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It's mainly derived from the frequency and magnitude of the wave. The frequency derives from the period of the binary system, which in turn derives from the masses of the two black holes. Once the period has been determined it's possible to solve for the original masses. Given those we can estimate the energy produced in the collision, compare that to the magnitude of the wave we received, and then estimate the distance (similar to estimating how far away a sound is by how loud it was). LIGO can also roughly locate the direction the waves come from by comparing when the signals are received at the two different detectors (LA and WA). If we add a third observatory at some point we should be able to triangulate much more accurately.



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