Derivative Dynamics Indicator [MarktQuant]

The Derivative Dynamics Indicator is a versatile technical indicator that combines several critical metrics used in cryptocurrency and derivatives trading. It helps traders understand the relationship between spot prices, perpetual contract prices, trading volume pressure, and open interest across multiple exchanges. This indicator provides real-time visualizations of:

• Funding Rate: The cost traders pay or receive to hold perpetual contracts, indicating market sentiment.
  
• Open Interest (OI): The total value of outstanding derivative contracts, showing market activity.
  
• Cumulative Volume Delta (CVD): A measure of buying vs. selling pressure over time.
  
• Additional Data: Includes customizable options for volume analysis, smoothing, and reset mechanisms.
  

Key Features & How It Works
1. Metric Selection
You can choose which main metric to display:

• Funding Rate: Shows the current funding fee, reflecting market sentiment (positive or negative).
  
• CVD: Tracks buying vs. selling pressure, helping identify trend strength.
  
• Open Interest: Displays total outstanding contracts, indicating market activity levels.
  

2. Volume Data Validation
The script checks if the selected chart includes volume data, which is essential for accurate calculations, especially for CVD. If volume data is missing or zero for multiple bars, it warns you to verify your chart setup.

3. CVD Calculation Methods
You can select how the CVD (Cumulative Volume Delta) is calculated:

• Basic: Uses candle open and close to estimate whether buying or selling pressure dominates.
  
• Advanced: Uses a money flow multiplier considering price position within high-low range, generally more accurate.
  
• Tick Estimation: Uses percentage price change to estimate pressure.
  

You can also choose to display a smoothed version of CVD via a Simple Moving Average (SMA) to better visualize overall trends.

4. CVD Reset Option
To prevent the CVD value from becoming too large over long periods, you can set the indicator to reset periodically after a specified number of bars.

5. CVD Scaling
Adjust the scale of CVD values for better visibility:

• Auto: Automatically adjusts based on magnitude.
  
• Raw: Shows raw numbers.
  
• Thousands/Millions: Divides the CVD values for easier reading.
  

Funding Rate Calculation
The indicator fetches data from multiple popular exchanges (e.g., Binance, Bybit, OKX, MEXC, Bitget, BitMEX). You can select which exchanges to include.

It calculates the funding rate by taking the mean of spot and perpetual prices across selected exchanges.
Open interest is fetched similarly and scaled according to user preferences (auto, millions, billions). It indicates the total amount of open contracts, providing insight into market activity intensity.

Visualizations & Data Presentation

• Funding Rate: Shown as colored columns—green for positive (bullish sentiment), red for negative (bearish sentiment).
  
• Open Interest: Displayed as a line, showing overall market activity.
  
• CVD & SMA: Plotted as lines to visualize buying/selling pressure and its smoothed trend.
  
• Information Table: Located at the top right, summarizes:
  

1. Current base currency
   
2. Number of active sources (exchanges)
   
3. Calculated funding rate
   
4. Total open interest
   
5. Current CVD and its SMA
   
6. Last delta (buy vs. sell pressure)
   

How to Use It

1. Select Metrics & Exchanges: Choose which data you want to see and from which exchanges.
   
2. Adjust Settings: Tweak CVD calculation method, SMA length, reset interval, and scaling options.
   
3. Interpret Visuals:
   

• A positive funding rate suggests traders are paying long positions, often indicating bullish sentiment.
  
• Negative funding rates can indicate bearish market sentiment.
  
• Rising CVD indicates increasing buying pressure.
  
• Open interest spikes typically mean increased market participation.
  

Important Notes
The indicator relies on the availability of volume data for accurate CVD calculation.
Always verify that the exchanges and symbols are correctly set and supported on your chart.
Use the combined insights from funding rates, CVD, and open interest for a comprehensive market view. This tool is designed for research purposes only.