THE MOST PROFITABLE PATTERN: how to trade liquidity collection?
What is your favourite pattern in trading? Write in the comments below this educational idea. I think one of the best patterns is liquidity collection.
This pattern has become so common in Bitcoin trading that it is no longer considered unique. But if you look at the history of trades over the last year, you can see the profitability and reliability of this pattern. The number of profitable trades using this pattern is close to 100%.
🚩 To understand what liquidity collection is, we need to understand the definition of liquidity.
📊 What is liquidity?
✅ Liquidity is the ability of a cryptocurrency to exchange into fiat or another cryptocurrency. From this came the concept of high liquidity and low liquidity assets. If you can sell or buy 1 Bitcoin in 1 second. It`s a high liquidity, then you can sell unknown coin on small exchange for the whole 2-3 days. It`s a low liquidity.
Also, there are high and low liquidity exchanges. For example, you want to trade 1 Bitcoin for $30 000. On a high liquidity exchange you can do it in 1 second and 1 click, but on a low liquidity exchange, where there are simply no buyers for your Bitcoin, the trade can take more than 1 minute.
📊 What is liquidity collection?
Liquidity collection is an intentional price movement where a big player pushes the price up or down in order to get enough cryptocurrency to oprn his short or long. You can see examples of liquidity collection on the chart.
🚩After liquidity collections, the price could fall by -50-70% and rise by >+100%. This shows how important this pattern is in trading and what profit it may give.
📊 What types of liquidity collection are possible?
There are 2 types of liquidity collection:
1️⃣ liquidity collection to buy. This happens when a big player wants to open a long trade. He pushes the price below a local low or important level to activate stop losses of long traders and buy back their cryptocurrency (their liquidity). After that, the price starts to rise.
🚩You can see such an example on the $30,000 chart. There have been 2 liquidity collections to buy.
2️⃣ A liquidity collection to sell occurs when the whale needs to open a short. He intentionally pushes the price above the local level. By doing this he activates stop losses of short traders and he can also sell enough of his cryptocurrency to long traders who are trading a breakout of the highs.
🚩There are a lot of examples on the chart. My favourite is the liquidity collection at the ATH and new ATH. The price fall so much and you can get good profit from 30 to 70%.
📊 How can you identify liquidity collection?
It can be in the form of a false breakout or an intentional takeout of stops like a shakeout (where a major player intentionally pushes the price to activate traders' stop-losses).
Liquidity collection happens not only on higher timeframes, but also on lower ones. Some scalpers use this pattern to trade on 5-15 min.
🚩I decided to show you liquidity collection on the daily timeframe because these signals are more noticeable and have better results on 4h-1d timeframes. Also you can use this pattern at any crypto, Forex or stocks.
📊 Why are big players looking for liquidity?
If you're a big player, even on a highly liquid exchange it's hard for you to sell or buy >100 Bitcoins. There are simply no buyers or sellers at the price you need. To do that, the whale is looking for liquidity accumulation areas, which are very often placed below or above important price levels (local lows/highs, all-time highs, even numbers). These are the places where traders place most of their buy or sell orders and big player have enough liquidity to buy or sell crypto.
I like the example with the bread and it`s easy to understand for the beginner. Image that you need to buy bread to yout home. You can buy it at any shop. But what if you are large enterprenuer and want to buy the bread to your 100 shops? You not able to buy it in the closest shop because there is no bread (no liquidity). You have to go to the the large bakery where you can order enough bread for your shops. This large bakery is the liquidity accumulation areas above or below important price levels.
📊 What tools can help you identify liquidity collection?
What can help you understand where the price will go more than the whale's own orders? The whale places his buy/sell orders near important levels in advance, because this is his only chance to open a deal for $100-200 million or more.
That's why I use the DOM and Footprint indicators, where I can clearly see the orders of the big players. With this information I can:
1️⃣ close the trade in profit in time, before the price starts to make a pullback.
2️⃣ open a trade in the same side with a big player: put a short stop loss close to the whale's order and get a best risk reward.
You can see an example of a large whale order on the chart. One whale placed an order to buy 98 Bitcoins at $23,200, after which the price rebounded during the fall and continued rising.
🔥Traders, how do you use liquidity collection? Write in the comments if you found this educational idea useful and going to use it in your trading strategy.
💻Friends, press the "boost"🚀 button, write comments and share with your friends - it will be the best THANK YOU.
P.S. Personally, I open an entry if the price shows it according to my strategy.
Always do your analysis before making a trade.
This pattern has become so common in Bitcoin trading that it is no longer considered unique. But if you look at the history of trades over the last year, you can see the profitability and reliability of this pattern. The number of profitable trades using this pattern is close to 100%.
🚩 To understand what liquidity collection is, we need to understand the definition of liquidity.
📊 What is liquidity?
✅ Liquidity is the ability of a cryptocurrency to exchange into fiat or another cryptocurrency. From this came the concept of high liquidity and low liquidity assets. If you can sell or buy 1 Bitcoin in 1 second. It`s a high liquidity, then you can sell unknown coin on small exchange for the whole 2-3 days. It`s a low liquidity.
Also, there are high and low liquidity exchanges. For example, you want to trade 1 Bitcoin for $30 000. On a high liquidity exchange you can do it in 1 second and 1 click, but on a low liquidity exchange, where there are simply no buyers for your Bitcoin, the trade can take more than 1 minute.
📊 What is liquidity collection?
Liquidity collection is an intentional price movement where a big player pushes the price up or down in order to get enough cryptocurrency to oprn his short or long. You can see examples of liquidity collection on the chart.
🚩After liquidity collections, the price could fall by -50-70% and rise by >+100%. This shows how important this pattern is in trading and what profit it may give.
📊 What types of liquidity collection are possible?
There are 2 types of liquidity collection:
1️⃣ liquidity collection to buy. This happens when a big player wants to open a long trade. He pushes the price below a local low or important level to activate stop losses of long traders and buy back their cryptocurrency (their liquidity). After that, the price starts to rise.
🚩You can see such an example on the $30,000 chart. There have been 2 liquidity collections to buy.
2️⃣ A liquidity collection to sell occurs when the whale needs to open a short. He intentionally pushes the price above the local level. By doing this he activates stop losses of short traders and he can also sell enough of his cryptocurrency to long traders who are trading a breakout of the highs.
🚩There are a lot of examples on the chart. My favourite is the liquidity collection at the ATH and new ATH. The price fall so much and you can get good profit from 30 to 70%.
📊 How can you identify liquidity collection?
It can be in the form of a false breakout or an intentional takeout of stops like a shakeout (where a major player intentionally pushes the price to activate traders' stop-losses).
Liquidity collection happens not only on higher timeframes, but also on lower ones. Some scalpers use this pattern to trade on 5-15 min.
🚩I decided to show you liquidity collection on the daily timeframe because these signals are more noticeable and have better results on 4h-1d timeframes. Also you can use this pattern at any crypto, Forex or stocks.
📊 Why are big players looking for liquidity?
If you're a big player, even on a highly liquid exchange it's hard for you to sell or buy >100 Bitcoins. There are simply no buyers or sellers at the price you need. To do that, the whale is looking for liquidity accumulation areas, which are very often placed below or above important price levels (local lows/highs, all-time highs, even numbers). These are the places where traders place most of their buy or sell orders and big player have enough liquidity to buy or sell crypto.
I like the example with the bread and it`s easy to understand for the beginner. Image that you need to buy bread to yout home. You can buy it at any shop. But what if you are large enterprenuer and want to buy the bread to your 100 shops? You not able to buy it in the closest shop because there is no bread (no liquidity). You have to go to the the large bakery where you can order enough bread for your shops. This large bakery is the liquidity accumulation areas above or below important price levels.
📊 What tools can help you identify liquidity collection?
What can help you understand where the price will go more than the whale's own orders? The whale places his buy/sell orders near important levels in advance, because this is his only chance to open a deal for $100-200 million or more.
That's why I use the DOM and Footprint indicators, where I can clearly see the orders of the big players. With this information I can:
1️⃣ close the trade in profit in time, before the price starts to make a pullback.
2️⃣ open a trade in the same side with a big player: put a short stop loss close to the whale's order and get a best risk reward.
You can see an example of a large whale order on the chart. One whale placed an order to buy 98 Bitcoins at $23,200, after which the price rebounded during the fall and continued rising.
🔥Traders, how do you use liquidity collection? Write in the comments if you found this educational idea useful and going to use it in your trading strategy.
💻Friends, press the "boost"🚀 button, write comments and share with your friends - it will be the best THANK YOU.
P.S. Personally, I open an entry if the price shows it according to my strategy.
Always do your analysis before making a trade.
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