Liquidity Ratio Short Signal
Liquidity Ratio Short Signal is an indicator built on top of Liquidity Ratio that focuses on the short side. While Liquidity Ratio shows the overall liquidity imbalance (lower values favour longs, higher values favour shorts), Liquidity Ratio Short Signal highlights moments when conditions for short scenarios become especially interesting.
Conceptually, it is the mirror version of Liquidity Ratio Long Signal, but applied to the seller side. If you are familiar with the Long version, you can treat Short as the same logic, inverted for short setups.
Connection to Liquidity Ratio and Long Signal
To recap the core idea of Liquidity Ratio:
- low values — favour long scenarios;
- high values — favour short scenarios.
Liquidity Ratio Long Signal singles out moments when the long-side liquidity state becomes statistically meaningful. Liquidity Ratio Short Signal does the same for the short side: it helps you see when the liquidity advantage of sellers is not just present, but stands out against recent history.
Parameters: % and Threshold
Liquidity Ratio Short Signal uses the same parameter set as the Long version:
- Depth (%) — at what order book depth liquidity is evaluated. Lower depth means a faster, more “nervous” signal; higher depth makes it smoother and more focused on the broader background.
- Threshold — the level from which a signal is treated as meaningful. Everything below the threshold can be considered background.
Depth defines where exactly we look at liquidity, while the threshold defines from which level it makes sense to react to growing selling pressure.
Interpretation
In general terms:
- the higher Liquidity Ratio Short Signal is, the more pronounced and significant the short-side liquidity state is considered;
- values below the threshold are usually ignored in strategies and alerts;
- values clearly above the threshold mark moments when it makes sense to look more closely at short scenarios or revisit risk on long positions.
Liquidity Ratio Short Signal does not provide exact entry points by itself; it sets the context: how different the current selling pressure is from the market’s usual behaviour.
Local and Global Versions
As with other Ziggs indicators:
- [Local] Liquidity Ratio Short Signal shows how strong and meaningful the short-side liquidity state has become for a specific coin (for example, ETHUSDT).
- [Global 1] / [Global 2] Liquidity Ratio Short Signal reflect the strengthening of sellers at the level of the broader market, based on different aggregation models.
A typical approach:
- use the local version for working with a specific instrument,
- use the global versions as a background: whether the market as a whole supports the short idea.
Typical Use Cases
1. Short Scenario Filter
Liquidity Ratio Short Signal works well as a filter: consider aggressive short setups only when the indicator is clearly above your chosen threshold.
- depth controls how “fast” the signal is;
- the threshold cuts off weak episodes where it is too early to react.
2. Risk Control for Longs
When both Liquidity Ratio and Liquidity Ratio Short Signal are rising, it is a sign to look more carefully at existing long positions:
- think about partial profit-taking,
- adjust stop levels,
- reduce position size or leverage.
Combined with long-side indicators (such as Zigg Long), this signal helps to spot moments when risk for a long portfolio is increasing.
3. Alerts and Strategies
Thanks to depth and threshold, Liquidity Ratio Short Signal is well suited for:
- creating alerts like “notify when the signal exceeds X”;
- filtering short entries in custom strategies;
- revisiting long-side risk when seller strength rises sharply.
If You Already Use the Long Version
If you understand the logic behind Liquidity Ratio Long Signal, the Short version is the same approach applied to the seller side. Strategically, it makes sense to look at them together as indicators that show which side currently controls liquidity — buyers or sellers.