Plain-English definitions of the concepts behind CryptoPatterns.ai — from effective leverage and liquidation cascades to win rate, profit factor and the chart patterns our scanner detects.
Effective leverage. Effective leverage is your total position exposure relative to your actual account equity, measured across every position and bot at once — not the leverage you set on a single trade.
The leverage you set on one position (say 10x) only describes that trade. If you run several leveraged positions simultaneously, your real, account-wide exposure can be far higher than any single setting suggests. Effective leverage captures that aggregate picture, which is what actually determines how a market move affects your equity. CryptoPatterns’ Risk X-Ray computes it across all your bots and positions.
Related: Liquidation cascade, Risk X-Ray, Perpetual futures
Liquidation cascade. A liquidation cascade is a chain reaction in which one position being liquidated moves price or drains margin enough to trigger the next liquidation, and the next.
Cascades are how leveraged accounts blow up quickly: a single adverse move forces one liquidation, which can push price further and trigger others, compounding losses. Risk X-Ray models the order your positions would liquidate in under a price shock, so you can see where the dominoes start before they fall.
Related: Effective leverage, Liquidation price, Risk X-Ray
Liquidation price. The liquidation price is the market price at which an exchange forcibly closes a leveraged position because its margin can no longer cover losses.
It depends on your entry, leverage, position size and maintenance-margin requirement. Higher leverage moves the liquidation price closer to your entry, leaving less room for the market to move against you. Knowing it — and your aggregate liquidation risk across positions — is essential before trading futures.
Related: Effective leverage, Liquidation cascade, Perpetual futures
Risk X-Ray. Risk X-Ray is CryptoPatterns.ai’s cross-bot risk view that aggregates every position and bot into your true effective leverage, a liquidation-cascade map, and your concentration and correlation exposure.
Most tools show risk one position at a time, on one exchange. Risk X-Ray is cross-bot and cross-position: it consolidates your entire footprint into a single picture of real risk, and lets you preview how any new trade changes that picture before you place it. It is a feature few, if any, retail crypto tools offer.
Related: Effective leverage, Liquidation cascade
AI crypto copilot. An AI crypto copilot is an AI assistant that not only answers questions about crypto markets but takes real, multi-step actions — like creating alerts, running scans and staging trading bots — with the user’s approval.
It differs from a generic chatbot in two ways: it is grounded in your real account data (positions, bots, portfolio, live market), and it can use tools to act inside the platform rather than only describing what to do. CryptoPatterns’ copilot is Claude-powered and stages every live action for your confirmation.
Related: Win rate, Risk X-Ray
Candlestick pattern. A candlestick pattern is a one- to three-candle formation on a price chart — such as an engulfing, hammer or morning star — used to anticipate reversals or continuations.
Each candle encodes the open, high, low and close for a period; their shapes and sequences reflect the balance between buyers and sellers. Candlestick patterns are probabilistic signals, strongest when they appear at key levels and are confirmed by the following candle and volume.
Related: Chart pattern, Win rate, Support and resistance
Chart pattern. A chart pattern is a multi-bar price structure — such as a triangle, flag, double top or head and shoulders — that traders use to anticipate the next move.
Unlike single candlestick signals, chart patterns form over many bars and are usually traded on a breakout or breakdown of a defining trendline or neckline. They tend to be more reliable when the breakout is decisive and accompanied by a volume expansion.
Related: Candlestick pattern, Harmonic pattern, Breakout
Harmonic pattern. A harmonic pattern is a five-point price structure (such as the Gartley, Bat, Butterfly or Crab) defined by specific Fibonacci ratios that mark a potential reversal zone.
Harmonic patterns aim to give precise, rule-based entries with tight risk by requiring the swings between points to fit particular Fibonacci retracements and extensions. They are most reliable when the ratios fit cleanly and align with other support or resistance.
Related: Chart pattern, Support and resistance
Win rate. Win rate is the percentage of trades or signals that end in a profit — wins divided by the total of wins and losses.
Win rate alone is incomplete: a strategy with a 40% win rate can be highly profitable if its winners are much larger than its losers. That is why it should always be read alongside reward-to-risk and profit factor, and why a win rate computed on a tiny sample is unreliable.
Related: Profit factor, Risk-reward ratio, Expectancy
Profit factor. Profit factor is the sum of all winning trades divided by the absolute sum of all losing trades; a value above 1.0 means the wins outweighed the losses.
It is one of the clearest single measures of an edge. A profit factor of 1.5 means you made 1.5 units for every 1 unit lost. Because it weighs the size of wins and losses (not just how often you win), it is more informative than win rate on its own.
Related: Win rate, Expectancy, Risk-reward ratio
Risk-reward ratio. The risk-reward ratio compares how much you stand to lose if a trade hits its stop versus how much you stand to gain if it hits its target.
A 1:3 risk-reward means risking 1 to make 3. A favourable ratio lets a strategy be profitable even with a sub-50% win rate. CryptoPatterns’ signals each carry a defined entry, stop and target, so the reward-to-risk is known before you take the trade.
Related: Win rate, Expectancy, Stop-loss
Expectancy. Expectancy is the average amount you can expect to win or lose per trade, combining win rate with the average size of wins and losses.
Expectancy = (win rate × average win) − (loss rate × average loss). A positive expectancy means a strategy is profitable over many trades, regardless of any single result. It is the number that matters most when ranking setups — a high win rate with tiny wins and big losses can still have negative expectancy.
Related: Win rate, Profit factor, Risk-reward ratio
Support and resistance. Support is a price level where buying tends to halt a decline; resistance is a level where selling tends to halt an advance.
These levels form where supply and demand have repeatedly turned price in the past. Patterns and signals are generally more reliable when they occur at well-established support or resistance, and a level that breaks often flips role — old resistance becoming new support, and vice versa.
Related: Breakout, Chart pattern
Breakout. A breakout is when price moves decisively beyond a defined support, resistance or chart-pattern boundary, often signalling the start of a new move.
Traders watch breakouts to enter as a new trend begins, but false breakouts are common, so confirmation — a decisive close beyond the level, ideally with rising volume — is key. Many chart patterns (triangles, flags, double tops) are explicitly traded on their breakout.
Related: Support and resistance, Chart pattern
Stop-loss. A stop-loss is a predefined price at which a trade is automatically closed to cap the loss if the market moves against you.
Placing a stop is the core of risk management: it defines your maximum loss before you enter, which lets you size the position sensibly. CryptoPatterns’ signals and bots include defined stops, and Risk X-Ray shows how your stops and leverage combine into real, aggregate risk.
Related: Take-profit, Risk-reward ratio, Liquidation price
Take-profit. A take-profit is a predefined price at which a trade is automatically closed to lock in a gain.
Setting a target before entering removes emotion from the exit and, paired with a stop-loss, defines the trade’s reward-to-risk in advance. Signals on CryptoPatterns carry one or more take-profit targets alongside the entry and stop.
Related: Stop-loss, Risk-reward ratio
Perpetual futures. Perpetual futures are crypto derivatives that let you trade with leverage and go long or short, with no expiry date, kept aligned to spot price by a periodic funding payment.
“Perps” are the most-traded crypto instrument. They allow leverage (amplifying gains and losses), short selling, and continuous holding, but carry liquidation risk and funding costs. CryptoPatterns’ bot supports full perpetual futures, and Risk X-Ray surfaces the leverage and liquidation risk they create.
Related: Effective leverage, Liquidation price, Funding rate
Funding rate. The funding rate is a periodic payment exchanged between long and short holders of a perpetual futures contract to keep its price tethered to the underlying spot price.
When the rate is positive, longs pay shorts (and vice versa). Persistent funding can be a meaningful cost or income depending on your position, and extreme funding often signals crowded positioning. It is one of the conditions CryptoPatterns can factor into alerts and strategies.
Related: Perpetual futures, Effective leverage
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