Liquidity Ratio

Liquidity Ratio is an indicator that measures liquidity imbalance in the order book. Unlike Zigg Long / Zigg Short, it is a single indicator: low values point to a higher probability of long scenarios, and high values — to a higher probability of short scenarios.

The indicator is calculated for a specific coin as a local version, as well as in global versions Global 1 and Global 2, which reflect the state of the market as a whole.

Visually, Liquidity Ratio looks similar to a classic oscillator: a line that moves smoothly up and down. Under the hood it relies on a separate liquidity-based algorithm tuned to produce a smoother, analysis-friendly curve.

Interpreting the Values

The core idea of Liquidity Ratio:

the lower the value, the higher the probability of a long,
the higher the value, the higher the probability of a short.

At the same time, it is important not to look at the number in isolation, but in context:

what price did in the past when Liquidity Ratio was at similar levels;
how the indicator behaves on the chosen timeframe and asset;
whether it aligns with other Ziggs indicators (for example, Zigg Long / Zigg Short).

In practice, Liquidity Ratio is best treated as a tool that shows which side currently has the liquidity advantage — buyers or sellers.

Depth Parameter

Liquidity Ratio does not have a threshold; it is configured only via the depth parameter, expressed as a percentage of the order book. At this depth the indicator evaluates how liquidity is distributed.

The smaller the depth, the more sensitive the indicator:

more local fluctuations,
faster reaction to changes in the order book.

The larger the depth, the smoother it becomes:

less noise,
signals appear less frequently,
more focus on the broader liquidity background.

As a starting point, you can use the same depths as for Zigg Long / Zigg Short (for example, 5%), and then adapt them to your timeframe and trading style.

Local and Global Liquidity Ratio

Structurally, Liquidity Ratio follows the same logic as other Ziggs indicators:

[Local] Liquidity Ratio — measures the liquidity imbalance for a specific coin (for example, ETHUSDT) on the selected exchange and timeframe.
[Global 1] / [Global 2] Liquidity Ratio — show the overall market background: whether liquidity is concentrated more on the long or on the short side. Different global versions use different models of market aggregation.

In practice:

the local version helps you understand what is happening with a particular coin;
the global versions show whether the broader market supports a long or short bias.

As with Zigg Long / Zigg Short, the strongest setups usually appear when local and global Liquidity Ratio point in the same direction.

Typical Use Cases

1. Directional Filter

Liquidity Ratio can be used as a simple directional filter:

when values are low — give priority to long setups,
when values are high — give priority to short setups.

This is especially useful for traders who already have their own entry logic but want to factor in the state of liquidity.

2. Combination With Zigg Long / Short

Liquidity Ratio works well together with Zigg indicators:

low Liquidity Ratio + Zigg Long signals — liquidity and imbalance point in the same direction, which increases the probability of long scenarios;
high Liquidity Ratio + Zigg Short signals — strengthens the case in favour of shorts.

In this setup, Liquidity Ratio acts as an additional confirmation layer on top of the primary signals.

3. Identifying “Extreme” Liquidity States

By scrolling back through history, you can mark Liquidity Ratio levels that often preceded reversals or sharp moves for a specific asset. Later these zones can be used as:

levels where it makes sense to watch price action more closely,
filters for alerts and strategies,
reference points for re-evaluating risk on open positions.

Practical Notes

Do not treat Liquidity Ratio as a standalone “entry signal”; it is a context indicator.
Always read it together with price and other Ziggs indicators, not in isolation.
Adjust depth experimentally: start from a base value and see how the picture changes across different timeframes.
Mark historical levels where strong moves often started and use them as reference zones.
Combine local and global Liquidity Ratio: the local one — for a specific coin, the global ones — to understand whether its behaviour aligns with the broader market.

Where to See Examples

This documentation describes the general principles behind Liquidity Ratio. The most practical understanding comes from live examples. In our Telegram channel we regularly review situations where Liquidity Ratio helps to read the liquidity balance and combine it with Zigg Long / Short.

You can subscribe here: https://t.me/ziggsapp.