCUSD
contract. The open interest data of Binance Futures tends to refresh every 5-
15 minutes but Bitmex’s open interest data updates almost instantaneously.
This allows traders who want to use shorter timeframes the opportunity to
gain valuable insights into how Bitmex traders are positioned.

Take a look at the 1-minute chart of open interest on Bitmex BTCUSD above.
Open interest steadily increased in the low volatility price range around 10600
and then open interest quickly decreased upon the strong bearish move lower.
This is an indication that the market may have shaken out longs at a lower
price by triggering their stop losses and liquidations. Not surprisingly, price
rose after this event occurred.
You do not just have to use Binance Futures data to make your trading
decisions. There are many other exchanges on TRDR that can give you access
to other sources of data that can aid you in your decision making. For
example, Bitfinex offers data on long/short positions and FTX gives
instantaneous open interest data on many different altcoins.
Look for
 A large rapid rise or fall in total positions (within one to three 5-minute
periods for short-term trading)
o A large rise in total positions can sometimes mean that either a
large short had exited or a large long had entered on that coin
o A large drop in total positions can sometimes mean that either a
large long had exited or a large short had entered on that coin
 At the same time of the rapid rise or fall in total positions you also
notice an increase in open interest
o A large rise in open interest can signify a large position entering
 If there is both a noticeable change in top traders’ positions and a rise
in open interest, this can be a strong sign to enter a trade in the same
direction as the top positions
 After entering the trade, wait for a rapid change in top positions in the
opposite direction with a decrease in open interest in order to exit your
position
o If there is a large decrease in top positions and a large increase
in open interest, this can signify a large short entering, you can
then wait for a corresponding large increase in top positions and
 a large decrease in open interest that can signal the large trader
exiting as this can be a bullish signal
o If there is a large increase in top positions and a large increase
in open interest, this can signify a large long entering, you can
then wait for a corresponding large decrease in top positions and
a large decrease in open interest as that can signal the large
trader exiting as this can be a bearish signal
 Watch for divergences between top trader positions and total trader
positions as this is a sign that large traders and retail traders are
betting on different price directions
o A great way to use the total traders’ positions in this manner is
as confirmation, if you notice a large long entering but then also
see the total long account % is dropping then this is a sign that
a large whale is betting on an upward price movement whereas
the retail crowd is betting on a downward price movement
o Price tends to punish retail traders (total long account %
indicator) and benefit whales (top trader positions)
To get this type of indicator setup, click here: https://www.trdr.io/u/Bennett-
Stein/t/Altcoin%20Whale%20Tracking.
Part 4: Supply/Demand
Large Trades
Indicators needed: Trades widget and Volume by side (delta)
Ticker: Any
LRA looks at market ranges and determines how retail traders and larger
institutional players/market makers interact with one another. The large
trades widget grants us insight on how large market orders from these
institutional players have impacted the market. This type of analysis is more
direct than the analysis of position data as it relies on looking for an
imbalance between the large buyers and sellers to determine the
supply/demand at current market prices.
The trading feed above is BTCUSDT from Binance Futures. With an analysis of
trades, you can use a filter for trades by size in USD. If you place the slider
from 10k up to infinity, then it will only show market orders over 10,000 USD.
Additionally, the trades feed above is denoted in Bitcoin for Binance Futures,
and red denotes market sells and green denotes market buys. The tiny
numbers that you see to the right of each timestamp show how many
different limit orders have been filled by any specific market order.
Typically, if you see a large market order that also has a large superscript
(number to the right of the timestamp), that can show a big player’s hand.
This means that if you see a massive buy that fills 100 limit orders for
example, price is likely to continue moving higher.
One of the easier ways to determine price’s likely future direction is by
analyzing orders over 100k USD on coins with large market caps. You can also
analyze these types of trades by using TRDR’s indicator titled Volume by Side
delta, trades of > 100k USD.
With an analysis of market orders, remember that very strong buying can
occur at the onset of an uptrend but also at the end of the uptrend. The same
goes for strong selling, it can occur at the onset of a downtrend, but also at
the end of the downtrend. This is because markets tend to reverse from
volume extremes.

Looking at the order flow from the trades over 100,000 USD above, do you
believe that the market in the short-term is more bullish or more bearish?
The order flow shown previously was quite bullish. We could see the market
buys consistently outnumber the market sells and price rose. You can see
from the recent picture above that the market buys continued to outnumber
the market sells and price did continue to rise beyond 9180.
We can also track large market order sizes for altcoins, just remember that
while 100k USD might be a normal large market order size for Bitcoin, it will
not be for most altcoins. Instead, on altcoins with middling market caps you
can use a size above 10k USD and altcoins with lower market caps you can
use a size above 1k USD.
The order flow shown above on LINK was very bearish. The sellers were in
control and it is this type of market phase in which it would not be a great
idea to go long, even after prices had declined on LINK for around 10 to
around 9.5. This type of order flow is one in which not much bullish pressure is
existent, meaning that it would likely be a terrible spot to enter a long position
in the short-term.
Many traders hold a belief that buying an asset after it falls heavily in price
gives them a ‘better deal’. The truth is that buying coins that are under heavy
seller pressure can be incredibly dangerous, and doing so can lead to you
being trapped in an unprofitable long position.
As shown from the order above 10k USD, price continued to sell off as the
sellers were firmly in control of LINK.
Take a look at the delta volume over 10k USD and the open interest of LINK
above. If you were currently in a short position do you think that it would be
better to exit or hold? Hint: think of the trapped traders via the open interest
and look at the strength of the sellers vs the buyers to determine price’s most
likely future direction.
The price at the previous picture was 14.36, and now the price is trading
around 13. The price dropped 10%, likely because within the chart above you
may notice that the sellers have a much stronger hand on LINK than the
buyers and clearly the larger traders have been bearish. Additionally, we can
see a rise in open interest which suggests likely trapped traders at higher
prices on LINK, which might make it harder for LINK to move back upward
until many longs on LINK get successfully shaken out.
Remember to always adapt an LRA mindset when it comes to the large trades
indicator. Look at open interest and find where trapped traders are likely
located and look at which way the market is trending and find if that trend is
backed up by strong market orders or if instead it is a weak trend with not
much market order volume in one way or another.
Test
1. Looking at the pattern of volume on the trades indicator, do you believe
that the market shown is bullish or bearish?
In the previous picture of the 10k USD+ trades indicator, SXP was trading a
little above the 1.5 level. However price declined to around 1.47 after large
market sells came in, a decrease of around 2%. A strong signal that the price
was likely to fall was the consistent power of the sellers in the previous
pictures, as well as the large market sell at 1.525. Moreover, there were not
any market buys that rivaled the size of the market sells, and consequently,
price fell.
Now let’s go over how to deduce position data from open interest and the
trades indicator. Imagine you see a $2 million buy candle on volume by side
on the 5 sec chart. On that timeframe you can be quite sure it's a single
market order, and consequently you can make these following assumptions:
1. If OI (open interest) increased by $2 million then it was probably a
market open buy, and all/most filled limit orders also opened positions
(open sells).
2. If OI increased by $1 million then it was probably a market open buy,
 and 50% of limits were open sells, and 50% of limits were close sells.
3. If OI increased by $1.5 million then it was probably a market open buy,
and 75% of limits were open sells, and 25% of limits were close sells.
4. If OI increased by $1.2 million then it was probably a market open buy,
and 60% of limits were open sells, and 40% of limits were close sells.
5. If OI was flat ($0 change), then it was probably a market open buy
filling limit close sells, or it was a market close buy filling limit open
sells.
6. If OI decreased by $2 million, then it was probably a market close buy,
and all filled limit orders also closed positions (close sells).
7. If OI decreased by $1 million, then it was probably a market close buy,
and 50% of limits were open sells, and 50% of limits were close sells.
8. If OI decreased by $1.5 million, then it was probably a market close
buy, and 25% of limits were open sells, and 75% of limits were close
sells.
9. If OI decreased by $1.2 million, then it was probably a market close
buy, and 40% of limits were open sells, and 60% of limits were close
sells.
Look for
 The overall shape and structure of the trades indicator
o If you notice that buys are consistently larger than sells then the
market is typically more likely to rise
o If you notice that sells are consistently larger than buys then the
market is typically more likely to fall
 Reference open interest to locate where traders are likely trapped and
if large orders are trading with or against the trapped traders
o If you notice a strong uptrend on a coin that has open interest
rising throughout and market buys are consistently dominating
over market sells, then the market is likely to keep rising
o If you notice a strong downtrend on a coin that has open interest
rising throughout and market sells are consistently dominating
over market buys, then the market is likely to keep falling
Order Depth
Indicators needed: Order book depth set on 0-1% and set to delta, order book
depth (aggregated) set on 0-1% and set to delta with the Binance exchange
ticked (you can use other exchange spot order depth data if you would like)
Ticker: Any coin
You can use these order depth indicators in order to gauge the levels of
supply/demand near price. Typically, for me, I have found that order depth
indicators tend to work better on smaller timeframes such as the 1-minute
and 5-minute timeframe. Also, remember that especially when reading order
depth, it is important to note that it is typically better to wait to transact at a
better price instead of entering/exiting a trade immediately. This means that if
you have the option to enter a long position now purely based on order depth,
it might be better to wait for price to dip further before entering.
Now let’s talk about what order depth is. Order depth represents how many
limit buy orders have been placed and also how many limit sells have been
placed. Traditional trading teachings give a simpler read of order depth. They
state that when there are more bids (limit buys) than offers (limit sells), price
rises. Furthermore, when there are more offers than bids, they state that price
tends to fall.
However, I hold a very different view of order depth. A view that is ingrained
deeply with LRA. I believe that we must look at the market from a non-
traditional sense in order to stay ahead of the herd.
From an LRA standpoint, it makes sense for market makers to pressure the
market into filling their large limit orders. When their limit orders are filled,
they are able to open or close positions at what they deem as good prices for
them. This would mean that if there are more bids than offers within a given
price zone, that may be because market makers are attempting to
accumulate, which would mean that it would make sense for price to move
lower and then once those bids are filled, that price would rise (depending on
the order depth structure after the bids are filled). Basically, this strategy
profits from buying when a positive order depth delta turns negative and
selling when a negative order depth delta turns positive.
The order depth delta refers to the difference between bid order depth and
offer order depth, which quantifies whether there are more bids or offers in a
given price range. Now there are two types of order depth that I use: spot
order depth and futures order depth. On charts below you will notice that the
bottom indicator is spot order depth and the chart just above that is just the
order depth of the current chart (futures order depth). I use both in concert
with one another, and will only take a trade when both show a positive order
depth delta or both show a negative order depth delta.
Take a look at LINK on the chart above. We can observe that prior to the
bullish move up to 8.5, we had a large amount of offers. Price subsequently
burst through the offers and filled nearly all of the large offers before making
a large price wick on the hourly timeframe. After this, take a look at how the
bids then grew larger in strength than the offers as can be seen from the
latter two white arrows. What do you think happened next to the price of
LINK?
LINK falls around 20% from its peak at just beyond 8.5. This likely occurred as
many bids were placed and then the price may have been pushed so that
those bids would be absorbed.

On YFI from Binance Futures, we can see that there is suddenly a large order
depth imbalance with many more offers than bids that have recently been
placed. Due to this, we can expect the price of YFI to continue to rise until
many of these large offers have been filled. If this does occur and we see
price rise and then we see a positive delta, that could signify that price may
soon fall.

Price does in fact rise and then we can see that both spot order depth and
YFI’s order depth have positive order depth deltas, signifying that there are
now more bids than offers near price. It is now more likely than not that price
will fall further in order to fill many large limit buy orders.
Price falls around 25% from its recent high as bids continually get filled. These
three looks at YFI at various times with various order depth patterns shown
can illustrate just how powerful market makers can be at pressuring price to
fill their limit orders.
Now, you might at first be confused why there is a common pattern of which
many large bids are placed at relatively high prices and then price falls soon
after filling these bids. Or, you might wonder why after a strong downtrend
you will see many large offers at relatively low prices and then price rises
soon after filling these offers.
The reason why this occurs is due to the added factor of the intersection of
market and limit orders. If there are many visibly large bids, then this conveys
a large amount of buying interest at the prices that the bids are resting at.
However, if there is a massive amount of market selling that clears through
these bids, then that is a strong sign that price will likely continue moving
lower due to the fact that the sellers were confident enough to sell through
such large bids. Therefore, it is not always the case that market makers are
trying to get their bids/offers filled but rather that if traders are willing to fill
liquidity at many large limit orders, price tends to continue moving in that
direction. Therefore, the ability of many market orders to clear large bid and
offer walls can reveal whether supply or demand is truly stronger.
You can also use different settings on the order depth indicator such as a 0%
to 1% (or 0% to 2.5%) instead of using the 0% to 5% that I have been showing
in previous examples. These smaller order depth ranges can work well on
lower timeframes.
BNB on the 1 minute timeframe on a 0% to 1% depth range above shows us
multiple insightful patterns of order depth. Take a look at the first set of white
arrows, at around 11:15 on both spot and futures order depth charts. We can
see a strong negative order depth delta on both that was followed by price
continuing to spike higher until later consolidating. Then after price ranges for
some time, both order depth deltas flip positive. Price slowly falls as bids get
filled. This is a common pattern that you should be on the lookout for.
Test
1. Do you think it's more likely for price to rise or continue falling based on the
short-term order depth shown above?
The answer is that BNB rises around 3% higher in a short period of time after
the large offers could be seen in the order book. Price filled these offers and
then shortly after this picture was taken, price soon fell.
2. Do you believe that BTC on the 1-minute timeframe here is more likely to
be bullish or bearish?
Bitcoin is quite bullish in the previous example. We can see that the order
depth has recently flipped bearish on the perpetual’s order depth delta and
we can also see a consistent negative delta on the spot order depth. From the
previous picture to this one, BTC rose by around 3%.
Look for
 A typical pattern you will notice is when price is trending higher and
you notice many offers being placed
o This is usually what happens before price trends even higher
 and those offers that are filled were placed by market makers or
by larger traders
o After many of these offers have been filled, price tends to fall
 When price is trending lower and you notice many bids being placed
o This is usually what happens before price trends even lower and
those bids that are filled were placed by market makers
o After many of these bids have been filled, price tends to rise
 A flip of positive order depth delta to a negative order depth delta is
typically followed by a price rise
 A flip of negative order depth delta to a positive order depth delta is
typically followed by a price drop
 An extremely negative order depth delta is typically followed by a price
rise
 An extremely positive order depth delta is typically followed by a price
drop
 Reference past patterns of order depth, and remain flexible in your
order depth analysis
o If you notice that a coin has actually typically seen a positive
delta that is soon after followed by a price rise, then that might
be a pattern that could repeat itself in the near future
o If you notice that a coin has actually typically seen a negative
delta that is soon after followed by a price drop, then that might
be a pattern that could repeat itself in the near future
 On smaller timeframes such as the 1-minute or 5-minute, use order
depth with smaller ranges such as the 0% to 1% or the 0% to 2.5%
 On higher timeframes such as the 1-hour or 4-hour, you can use order
depth with larger ranges such as the 0% to 5% and higher
 You can also select the order depth range based on the coin’s volatility,
on coins with little volatility you should use smaller order depth ranges
and on coins with more volatility you should use larger order depth
ranges
To get this type of indicator setup, click here: https://www.trdr.io/u/Bennett-
Stein/t/Order%20Book%20Depth.
Average Trade size of Buyers vs Sellers
Indicators needed: Mean Volume by Side (delta) set to 10k USD and under,
Mean Volume by Side (delta) set to 10k USD and over
Ticker: Any coin, but for coins with large market caps such as BTC, ETH, LINK,
you can use the above settings and for lower market cap coins you can use 1k
USD and under and 1k USD and over (any timeframe works)
This setup is a very versatile weapon in your trading analysis arsenal as it
separates the average size of market buys and market sells and then
represents that data with the delta of market buy - market sell. Thus, mean
volume by side gives us a filtered look at the potential strength of the buyers
and sellers.
What this means is that if you are looking at LINKUSDT on Binance Futures
and your timeframe is set to 1 minute and you are using mean volume by side
of 10k USD and under and there are 100 market buy orders and 180 market
sell orders and the total sell volume of orders under 10k USD on that 1 minute
candle was 1,800 LINK and the total buy volume of orders under 10k USD was
200 LINK then the mean volume by side for the sellers would be 10 LINK and
would be 2 LINK for the buyers. The delta of this 1 minute candlestick would
be -8 LINK, which would show a red delta.
Looking at mean (average) volume rather than raw volume can reveal further
information about whether the buyers or the sellers have been more
dominant. However, you should also take a look at regular volume as well in
order to maintain a full picture of the trades taking place.

In the picture above, the mean volume by side that has a y-axis range of -.2 to
.2 represents the mean delta of trades under 10k USD. The indicator just
below that has a y-axis between -8 and 8 as this represents the mean delta of
trades over 10k USD.
Take a look at the period of trading from around 17:40 to 18:50 and
specifically take a look at the difference between the larger trading sizes and
smaller trading sizes. Remember that larger trades are located on the
bottommost indicator whereas smaller trades are located on the indicator just
above that.
What we see as price mostly ranges between the times of 17:40 to 18:50 is a
delta showing mostly smaller mean buys and larger mean sells. After this had
occurred for some time, price fell as the larger sellers crushed the smaller
buyers. Now, take a look at the current time period between 18:50 and the
current time at around 19:10. Do you notice the larger mean delta favoring
the buyers or sellers and do you notice the smaller mean delta favoring the
buyers or sellers?

Price moves higher as the average (mean) small market orders favored the
sellers and the average large market orders favored the buyers. The buyers
prevailed and price rose.
This can also be observed on higher timeframes such as the 1-hour. Take a
look below of the stark difference between the average larger market order
and the average smaller market order. The average market order under 10k
USD was predominantly made up of sell orders whereas the average market
order above 10k USD was predominantly made up of buy orders. Price
followed the big money.
You must remember to always use this volume analysis in conjunction with
other indicators such as open interest, order depth, and position data. Doing
so will help you to form a broader view of the coin you are trading.
Test
1. Based on your analysis of large and small retail market order volume, do
you believe that the market is more likely to rise or fall?
The price of DEFI rises quite aggressively after we can see a drastic change in
the average market order under 1000 USD. Before around 18:00 on the
picture above, most smaller orders were market buys. Then after that time,
the smaller market orders are dominated by smaller market sells. At the same
time, larger orders over 1k USD show that the average market buy was larger
than the average market sell. The combination of smaller market sells and
larger market buys was a strong indication that the price would soon rise.
Look for
 An imbalance between the average market buy order and the average
market sell order
o If you notice that trades over a higher volume threshold are
mostly sells but trades on a lower volume threshold are mostly
buys, then this can suggest that the market is more likely to fall
o If you notice that trades over a higher volume threshold are
mostly buys but trades on a lower volume threshold are mostly
sells, than this can suggest that the market is more likely to rise
 A period of time in which all average orders are buys or all average
orders are sells
o When market buys entirely dominate over market sells on every
threshold but the market struggles to move higher, then that
shows the power of the sellers
o When market sells entirely dominate over market buys on every
threshold but the market struggles to move lower, then that
shows the power of the buyers
To get this type of indicator setup, click here: https://www.trdr.io/u/Bennett-
Stein/t/Volume%20Difference.
Part 5: The Ultimate Test
Now that you have been given the theory of LRA and have seen it applied to
the indicators in TRDR, let's run through a series of trading tests to hone your
pattern recognition.
1. Given the chart below of open interest and position data, would
you rather enter long or short now?

1. Trading Choice 1: Long

Within the original chart given to you, first analyze the pattern of open
interest. Did you notice how open interest mostly fell whenever the market
moved lower but then open interest typically rose when the market rose? This
is a common pattern that can occur before the market rises. Additionally,
notice how position data shows how the long account percent has been
consistently falling, indicating that retail traders likely think that the market
will soon continue to fall. This is bullish.
Now, I want you to look at the chart above. Would you close your current long
position (entered at the arrow) or hold it?
1. Trading Choice 2: Close Long
Now, the market has changed. We can see that the long account percent has
risen dramatically and open interest has fallen quite a large amount as well
during the uptrend. This is a sign that the uptrend is likely finished for the
moment. It would have been most optimal to have sold at the previous
picture, and potentially to have entered short at around 5.1 to 5.2.
Hopefully your analysis of ETC led you to choose to enter long based on the
metrics provided. If you chose to short instead, no worries as there are plenty
of more trading tests below for you to learn from.
2. Given the chart of average market orders below and above 10k
USD, would you long or short now? If you chose to enter long, would
you rather enter long now or wait for price to drop lower? If you
chose to enter short, would you rather enter short now or wait for
price to rise higher?
2. Trading Choice 1: Wait and enter long at lower price

It would have been most optimal to have waited and entered long at a
lower price. The reason is likely due to the fact that the previous picture
showed a strong downtrend that looked to be finished after the strong
bullish candle appeared at a little after 12:00 on the 5th. However, this
would have been a poor place to buy because of two reasons. The first
reason is that the average larger market orders over 10k USD show very
little net buying, which does not give great cause for an uptrend. The
second reason is that most strong bullish reversals don’t occur in a V-
shaped formation, so it's typically better not to trust the first strong
bullish candle that comes out of a downtrend.
Would you close your current long position on BNB or hold it? To answer
this question, pay attention to how average orders under 10k USD have
been trending and how average orders above 10k USD have recently
changed.
Trading Choice 2: Hold the long position

The white arrow denotes the location of the last candle shown in the
previous example. The best choice here would have been to have held the
long position as we can see that the average smaller market order at that
time was mostly sells whereas the trades over 10k USD were dominated
by a period of strong buying. Additionally, notice the strong bullish
candlesticks and weaker bearish candlesticks before price rose.
Additionally, notice how after price initially rose to around the 23 price
level (at the beginning of the day on the 7th) that the average smaller
market orders began to buy but the larger market orders were mostly
market sell orders. After this occurred, price began to trend lower until
around the 20 price level as many smaller market orders began to lean
toward sells, but price likely shocked those bearish traders after it rose.
What can be found from this sequence here is that price tends to move
against the dominant direction of the average smaller market orders.
3. Given the chart below of order depth on BCH, would you rather
enter long or short at the current price?

Trading Choice 1: Short at current price

BCH on the 4-hour timeframe with 0 to 25% delta order depth indicates to
us in the previous picture that there is a large amount of bids that have
recently placed during the bullish run up to around the 325 level. Take a
look at the arrows on the order depth charts that indicate the order depth
delta reaching extremes (the white arrow on the chart above shows where
you previously were given the option of entering long or short from the
previous picture).
Now if you were currently still in a short position, do you think that it
would be a better idea to close your position or hold it?
Trading Choice 2: Hold short position

The reason why it would have been a better play to have held the short
position is that we can see that the bids on the order depth chart of the
perpetual still shows a positive order depth delta, even though the spot
order depth shows a negative reading. It’s typically better to exit in profit
when both order depth deltas move from positive to negative or from
positive to negative. The example above only showed one order book
delta shifting from positive to negative, therefore, it’s likely better to hold
your short.
4. Given the chart below of ETH, would you rather enter long or
short at the current price?
Trading Choice 1: Long at current price

From the indicators shown on the chart above, we can observe the many
indications that the price of ETH was likely to rise. First, notice the drop in
total long account % that occurs near the market low around 355. There is
also a rise in open interest that occurs at the same time. This indicates
that many retail trading accounts are likely entering into short positions
around the market bottom. The subsequent price move higher left many
of these traders trapped, making it easier for price in the future to rise
and harder for price to fall.
Furthermore, notice the change from positive to negative order depth
delta that can be seen on both the spot and futures order depth. This is
typically a bullish sign as well, as it shows that there are many limit sells
that the market might be pressured to fill. In total, entering a long position
would have been a trade that had little drawdown but a fair amount of
upside profit.
Now if you were currently still in a long position, do you think that it would
be a better idea to close your position or hold it?
Trading Choice 2: Hold long position

It would have been best to have held the long position. Take a look at the
shaded portions to see the information that would have been available to
you before ETH continued to rise. We can see that at that point in time,
order depth was still indicating potential for higher moves and the long
account % wasn’t showing much change either. Due to any lack of
meaningful change in the indicators that we have chosen here, there isn’t
a reason for us to consider closing our position.
5. Given the chart below of order depth on DEFI, would you rather
enter long or enter short at the current price?
Trading Choice 1: Long at current price

Take a look at the shaded zones of the top traders in the chart above. We
can see that just as price was beginning to trade lower around 12:00 on
September 15th, that the top traders’ positions revealed that they were
entering short positions and exiting long positions. Furthermore, a large
short position had likely exited on the second highlight of the top trader’s
positions. This would have been a good time to enter into a long position.
Now if you were currently still in a long position, do you think that it would
be a better idea to close your position or hold it?
Trading Choice 2: Hold long position

Like the example before on ETH, it would have made for a better trade to
have continued to hold DEFI rather than exit. We can see that there was a
period of prolonged ranging where we saw open interest fall, the long
account % slowly dropping, and the top trader positions rising. The long
account % dropping and top trader positions rising was quite bullish and
the dropping open interest showed us that many traders chose to exit
positions near market lows around 700, which naturally led to a price rise
higher.
6. Given the chart below of SXP, would you rather bet on this
market rising or falling in the near future?
Trading Choice 1: Long at current price

SXP rises around 10% after the large drop in open interest and the slight
drop in the long account %. This would have made for a good time to have
entered into a long position, after many other retail long positions had
closed their long positions (as indicated by the drop in open interest and
the drop in the long account %).
Now if you were currently still in a long position, do you think that it would
be a better idea to close your position or hold it?

Trading Choice 2: Close long

SXP falls by over 10% in price. There were not too many indications that
would have led us to believe that this would have happened, however,
there was a period of rising open interest and a rising long % after a high
is made at around 1.6. This type of pattern tends to indicate that retail
long traders began to ‘buy the dip’, and this is a strong sign that price will
likely move lower and trap those long traders.
7. Given the short-term trading setup below of BTC on the FTX
exchange, would you rather enter long or short at current market
prices?
Trading Choice 1: Short at current price

Notice that within the blue shaded zone that open interest barely changes
even though BTC rapidly fell about 100 USD in the first picture. The fact
that open interest failed to drop is a sign that many long traders are likely
still holding positions at a loss at higher prices which makes it all the more
likely for price to push even lower.
Now if you were currently still in a short position, do you think that it
would be a better idea to close your position or hold it?
Trading Choice 2: Close short

Notice the large difference in scenarios between the original picture and
the second picture. Subsequently in the picture above, we can finally see
that open interest begins to drop on high volatility spikes to the downside.
This is a sign that long positions have been successfully shaken out and
price is more likely to rise.
8. Given the chart below of TRB, would you rather enter long or
short at current market prices?
Trading Choice 1: Open short position

Notice that within the blue shaded zone of the total long % that many
long positions enter upon the first selloff. That fact combined with rising
open interest grants us a great opportunity to open a short position. Now,
currently on the chart above we can see a slightly declining long account
% and declining open interest.
What does this tell you? Should we continue to hold our short position or
would it be better to close the position?
Trading Choice 2: Close short position

It would have been far better to have closed your short position. This is
evidenced by the declining long account % and declining open interest,
which suggests many retail longs are closing their positions at a loss.
Moreover, at the time of 16:00 on the chart above you may notice the
rapidly declining long account % that had occurred. When many traders at
this time had hopped into short positions and/or closed out their long
positions, this would have given us a great opportunity to enter into a
long position.
9. Given the chart below of ETH from the FTX exchange, would
you rather enter long or short at current market prices?
Trading Choice 1: Open long position

We can note a large open interest drop that occurs around 17:00 on the
chart above. This shaded region shows us a rapid decline of open interest
when ETH rapidly traded from around 384 down to a low of 371. After this,
price slowly moved back upward after many long positions were likely
shaken out and/or liquidated.
Do you think that we should continue to hold our long position or would it
be better to close the position? Take a look at open interest and any other
factors that would potentially make you want to close your position.
Trading Choice 2: Hold long position

This is a large zoom out of the chart, but take another look at the previous
picture. Notice that open interest did not massively decline on many
upward price moves but rather open interest declined more so on price
moves lower. Due to this, there isn’t much reason to close the long
position entirely and it would have made for a rather profitable long if you
had held.
10. Now for the final example on Bitcoin, would you rather enter
long or short at current market prices on this supercharged
chart?
Trading Choice 1: Open long position

There is a lot to unpack from the previous chart. First, notice that the total
long account % is declining while the top positions long % is increasing,
this divergence is typically regarded as bullish. We see open interest
declining mostly on bearish moves (before the upward price move
occurred as displayed above). There is negative order depth, indicating a
fair amount of liquidity to be filled at higher prices. Finally, I wouldn’t state
that the mean volume by side gives us too strong of a read in this
situation, however I can see that there is slightly more selling from market
orders under 10k USD and slightly more buying from market orders over
10k USD before the price move up to 10740, which is bullish.
Do you think that we should continue to hold our long position or would it
be better to close the position? Take a look at the many indicators on the
chart above and determine if you would want to close your position.
Trading Choice 2: Hold long position (maybe)

There is no correct answer to the question I stated above, although I

would lean toward the answer of holding your long position. Currently,
BTC looks slightly more bullish than bearish and we can note this from the
fact that the total long % has decreased, both order depths’ have
remained negative (at the time of the previous picture) and the mean
volume by side does not indicate any extreme bearishness. On the flip
side, we can also see a declining top trader positions long %, a declining
open interest and many high volume bullish price moves that each time
have been sold back down into the range. Only time will tell whether this
setup was ultimately bullish or bearish, but you can find the answer to
that question by taking a look at what BTC did after September 25th,
2020 (date of which I am writing these words).
To get this crazy chart setup, click here: https://www.trdr.io/u/Bennett-
Stein/t/Super%20Chart
A Final Word
I was and still am incredibly enthusiastic about both the approach to the
markets that LRA advocates for and the wonderful indicator subset that
TRDR offers. There are so many different setups that you can create and
the possibilities are truly limitless with how you choose to interact with
the cryptocurrency market.
I can tell you that if you are serious about trading and you are willing to
put the time in, you can be very successful. However, the notion of
‘putting the time in’ includes engaging in daily chart practice, interacting
with other traders socially (through Discord/Telegram or through other
platforms), an ability to adapt to market changes, and fostering a mindset
that you can and will succeed no matter the odds.
The philosopher James Allen once stated in his book, As a Man Thinketh,
“A man's mind may be likened to a garden, which may be intelligently
cultivated or allowed to run wild; but whether cultivated or neglected, it
must, and will, bring forth. If no useful seeds are put into it, then an
abundance of useless weed seeds will fall therein, and will continue to
produce their kind.”
Cultivate your proverbial garden by maintaining a sense of constant
curiosity of the markets, and I hope you will be as amazed as I am by the
constant stream of patterns of human nature that present themselves in
the form of cryptocurrency charts.
Happy trading!
In the picture above, we can clearly see that retail long accounts are mostly
entering into long positions as price rises. This is signified by the three arrows,
with one drawn on price, one on the long account %, and one on the change
in open interest. Due to the fact that many longs were entering as price rose,
and likely due to this, price struggled to rise any higher and eventually fell as
can be seen in the picture below.