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Liquidity

Choch Entry & Liquidity Model | Trading StrategyIntroduction: The trading strategy "Choch Entry & Liquidity Model" has emerged as an innovative model in the financial domain, focusing on market entry and liquidity. This approach is built upon key principles aimed at maximizing returns and effectively managing risk. Fundamental Principles: The strategy relies on an entry approach known as "Choch Entry," which is presumed to provide precise trading signals based on specific indicators. This method aims to capture significant price movements through a detailed analysis of market data. Liquidity Management: Another distinctive element of this strategy is its focus on liquidity. The "Liquidity Model" seeks to optimize order execution, ensuring that the strategy can enter and exit the market efficiently, minimizing slippage and price impact. Practical Implementation: The practical implementation of this strategy requires a thorough understanding of financial instruments and indicators used in the model. Traders must be able to adapt the strategy to changing market conditions and constantly monitor key variables to make informed decisions. Risks and Challenges: As with any trading strategy, it is crucial to understand the potential risks and challenges associated with the "Choch Entry & Liquidity Model" strategy. Market volatility, sudden changes in economic conditions, and other factors can influence outcomes. Conclusions: The "Choch Entry & Liquidity Model" trading strategy represents an intriguing approach that combines targeted entry with careful liquidity management. Its effectiveness depends on the trader's proficiency in consistently and flexibly applying key principles, adapting them to the changing dynamics of the market.
Education
by Forex48_TradingAcademy
Trading on Holidays: Liquidity and Spreads When trading forex, it's essential to check spreads, especially during holidays. Trading forex during holidays can be a bit more challenging due to reduced liquidity in the market. Liquidity refers to the ease with which assets can be bought or sold without causing a significant change in price. During holidays, liquidity can be lower as many traders and financial institutions take time off, leading to fewer participants in the market. Lower liquidity can directly impact the spread, which is the difference between the bid and ask price of a currency pair. In times of reduced liquidity, spreads tend to widen, meaning the difference between the buying and selling price of a currency pair increases. This can lead to higher trading costs for traders, as wider spreads require a larger price movement in the underlying asset before a trade becomes profitable. It's essential for traders to be aware of these potential spread increases during holidays to avoid unexpected trading costs. Additionally, wider spreads can also lead to slippage , where a trade is executed at a different price than expected. This can further impact trading results, especially during fast-moving markets with low liquidity. Therefore, checking spreads during holidays is crucial for forex traders to anticipate potential increases in trading costs and adjust their trading strategies accordingly. On TradingView, you can check the spreads in the top left corner. There you can find bid, ask prices and the spread between them. It's important to factor in the impact of wider spreads on profitability and risk management when trading during these periods. By staying informed about spread changes during holidays, traders can make more informed decisions and better navigate the challenges of lower liquidity in the forex market. ❤️Please, support my work with like, thank you!❤️
Education
by VasilyTrader
4
TRADING FOUNDATION: WHY DOES PRICE MOVE (PART 1 - LIQUIDITY)WHY DOES PRICE MOVE IN THE FOREX MARKET? A simple answer to this question is... price moves for 2 major reasons To take liquidity To fill imbalances or price inefficiencies I will break this into two parts and discuss Liquidity first. What is Liquidity in Forex Trading? Liquidity is the presence of orders at specific prices in the market, ensuring that transactions can take place without disruptions. When traders talk about liquidity, they are usually referring to the resting orders in the market. These orders can be absorbed or targeted by banks and financial institutions (BFIs) to influence the patterns of price movement. Liquidity can be found throughout the market, although certain areas may have higher levels than others. The good news is that it is indeed possible to learn how to identify and recognize liquidity patterns. Liquidity comprises a variety of orders that gather in the market, including limit orders, stop loss orders, and stop limit orders. These orders come into play when prices reach specific levels of supply or demand in the market. Understanding liquidity is essential in comprehending how prices move. Why do you need to understand Liquidity? Liquidity is crucial for predicting price movements. Analyzing liquidity, along with market structure, supply and demand, and order flow, provides insights into potential price directions. It's important to consider liquidity alongside trend analysis and supply and demand to understand market conditions effectively. Highly liquid markets can be manipulated by large banks or institutions, leading to liquidity shortages, price slippage, and poor trade execution. Recognizing liquidity pools during slow sideways price movements is key. What are the main types of Liquidity in Forex trading? 1. Buy-side liquidity (see chart for example) Buy-side liquidity refers to the accumulation of orders above a range or high, including buy-stop limits and stop losses placed by sellers and breakout traders. Banks and financial institutions (BFIs) may target these orders to fuel temporary or sustained bullish price movements. Buy-side liquidity can be divided into 3 a. Relatively equal highs liquidity b. Previous high liquidity c. Trendline liquidity a. Relatively equal highs: This is when the price fails to break a level within a minimum of two tries. When this happens, there is a high tendency that orders will be above that level i.e. stop-losses or buy-stop orders. Due to this, large institutions will target that level to liquidate their orders or fill new orders. see the example below. b. Previous high: A previous high is the top of a level or range from which a retracement in price started. Every high in the market holds liquidity. Usually not as appealing at the relatively equal highs. see the example below. c. Trendline: This liquidity setup is usually as appealing as the relatively equal highs as it provides enough liquidity in the market to liquidate orders of large funds or fill in more orders. Anytime you notice a buy-side trendline liquidity building up, expect that price will move radically fast towards it. see example below 2. Sell-side liquidity (see chart for example) Sell-side liquidity refers to the collection of orders situated below a range or low, including sell-stop limits and stop losses placed by buyers and breakout traders. Banks and financial institutions (BFIs) can target these orders to generate temporary or sustained bearish price movements. Similar to buy-side liquidity, sell-side liquidity serves a crucial role in the market dynamics. Sell-side liquidity can be divided into 3 a. Relatively equal lows liquidity b. Previous low liquidity c. Trendline liquidity a. Relatively equal lows: This is when the price fails to break a level within a minimum of two tries. When this happens, there is a high tendency that orders will be below that level i.e. stop-losses or sell-stop orders. Due to this, large institutions will target that level to liquidate their orders or fill new orders. see the example below. b. Previous low: A previous low is simply put at the top of a level or range from which a retracement in price started. Every low in the market holds liquidity. Usually not as appealing at the relatively equal lows. see the example below. c. Trendline: This liquidity setup is usually as appealing as the relatively equal lows as it provides enough liquidity in the market to liquidate orders of large funds or fill in more orders. Anytime you notice a sell-side trendline liquidity building up, expect that price will move radically fast towards it. see example below Note : This does not mean you should just trade based on where you see liquidity, you should also do a proper multi-timeframe analysis, and if your narrative aligns with where liquidity is resting, there is a higher chance for it to go there. I will make a post on the Part 2 - Imbalances. Ensure to follow so you see what it is and how to make good use of it. Cheers, Jabari
OANDA:XAUUSDEducation
by jabariofafrica
Liquidity - How to easily spot it!Here's how you can easily use liquidity to create wealth 🤑 Knowing how to identify liquidity is an important aspect of trading that shouldn't be overlooked, BUT contrary to popular belief, it's not the greatest thing since sliced bread... It does have its significance and it's place, but understanding WHY "liquidity" is formed is more important than the WHERE ... Once you know why, you can slay hard every single day! Follow me for more educational posts and market analysis:) Anyway, that's all for now, Hope this post helps and as usual... Happy Hunting Predators 🦁🐯🦈
Education
by Apexfx_Alpha
Trading sessions liquidity huntLiquidity serves as the driving force behind all markets. The fundamental driver of any price shift involves the creation and aggregation of liquidity, with the objective of accumulating or distributing positions among market participants. Accumulating positions necessitates counter liquidity to fulfill orders and initiate positions in the desired volume. Liquidity is therefore established within specific price ranges, with the intention of later manipulating it toward the accumulation of counter liquidity, ultimately achieving the goals of order fulfillment. The bulk of liquidity, including stop orders and liquidations, tends to congregate around technical and psychological support/resistance levels, which can be observed retrospectively through the analysis of clusters and volume profiles. Engaging in trading based on a one-time reaction, characterized by a substantial cluster forming during the breach of a particular price level, can lead to premature entry and potential losses, driven by inaccurate expectations of either a price breakthrough or deviation from calculated reference points - An approach that leans towards caution, involving the selection of a trading setup once liquidity has been obtained from the previous trading session's highs/lows within the prevailing trend. This process is carried out while ensuring alignment between higher and lower timeframes. - The primary objective is capital preservation, which is accomplished by minimizing risk to the range of 0.5-1% per trade and adjusting open positions to the break-even point after confirming the trend's structure. - The strategy opts for an entry technique that boasts a high mathematical expectation of success. - Fresh positions are initiated exclusively during periods of elevated market volatility, particularly during the optimal trade time (OTT) sessions in London and New York. The focus is directed towards trading setups featuring risk:reward ratios ranging from 1:3 to 1:10. Given the dynamics of market participants accumulating and distributing their positions during trading sessions, it's reasonable to assert that liquidity forms outside the fluctuations of these sessions. This liquidity is typified by stop orders and position liquidation within the scope of a micro-trend. Consequently, it can be inferred that the commencement of the subsequent session will involve manipulation. The aim of this manipulation is to interact with such liquidity to amass positions in the opposite direction. Coupled with heightened volatility during the session's commencement, this provides opportunities to initiate positions before the impending price movement. The primary criterion for entering a position will be the disruption of the existing structure following the capture of liquidity. Additional factors might encompass corrective momentum, liquidity in the opposing direction acting as an attraction for distributing accumulated positions during manipulation, and the formation of trading ranges with deviations, among others. Entry into a position occurs on a lower time frame, emanating from an untested supply/demand zone. An additional aspect to consider is the presence of local liquidity before reaching the entry point.
BITSTAMP:BTCUSDEducation
by Crypto4light
How to trade Liquidity Sweeps 🌊 Trading liquidity sweeps 🌊 and identifying fake liquidity grabs 🕵️‍♂️ can be valuable skills for traders. These strategies involve capitalizing on market inefficiencies and understanding how institutional traders and algorithms influence price movements. In this guide, we'll explore what liquidity sweeps and fake liquidity grabs are and how to trade them effectively. Understanding Liquidity Sweeps: A liquidity sweep occurs when a trader executes a large market order that "sweeps" through the order book, clearing out available liquidity at various price levels. These sweeps often signal strong buying or selling interest, potentially leading to significant price moves. Identifying Fake Liquidity Grabs: Fake liquidity grabs 🎭 are market manipulation techniques used to deceive traders. Market makers or large players might place large orders on the order book to give the illusion of significant interest at a specific price level. However, they often cancel these orders before they get executed, leading to sudden reversals in price. Trading Liquidity Sweeps: Monitor Order Flow: Keep an eye on order flow and trade volume to identify sudden surges in trading activity. Liquidity sweeps are often accompanied by spikes in volume. Identify Key Levels: Look for important support or resistance levels where liquidity sweeps are likely to occur. These levels can be based on technical analysis, such as previous highs or lows. Entry and Stop-loss: Enter a trade when you spot a liquidity sweep that confirms your bias. Set stop-loss orders to manage risk in case the market moves against you. Take Profits: Take profits when the market reacts as expected, but be prepared for quick price reversals. Liquidity sweeps can be followed by retracements. Trading Fake Liquidity Grabs: Be Cautious: Approach price moves driven by apparent liquidity grabs with caution. These moves can be short-lived. Confirm Price Action: Wait for confirmation of the direction after the fake liquidity grab. Look for signs that real market sentiment is driving the price. Risk Management: Place stop-loss orders to protect your capital in case the market reverses quickly. Avoid chasing the initial price move. Use Additional Indicators: Combine your analysis with other technical indicators or market sentiment tools to increase your confidence in your trading decisions. Conclusion: Trading liquidity sweeps and fake liquidity grabs can offer opportunities for profit, but they also come with risks. It's essential to have a clear strategy, strict risk management rules, and the ability to adapt to rapidly changing market conditions. As with any trading strategy, practice and experience will help refine your skills in identifying and capitalizing on these market dynamics. 🚀📈🌊
INDEX:BTCUSDEducation
by AlexWhale
📈📊 Detecting Liquidity: Pivot Points and Trading ReversalsGreetings, fellow traders! Today, let's delve into the fascinating world of liquidity, pivot points, and how they can be essential elements in your trading strategy. Understanding the relationship between these factors can provide you with valuable insights into potential price reversals and market sentiment. 💡📈 🤔 What is Liquidity? Liquidity refers to how easily and quickly an asset can be bought or sold without significantly affecting its price. In the context of trading, liquidity often clusters at specific price levels, creating zones where many orders are concentrated. These zones can act as critical points of interest for traders. 🔄 Pivot Points and Liquidity: Pivot points are technical indicators calculated from previous price data, typically using the high, low, and close prices. They provide potential support and resistance levels, but they also reveal where liquidity might accumulate. 🔍 Liquidity Pools: Liquidity often pools around pivot points, creating liquidity pools. These pools represent price levels where a large number of buy and sell orders are clustered. Traders pay close attention to these levels as they can signal significant price reactions. 🚀 Trading Liquidity and Reversals: Here's how you can leverage liquidity and pivot points in your trading strategy: Identify Pivot Points: Use technical analysis tools to identify pivot points on your chart. There are various pivot point calculation methods, such as Standard, Fibonacci, or Camarilla. Choose the one that aligns with your trading style. Focus on Confluence: Look for confluence between pivot points and other technical indicators, such as trendlines, moving averages, or RSI. When multiple factors align at a specific price level, it strengthens the significance of that level. Observe Liquidity Zones: Pay attention to areas where liquidity is concentrated. These zones can act as magnets for price action. When price approaches a liquidity pool, it's more likely to experience significant movement. Spotting Reversal Signals: Reversals often occur near pivot points, especially if there's a confluence of factors. Look for candlestick patterns, divergence in oscillators, or other reversal signals to confirm a potential change in trend direction. Risk Management: Always implement proper risk management strategies. Set stop-loss orders to limit potential losses if the market moves against your position. 🌐 Conclusion: Understanding liquidity and pivot points can provide you with a unique perspective on market dynamics. By identifying liquidity pools and watching for reversal signals around pivot points, you can make more informed trading decisions. However, remember that no strategy is foolproof, and risk management is paramount. Keep refining your skills and adapt to ever-changing market conditions. 🔄📈
Education
by AlexWhale
1
Mastering Liquidity in Trading: Unraveling the Power of SMC 🔥Liquidity is what moves the market. Liquidity and liquidity pools are created and targeted by the markets and a lack of understanding on this topic is the main reason why the trading mind fails even if the analyst mind is correct. Traders who have been victim to their stop losses being taken by a wick before price running in their favour are the perfect example of having the correct analytical mind but a weak trading one. Liquidity is unlike an order block or price inefficiency or anything else that can be physically identified on a chart. It is invisible, however, it is still possible to identify without the need of indicators or anything other than price action alone. Simply put, liquidity is money in the market. Typically, this money comes in the form of retail orders and stop losses. Knowing this allows us to understand that if the market targets liquidity, and liquidity comes in the form of retail stop losses, the market must be hunting and going against retail strategies. 🟢The first and most prominent of these retail strategies is the idea of support and resistance. On the chart we can see an example of what retail traders would refer to as a level of resistance. In doing this they would short price from this level expecting a move down. This creates a liquidity pool just above this ‘resistance level’ where the average retail trader would place their stop losses. This liquidity pool is now a target for the market. So instead of trading this move down, we wait for the liquidity grab and use the rest of this strategy to capitalise on the bearish move that we can expect. On the Chart is a demonstration of the market hunting liquidity before making its next move. Again this is where traders would be correct in terms of bias but incorrect in terms of trading. This is an example of what an informed chart looks like. Instead of highlighting support and resistance levels, we highlight equal lows and equal highs respectively. Equals are usually in the form of otherwise referred to double tops or double bottoms but can also be more than that. The key difference, however, is that we would anticipate the market hunting the liquidity above the equal highs and below the equal lows. Due to this, we avoid being a victim to the market stopping us out by a wick and falling in our direction. The second most prominent retail strategy or idea is the trend-line. Every time a trend-line formation is present within the market, we can now understand the amount of stop losses and, therefore, liquidity that would be sitting under this ‘trend-line’. Above is an example of the importance of recognising trend-line liquidity. Once the liquidity above the equal highs has been hunted, we need to establish the next liquidity pool in the market. Seeing a break above the ‘resistance level’ would be seen as a ‘bullish breakout’ by the average trader. However, we can identify that as a liquidity purge and higher high, in which case we can expect a higher low to be made - which would mean a bearish retracement. On top of this, we can see a build up of trend-line liquidity just above the discount end of the parent price range. This gives us an added confluence and confidence in the fact that we can expect lower prices with the liquidity underneath the trend-line as our first target. Above is an example of liquidity being grabbed on the bullish side (above the equal highs) sending the uninformed trader long based off of a ‘bullish breakout’, then hunting the liquidity on the bearish side (below the trend-line) and sending the uninformed trader short based off of the break of the trend-line. This is typical of the market - it shakes out impatient and uninformed traders on both sides of the market before making the actual move. Here is another examples of how trendline liquidity gets purged by the market. On the chart we can see a trend-line where many traders would be longing the market, unaware that they will be victims of a liquidity purge. Below we can see that liquidity purge below the trend-line which would send the average trader short. Using the rest of the strategy, we are able to understand that price will react from specific levels to go long Below we can see the completion of this market cycle with our levels being respected and the real bullish leg being made. 🔥🟠🔥🔥🟠🔥 BONUS CHEATSHEETS👇👇👇👇
Education
by algoat
2
What is Polygon 2.0 ?Polygon, the most prominent Ethereum Layer 2 solution and one of the top cryptocurrency projects by market value, is launching its first zkEVM chain, independent of the main Polygon proof of stake chain. Furthermore, it plans to fundamentally change the architecture of the Polygon Network with the launch of Polygon 2.0. What Is Polygon 2.0? Polygon 2.0 is a planned Polygon Network upgrade to establish it as the "Value Layer of the Internet." It will be an elemental protocol that enables users to create, exchange, and program value in the same manner they do with information on the internet but in a decentralized system. By providing features such as digital ownership, decentralized finance, and new coordination mechanisms, Polygon 2.0 will enable anyone to access the global economy. It reimagines the architecture of the Polygon network, its governance, and tokenomics and tries to address the challenges of existing blockchains, more precisely, network throughput and scalability limitations. How Does Polygon 2.0 Work? Polygon 2.0 will take a four-layered structure designed to improve the security and scalability of the network while making transactions atomic and instantaneous. static1.makeuseofimages.com The layers include; Staking Layer : This is the existing layer composed of a "validator manager" contract on the Ethereum blockchain and a "chain manager" for every Polygon chain created. It maintains the validators' registry, processes their requests, and processes slashing events. Interoperability Layer : Built upon the staking layer, the interop layer connects every Polygon chain using bridges. It will also have an aggregator that merges zero-knowledge proofs into one proof sent to the Ethereum blockchain. Execution Layer : This layer will enable the Polygon chains to process blocks similarly to Ethereum blocks. It contains multiple components, including P2P, consensus, mempool databases, and witness generators. Proving Layer : This layer generates proofs for all internal and cross-chain transactions for each polygon chain: It's composed of the "common prover" for proof aggregation and verification, the "state machine" that simulates the execution environment, and a "constructor" for developers. Polygon Labs believes the resulting network of zk-powered Layer 2 chains consolidated through a cross-chain coordination protocol will achieve unified liquidity and unlimited scalability. Consequently, users will engage with the entire network with singularity. What Polygon 2.0 Means for Crypto Users? Polygon 2.0 is in the rollout stage. Collaborations between Polygon Labs, other stakeholders, and the broader Polygon and Ethereum community will determine whether to implement it or not through a formal governance process. But if the current development is to go by, the upgrade is likely to go through. Two major dates are pending for Polygon 2.0: The week of 10th July 2023, when they'll announce a token release, and the following week of 17th July, when governance will follow due process. Polygon 2.0 will introduce two great features to the network: 1-Polygon 2.0 will rely on zk-proofs to store validated transactions on Layer 1 and actual transaction data on Layer 2. This innovation will reduce the cost of transactions and improve users' privacy. 2-The network will support countless chains and allow unlimited cross-chain interactions instantly without compromising security. Hence, users will interact with the entire network without feeling they're leaving a single chain. With such developments paving the way for a better Polygon Network, it will be interesting to watch if more investors will bet on its future. Polygon 2.0 Will Be a Web3 Mainstay The future looks promising for the Polygon Network as it introduces Polygon 2.0, which will establish an essential protocol in the Web3 environment. Over the next few weeks, Polygon Labs will share detailed data on the architecture and workings of the new network and how they intend to transform the project. If interested in reviewing the proposal, you're encouraged to participate in the community's conversations that will shape the network's future. Hope you enjoy this article. Follow for more important contents an analysis. Refrences : www.makeuseof.com polygon.technology
MEducation
by TraderAmin-KZ
6
Shift In Market Structure Or Liquidity Grab By Smart Money????Look at the Us30, GBPUSD and EURUSD charts attached to this post, what do you see???? GBPUSD Do you see a shift in market structure or Liquidity grab by smart money algorithm? In financial market trading, one key to determine where the liquidity that the market will run next is located is to ask yourself who are those making money from the current move.... Where are they likely to trail their stops to. Whatever your answer is, that is the liquidity the algorithm will most likely run first to continue in the intended direction... With this understanding, you should now be able to understand that not all structure shift in a bullish or bearish market is a shift in market structure. The majority are liquidity grabs by smart money algorithm. US30
Education
by Elijahenoch7
How to work with liquidity grab?Hello everyone👋 Today we will discuss how to effectively work with areas of increased liquidity. Actually, it would be appropriate to make this post after we have examined how order flow is formed in the market in order to understand the technical aspect of working with liquidity. Therefore, first, we will provide some introductory information using a long position as an example. When a trader buys an asset, they usually set a stop loss at a certain level or, if they don't use protective orders, their position will have a liquidation price depending on the chosen leverage. Based on this, when a specific price level is reached (stop loss or liquidation), their asset will be sold with a market order that will match the nearest limit order. Hence the conclusion: any exit from a losing position, as described above, is someone else's entry into a position with a limit order, often at a favorable price. This is how the positions of all major market participants are accumulated. So, we simply need to estimate where the maximum number of active stop losses is located and make a trading decision based on that. Most often, stop orders are located in the following zones: 1️⃣Obvious levels with equal highs/lows. 2️⃣Above/below any high/low in an obvious trend. After identifying such zones using our indicator or independently, you can take trades in the direction of liquidity grab (counter-trend trades with high potential but also high risk) or wait for actual liquidity grab and confirmation to enter a trend trade. In the next post, we will explore the technical aspect of liquidity grab for a deeper understanding of the topic. We look forward to your questions. Happy trading!
Education
by PhantomFlow
Market Makers Buy And Sell ModelThe market Makers' Buy and Sell Model is a strategy that reveals the market maker algorithm model for price delivery. Basically, there are 3 things market makers' algorithms do with price in every trading session, day, week, and month Those 3 things are; Accumulation, Manipulation, and Distribution. AMD: A: Accumulation M: Manipulation D: Distribution 1. Accumulation: They accumulate liquidity through the delivery of a ranging market. The purpose of delivering a ranging market is to induce both buyers and sellers to enter the market thinking that price will go in their direction. How to Identify a Ranging Market: You know price is in a ranging market when you see obvious relative equal highs and lows price range. In a ranging market, price swing points have relatively equal highs and lows, that is, the price is neither delivering a higher high nor a higher low. 2. Manipulation: After accumulating both buy and sell orders, they then manipulate the market to further induce another set of traders which are breakout traders. But, that particular manipulation move is not their intended direction for the day. They only use it to gather liquidity, Which will then lead them to the next action which is to move and distribute prices in their real direction for the day. Usually, when price breaks out of a ranging market, the break-out is a manipulation to further induce a new set of traders to enter the market, further proving liquidity for market makers' real intended direction. 3. Distribution: After manipulating the price to a particular direction different from their plan, they then distribute the price to their original intended direction. e.g to buy, they will first sell the market and then buy at the discount price level. You know a price distribution through clean candles that left imbalances behind and then break market structure away from the previous manipulation move structure high or low to form a new structure. Example of Market Makers Buy and Sell Model as described on the chart. AMD: A: Accumulation M: Manipulation D: Distribution Accumulation: Price range for some time, accumulating liquidity on both sides of long and shorts. Manipulation: Price broke the high of the accumulation to take out Buyside liquidity and then create a new higher high and higher low. But it's a manipulation move. Distribution: Price moves away from the FVG leading to a shift in market structure, plus a short pullback, follow by a massive move to the downside to take out sell-side liquidity below. Entry: Your entry should be inside the FVG created by price before the shift in market structure, you can set a limit order inside the fvg and place your stop loss at the high of the swing high created prior to the fvg and shift in market structure. The same thing applies to a bullish market. Basically, Marker makers push prices higher so they can sell the market at a premium, while they sell the market to lower prices so they can buy that market at very discount prices This strategy can be used in any time frame and all markets including forex, crypto, stocks, future etc. Follow me for more updates. Feel free to ask me any questions in the comment.
Education
by Elijahenoch7
Learn to identify liquidity levels. Before we begin, we need to understand what liquidity is. A market with high liquidity is one where there is a large number of buyers and sellers willing to trade in that particular asset. This means that there is a high availability of buy and sell orders, allowing transactions to be executed quickly and with minimal impact on prices. Where are the most liquid points located on a chart? These points are found at the highs and lows. This is because at these points, many people are waiting for the zone to act as support or resistance, or for the price to break the zone (breakout) to continue its direction. I always use daily, weekly, and monthly timeframes to identify these zones. Why the liquid points are importante on a chart? Liquidity is extremely important because it is the direction in which the price moves. The price will always move towards these points to attract liquidity to the market. Without liquidity, financial markets cannot function. Which indicator can you use to identify liquidity levels? Previous Days Week Highs & Lows by sbtnc Certainly, this indicator will facilitate the process of identifying these points, but it will not identify all of them. -----Remember, like everything in trading, this needs to be combined with other confluences. It won't work by itself.----- Explanation of the example presented in the chart. I had some strong confluences indicating that the price was likely to have a bullish move. As seen in the COT report, there was aggressive selling of JPY. One of the things that helped me take this trade with confidence is that, as you can see in the circle, there was a weekly and monthly high together without being cleared. This created a double top pattern. Since this was such a liquid point, it gave me the confidence that the price would move towards this point before changing direction. And it did exactly that after consolidating for several days. These liquidity points can be used as confluence in our analysis, as well as a potential take profit level.
Education
by Wiiso
3
LESSON 1: TRADE THE LIQUIDITY OR BE THE LIQUIDITYWhat is Liquidity in Forex Trading? Liquidity is the presence of orders at specific prices in the market, ensuring that transactions can take place without disruptions. When traders talk about liquidity, they are usually referring to the resting orders in the market. These orders can be absorbed or targeted by banks and financial institutions (BFIs) to influence the patterns of price movement. Liquidity can be found throughout the market, although certain areas may have higher levels than others. The good news is that it is indeed possible to learn how to identify and recognize liquidity patterns. Liquidity comprises a variety of orders that gather in the market, including limit orders, stop loss orders, and stop limit orders. These orders come into play when prices reach specific levels of supply or demand in the market. Understanding liquidity is essential in comprehending how prices move. Why do you need to understand Liquidity? Liquidity is crucial for predicting price movements. Analyzing liquidity, along with market structure, supply and demand, and order flow, provides insights into potential price directions. It's important to consider liquidity alongside trend analysis and supply and demand to understand market conditions effectively. Highly liquid markets can be manipulated by large banks or institutions, leading to liquidity shortages, price slippage, and poor trade execution. Recognizing liquidity pools during slow sideways price movements is key. What are the main types of Liquidity in Forex trading? 1. Buy-side liquidity (see chart for example) Buy-side liquidity refers to the accumulation of orders above a range or high, including buy-stop limits and stop losses placed by sellers and breakout traders. Banks and financial institutions (BFIs) may target these orders to fuel temporary or sustained bullish price movements. 2. Sell-side liquidity (see chart for example) Sell-side liquidity refers to the collection of orders situated below a range or low, including sell-stop limits and stop losses placed by buyers and breakout traders. Banks and financial institutions (BFIs) can target these orders to generate temporary or sustained bearish price movements. Similar to buy-side liquidity, sell-side liquidity serves a crucial role in the market dynamics. Do you have any questions? feel free to ask. Cheers, David
Education
by jabariofafrica
10
Algorithm vs Liquidity In Determining PriceBased on my research into IPDA and algorithms, central banks, trading firms/hedge funds, and smaller banks use execution algos (EAs) for trading with different objectives. Small banks use EAs to split large parent orders into smaller child orders generally in one direction, buy or sell. These orders are executed separately over a period of time to either open or close positions. Trading firms and hedge funds use opportunistic EAs to buy and sell to turn a profit. Central banks use market making EAs to buy and sell in order to bring liquidity providers net positions back to or close as possible to neutral. (This sounds like equilibrium). Central banks use EAs cautiously and only during their main trading hours and always under the supervision of people. A key reason for using EAs is to access multiple liquidity pools in order to reduce market impact or footprint. This is similar to a parent child relationship between Central Bank algos and other smart money players, where smart money (including central banks) accumulate orders in consolidation before expanding price, then the central bank algo pulls them back to equilibrium like a parent calling their child that has strayed too far away. Then they rinse and repeat. I am of the opinion that with the function of central bank algos to facilitate the provision of liquidity with minimal market impact, that liquidity itself is the determining factor in price delivery. Algos used by smart money break up large orders in to smaller chunks and funnel them to multiple liquidity providers (market makers) for fulfillment since forex is decentralized. If there is enough liquidity (buyers and sellers) to open/close positions at a certain price then it is done at that price. When liquidity is low or there aren't enough buyers and sellers at the current price, the market maker's algo has to fill these received orders where there is enough liquidity based on available buyers and sellers. The algos move very quickly which can deplete available buy or sell orders rapidly leaving unfilled counter party orders in its wake which defines liquidity voids (imbalance). Algo adjustments to meet buyers and sellers at their price is perceived as a stop hunt but it's just economics. Example: If I must sell something and I want to sell it for $100 but no one is willing to pay $100, I would have to look for buyers willing to pay $95. If I must buy something and I only want to pay $100 but the seller is charging HKEX:105 , then I have to pay $105. Either the buyer crosses the spread to meet the seller or the seller crosses the spread to meet the buyer. When there are limit and stop orders the buyer or seller isn't moving so the liquidity provider has to move to meet these buyers/sellers at their limit or stop order prices (including orders left behind in liquidity voids). When the orders trigger and price reverses it takes out both buyers and sellers so people call it a hunt, but I'm sure it is intended for actual institutional trading entities because retail traders such as ourselves can not provide the liquidity to be on the other side of every order placed by institutions. We are simply collateral damage in the battle between financial titans seeking to provide and tap into liquidity.
Education
by MartialChartsFX
📊Liquidity GrabSmall and big players tend to acquire larger positions in the market than they can afford, in an attempt to benefit from the leverage. This is where the concept of liquidity grab comes into play. Large trades and institutional investors need to locate liquidity areas in the market to complete their trades. Stops and stop-loss orders are critical for survival in a leveraged market. Stop hunting is a common practice in Forex trading, where traders are forced to leave their positions by triggering their stop-loss orders. This can create unique opportunities for some investors, which is called a liquidity grab. Stop hunting is a trading action where the price and volume action threatens to trigger stops on either side of support and resistance. When a large number of stops are triggered, the price experiences higher volatility on more orders hitting the market. Such volatility in price generates opportunities for participants to enter a trade in a favourable environment or protect their position. The fact that too many stop losses triggered at once result in sharp moves in the price action is the reason behind the practice of liquidity grab. 📍 What is liquidity sweep? In trading, a liquidity sweep is the process of filling an order by taking advantage of all available liquidity at multiple price levels. Traders use this method to ensure their orders are filled at the best possible price by breaking up their order into smaller sub-orders and spreading them across multiple price levels. Institutional traders and high-frequency trading firms commonly use liquidity sweeps for efficient and quick execution of large trade volumes. 📍 Liquidity Zones Big players in trading aim for the best prices but face challenges finding sufficient counter-forces to fill their large orders. Entering the market at low liquidity areas creates more volatile markets, negatively impacting the average price. Conversely, entering at high liquidity areas results in less volatile markets, ensuring a better average price for the position. These liquidity zones are where stop-loss orders are placed, and the concept of "liquidity grab" comes from the need for big players to enter the market in these zones to take large positions. Traders use swing lows and swing highs to create these liquidity zones and place stops as reference points, resulting in either a reversal to the mean or a breakout of the level. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Editors' picks
Education
by QuantVue
21
SMART MONEY CONCEPTS #1: LIQUIDITY THEORYHi everyone! As you all should know by now, I mainly use smart-money concepts to enter into my trades. Today I will be talking about the concept of liquidity and how to capitalise on it. Looking at the graph, there are 4 main types of liquidity that I use and as stated in the chart, I will normally look for entries off the liquidity grab zones or liquidity hotspots as I would describe. Make sure to backtest and forward test into your chart data to identify which type of liquidity are the most prevalent. There are many many different forms to liquidity zones and knowing when a liquidity grab occur can be a very profitable strategy.
OANDA:XAUUSDEducation
by Jon_Jones_Junior
3
How to Chart Fed LiquidityI'm going to be clearing out some of my half baked ideas. I don't have a lot of time to write full ideas about them so enjoy the charts and feel free to ask any questions about them if you have any. I'm going to integrate my TV charts into the website with a daily, weekly, monthly analysis. website is in my TV profile or find me on twitter. ----- The Fed Liquidity used in Master of Markets Idea What is Fed liquidity? To determine Fed Liquidity you can simple use this ticker FRED:RESPPANWW-FRED:RRPONTSYD-FRED:WDTGAL The Total Assets of the Federal Reserve Balance sheet at 8.382 Trillion. Subtract The Treasury General Account at 451 Billion Then Subtract the 2.142T Overnight Reverse Repo You get 5.789 Trillion in Net Liquidity which hasn't come down a heck of a lot since the last time I tallied up 5.9T
FRED:RESPPANWWEducation
by SPYvsGME
2
Manipulation strategyWe all know that markets are highly manipulated and the traders have to look for a signs of manipulation. There are a lot of types of manipulation - imbalance, candle without wick, liquidity grab and so on. On the chart I marked few areas, where price was manipulated and reversed. The strategy shows you how to recognise the manipulation patterns. It is based on smart money concept, but it is more focused on the liquidity grab and the low liquidity moves. So for example: On this chart I marked areas, where price created low liquidity moves and the results are strong movements on the manipulated direction. Why these examples are low liquidity moves? Because price cleared a lot of stop losses and inject fresh money in the market. The banks do not invest into the markets, they generate money in order to profit. In the first rectangle (lower one) - price created triple bottom - this is a major reversal retail pattern and created major liquidity pool, but look closer. Creating the pattern, price also took out lot of liquidity and moved away. In the second rectangle (the wedge) - price also created low liquidity move, because every time it gave strong signs of reversal tricking the traders to sell or buy and then took them out. Rule : In order price to move in one direction the institutions must buy or sell. To accumulate orders they should inject money in the market. The injections are liquidity grab in many ways and types. The markets can not move always with low liquidity moves and always stay in efficiency. The liquidity must to be created first, so that traders can come into the market and later to be taken out. As every strategy the "Manipulation strategy" sometimes give us false signals, but it is most accurate strategy. For example in consolidation we may see many false signals, but this is not because the strategy failed, it is because price was manipulated constantly. This is not smart money concept. The strategy is not focused on order blocks and breaker blocks, it is focused on low liquidity moves. The manipulation areas are also the true support and resistance, because when the banks buy or sell from the specific level, they will protect this level, if it is not targeted. Markets moves up and down, taking the buy side and sell side liquidity, this is the way that swings are formed. They are not forming based on retail support and resistance or Fibonacci numbers. How to use: 1) Calculate the liquidity - look for retail pattern - double top/bottom, previous high or low, support or resistance or every other obvious buy/sell zone. 2) Wait price to clear the level - liquidity grab. 3) Wait until price form low liquidity move(pattern). 4) Buy/Sell to the opposite liquidity pool.
FOREXCOM:XAUUSDEducation
by SerpentForexClub