There are a huge number of trading strategies in trading, however, there are some that significantly prevail over all others. They are based on the concept of liquidity. Let's look at them in detail.
✴️ STRUCTURED LIQUIDITY
Swing High and Swing Low are market highs and lows respectively, and Equal high and Equal low are equal market highs and lows respectively.
BSL (Buy Side Liquidity) - liquidity at the highs
SSL (Sell Side Liquidity) - liquidity at the lows
Trend liquidity. Trend is the most popular trading model all over the world and has been used for decades. No matter what you read, no matter what you watch, everywhere there will be a system of trend detection and trading logic described. It is hard not to guess where market participants, who trade both along the trend and against it, will set stop-losses.
✴️ LIQUIDITY IN A BULLISH TREND
Let's consider where liquidity appears behind the nearest maximum in an upward trend. Historically, the most traders set stops above/below some highs or lows.
The first participants are sellers who started shorting the market and successfully caught the reversal. These traders set their stop losses behind the nearest maximum, i.e. over the top where the reversal started. Those with experience will start to partially close their orders or get rid of the whole position during the pullback.
The second participants are those who trade the reversal, who do not believe in the continuation of the trend. They set their limit orders for a rebound from a significant zone (or jump on the market) and set their stop losses in the same place as the first ones - over the nearest maximum. It is understandable, if it goes higher, it means that the analysis was wrong.
And here are the third participants who trade breakouts, who trend trade and enter the battle only when the price updates the maximum. There are two options to enter the trade: buy-stop or manual, where both types of orders are market orders. It's simple, if the price breaks through the resistance zone, then they jump just follow the trend.
What have we found out? The first ones set stops behind the level, the second ones set their stops in the same place, the third ones work according to the market. All this crowd set tons of market orders behind the nearest maximum. All these market orders are liquidity. What do you think, if the big player has plans to mark down the price, will it go after this liquidity?
✴️ LIQUIDITY IN A BEARISH TREND
Liquidity in a bearish trend is the same, but in reverse.
✴️ LIQUIDITY POOL
Equal high (EQH) and Equal low (EQL) are equal market highs and lows, respectively. From technical analysis are support and resistance zones.
When price approaches the previous high in a bull market, participants begin to both buy and sell. What happens if the price does not make the high in a continuation of the trend and bounces back? Those who doubted the rebound from this zone start jumping in by the market, putting their stops above this high.
What do we have? The first stops were put by those who caught the reversal at the peak, the second ones are those who came in on the rebound, the third ones are those who are still waiting for the breakout and do not believe in the reversal, and the fourth ones are those who start jumping on the rebound. And there are also those who have not decided what to do. How to get them into the market? Simple is to show more rebound from this zone. The more touches of one significant zone are made, the more liquidity accumulates behind this zone.
✴️ TREND LIQUIDITY
When the price rolls in one direction, clearly bouncing off the trend line visible to everyone, it does it for a reason. In addition to those who jump on the market structure, there are those who open trades from the trend line. Stops of all participants are distributed below the lows (if we consider the trend line upwards), someone puts thembelow the first, someone below the second, someone fears to put them farther away. More often than not, all this liquidity will be cleaned out in the near future, and very often it happens in one sharp move. Why? To show the effect of surprise and prevent most from jumping out of the trade. Essentially, it's liquidity both structural and trend-following.
Since the market is fractal, this happens on all timeframes. You don't think that you have seen a trend and you need to urgently open a trade in the other direction. You need to realize that this liquidity can be collected once, collected by the same movement or not collected at all. It all depends on the market context of the higher timeframe.
✴️ DAILY LIQUIDITY
It's simple here liquidity accumulated behind the previous day's high and low.
✴️ SESSION LIQUIDITY
Similarly liquidity generated outside the minimums and maximums of the time sessions. Someone trading to collect session liquidity usually hunts for Asian session liquidity.
✴️ STRUCTURED LIQUIDITY
Swing High and Swing Low are market highs and lows respectively, and Equal high and Equal low are equal market highs and lows respectively.
BSL (Buy Side Liquidity) - liquidity at the highs
SSL (Sell Side Liquidity) - liquidity at the lows
Trend liquidity. Trend is the most popular trading model all over the world and has been used for decades. No matter what you read, no matter what you watch, everywhere there will be a system of trend detection and trading logic described. It is hard not to guess where market participants, who trade both along the trend and against it, will set stop-losses.
✴️ LIQUIDITY IN A BULLISH TREND
Let's consider where liquidity appears behind the nearest maximum in an upward trend. Historically, the most traders set stops above/below some highs or lows.
The first participants are sellers who started shorting the market and successfully caught the reversal. These traders set their stop losses behind the nearest maximum, i.e. over the top where the reversal started. Those with experience will start to partially close their orders or get rid of the whole position during the pullback.
The second participants are those who trade the reversal, who do not believe in the continuation of the trend. They set their limit orders for a rebound from a significant zone (or jump on the market) and set their stop losses in the same place as the first ones - over the nearest maximum. It is understandable, if it goes higher, it means that the analysis was wrong.
And here are the third participants who trade breakouts, who trend trade and enter the battle only when the price updates the maximum. There are two options to enter the trade: buy-stop or manual, where both types of orders are market orders. It's simple, if the price breaks through the resistance zone, then they jump just follow the trend.
What have we found out? The first ones set stops behind the level, the second ones set their stops in the same place, the third ones work according to the market. All this crowd set tons of market orders behind the nearest maximum. All these market orders are liquidity. What do you think, if the big player has plans to mark down the price, will it go after this liquidity?
✴️ LIQUIDITY IN A BEARISH TREND
Liquidity in a bearish trend is the same, but in reverse.
✴️ LIQUIDITY POOL
Equal high (EQH) and Equal low (EQL) are equal market highs and lows, respectively. From technical analysis are support and resistance zones.
When price approaches the previous high in a bull market, participants begin to both buy and sell. What happens if the price does not make the high in a continuation of the trend and bounces back? Those who doubted the rebound from this zone start jumping in by the market, putting their stops above this high.
What do we have? The first stops were put by those who caught the reversal at the peak, the second ones are those who came in on the rebound, the third ones are those who are still waiting for the breakout and do not believe in the reversal, and the fourth ones are those who start jumping on the rebound. And there are also those who have not decided what to do. How to get them into the market? Simple is to show more rebound from this zone. The more touches of one significant zone are made, the more liquidity accumulates behind this zone.
✴️ TREND LIQUIDITY
When the price rolls in one direction, clearly bouncing off the trend line visible to everyone, it does it for a reason. In addition to those who jump on the market structure, there are those who open trades from the trend line. Stops of all participants are distributed below the lows (if we consider the trend line upwards), someone puts thembelow the first, someone below the second, someone fears to put them farther away. More often than not, all this liquidity will be cleaned out in the near future, and very often it happens in one sharp move. Why? To show the effect of surprise and prevent most from jumping out of the trade. Essentially, it's liquidity both structural and trend-following.
Since the market is fractal, this happens on all timeframes. You don't think that you have seen a trend and you need to urgently open a trade in the other direction. You need to realize that this liquidity can be collected once, collected by the same movement or not collected at all. It all depends on the market context of the higher timeframe.
✴️ DAILY LIQUIDITY
It's simple here liquidity accumulated behind the previous day's high and low.
✴️ SESSION LIQUIDITY
Similarly liquidity generated outside the minimums and maximums of the time sessions. Someone trading to collect session liquidity usually hunts for Asian session liquidity.
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bit.ly/3spSQqC
🔻FREE Telegram channel🔻
t.me/DeGRAMChannel
🔻Contact for Paid SIGNALS🔻
t.me/DeGRAMForex