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Liquidity

Trade With The Trend And Watch Out For Liquidity SweepsHello traders In this example, we will explain how to trade with the trend and use liquidity as an additional confluence. 1) Price makes a new higher high, momentum is present. 2) After momentum, the price begins to create liquidity, as we talked about in one of the previous posts. Liquidity is a trap for retail and other traders. 3) We see that this is precisely why the manipulation took place, liquidity was picked up, and then the price moved impulsively towards the uptrend. 4) Price creates a new demand zone and impulsively continues bullish again. We see strong momentum. 5) In this situation, we see an excellent trend, we know that the price wants to continue bullish. 6) The price creates liquidity again and at one point, manipulation occurs again, we see a liquidity sweep, and the price from our zone impulsively continues to the uptrend. - In the next post, we will show you this example on a chart so that you can better understand this concept. - This is all about today's example, if you liked it, leave a like and write below in the comments if you have any questions.
Education
by hybridtradingfx
5
Q&As: order bookThere are people who trade based in order book exclusively & promote these so called orderflow trading platforms, even these days. Surely, it's a great deed to learn this interesting, exotic & unusual skill, but the thing is it's completely unnecessary. The real use cases for DOM aka LOB aka order book aka Level 2 data are mitigating adverse selection, reducing market impact & spotting potential counter agents. If you think deeper, all these issues are really all about position sizing and nothing else, you can operate as big as it's possible (depending how much diminishing returns you can let go), and the only thing that can help you figure it all out is order book. The one & only principle of orderbook analysis is to understand where's us (operators), and where's them (ones who just need to be filled), be nice with yours & be a nice counter agent for them. It's very simple, clients place big orders that immediately stand out. Everything else is us, we're spreading our orders equally all around the book. For some reason not many think about it, but as a maker it's good to not only provide liquidity aka make the market, but also to consume these huge limit orders if it lets you to offload some risk or to open a position if the prices are good. By doing so you always make the market better, the faster and in more clear fashion the market activity is unwinding - better for all of us. If you look at order book histogram and imagine it turned horizontally, you'll see peaks & valleys. So being inside a loading range (past a level) or nearby risk offloading areas (predetermined exit areas), you spread your limit orders the way they kinda fill these valleys, and you can also use market orders to kinda smooth the sharp peaks in order book. That's how you reduce your market impact.Your impact will start being too high when by filling the valleys you'll be creating new peaks, and by smoothing peaks you'll be creating new valleys. Easy enough? All the wise-ass reinforced learning & stochastic control models will output the same behavior, just a bit worse because they'll never defeat your "feel". They way you can process a feedback loop, as an organic, is DOPE. By monitoring your position in the queue you can decide to replace some limit orders that sit deep to somewhere where probabilities won't be your enemies. If you're not in the first 5% of the queue at these places, your're prone to adverse selection. Closer you are to the front of the level, the worse position in the queue is ok. Negligible but stable adverse selection has a huge negative long term impact, should be taken very srsly. In theory, it makes sense to care about order book as soon as you start trading more than 1 lot or if 1 lot is already a serious size on a given instrument. In practice, when you notice a statistically significant drop in revenue per lot on a given instrument, minding all other factors are equal, it's time to open dem books.
LSE:DOMEducation
by gorx1
Market sessions and liquidityVolatility is a measure of how much a market moves up and down over time. It's an important factor to consider when trading, because it can have a big impact on your profits (or losses). Liquidity is another important factor to consider when trading. It refers to the ease with which you can buy or sell a security. A liquid market is one where there are plenty of buyers and sellers, and prices don't change too much. A illiquid market is one where there are fewer buyers and sellers, and prices can change dramatically. So, what does market volatility tell you about its participants? Well, it can give you an idea of how confident they are. If a market is volatile, it means that participants are constantly buying and selling, which can be a sign of confidence. On the other hand, if a market is relatively stable, it may mean that participants are content to hold onto their positions for a longer period of time. Volatility can also give you an idea of how informed the participants are. If a market is moving up and down a lot, it means that participants are constantly reacting to new information. In contrast, if a market is relatively stable, it may mean that participants have a good understanding of the underlying conditions and aren't as easily swayed by new information. So, what does market liquidity tell you about its participants? Liquidity is important because it affects how easy it is to buy or sell a security. If a market is liquid, it means that there are plenty of buyers and sellers and prices don't change too much. This can be a sign that participants are confident in the market and expect prices to stay around the same level.
Education
by RobinhoodFX
CONSOLIDATION RANGE AND WHAT IT MEANSThere is a trick that market makers use and that is to create consolidations in order to induce retail entries. In text book practice, retail traders will always view a resistance or support level that has been tested more than once as a strong area to do entries because they feel it will hold price. As a result they put stop losses above or below the entry and these stop losses increase as market makers consolidate and incubate more retail traders entries. Remember market makers need these stop loss pools in order for them to open their huge positions so afterwards, they will run these stop losses, enter their orders and inject liquidity to move price very quickly. So beware not to buy at the current NZDUSD equal lows. You'll be trapped!
Education
by JayForexAcademy
Inducement Hello traders -In this example, we will explain what INDUCEMENT is. -Inducement is a trap for traders left by big boys in the markets to take your money. -The move is designed to first take out early sellers, then take retail pattern traders, then break out and break and retest traders together in one move. -The beauty of it is that everybody thinks they win, but in reality, the big boys go home with your money. -Look at this example carefully and next time you see it play out on the chart, look at how you can profit from it instead of getting your SL hit. Example: 1) Here, we see that the price is in a downtrend 2) Then, at the last BOS, the price barely breaks through the low and makes a trap for retail traders, breakout and retest traders, etc. 3) As you can see, this was an obvious fakeout and trap for other traders 4) In the end, the price picked up all SL, and came to our entry, from where it starts to move in our direction. -And remember, you want to swim with the whales and follow them, not go against them. Don't forget to leave a like and follow us for more quality content.
Education
by hybridtradingfx
1
THE ENGULFING CANDLE LIQUIDITY EntrySo let's learn something about engulfing candles entries. An engulfing candle is usually a momentum candle and in most cases signifies reversal and at times trend continuation. Now what you do is plot your fib on the engulfing candle from wick to wick and mark the 40-50% retracement area which becomes a potential supply liquidity zone to sell from a bearish engulfing and a demand liquidity zone to buy from a bullish engulfing. In short 90%+ of the time price will retrace back to these zones before continuing and can thus provide clean and safe entries with reduced drawdown, lower risk and a good risk to return. Try it
Education
by JayForexAcademy
1
Game Of LiquidityHello traders -Today we will talk about liquidity and its role. What is liquidity? -We will try to explain you as simple as possible what liquidity is and what you should be looking for when you want to spot it. -There is a theory on the FX markets that the Big institutions (Smart money) are always trying to trap us and take our Stop losses. -Retail education as we all know is based on patterns (double top,double bottom, trendlines, supp res zones etc... -As new traders come fresh on the markets they can be easily manipulated and taken away from their money because they are 'easy pray for big boys. -If you want to understand liquidity as simple as possible - when there is a trend line, double top pattern, there are retail stop losses and there is liquidity to be taken. Example: 1) In this example, we see that the price is moving in a downtrend 2) Then the price slows down with momentum and starts to make a lot of liquidity. 3) We can see liquidity in the form of a trendline, double tops, etc. 4) A lot of retail traders lose their money here, while we patiently wait for our opportunity. 5) Our entry is at the strong supply zone, and the price reaches it when it picks up all SL of retail traders. 6) At the end, we see a liquidity sweep that mostly happens in one move, and here we open our position. -Remember: This is the cat and mouse game. In order for one person to win someone else needs to take the loss. So our question is Are you a cat or a mouse? -If this post helped you better understand the concept of liquidity, leave a like. If you have any questions, write below in the comments.
Education
by hybridtradingfx
1
Asian Range | Liquidity Trap | FVG & London OpenHey folks I hope you're all good and making some good untraditional profits 😉 Here is a model that you will find few days every trading week! {Terms used in this Idea} Asian Range: a time span from 19:00 to 00:00 NY Time that forms every day except for Mondays.. Usually price taking of Asian Range's high or low means liquidity is taken and price "could" reverse short-term if that agrees with our daily bias.. London Open: Time span from 02:00 to 05:00 NY Time when the market is very acrive. Price usually forms high or low of day during London Open.. FVG: Fair value gab is a gab that forms between two candles separated by a third candle forming the gab (blue-shaded boxes on chart) If you found that useful give it a ♥️LIKE♥️ 💙Thank You💙 Glad to hear from you in comments✍️
VANTAGE:SP500Education
by MST_Trader
London Open Killzone Liquidity Build and FVG Hello Traders! What I shared with you happens on most days of the week and is a super easy way to get trdaes that are highly probable.. London Open Killzone time is: from 3:00 AM to 5:00 AM New York Time.. (though it could extend a bit further).. What we should be looking for is this scenario: We have a clear liquidity area..(single or double lows/relative equal lows) and time is London Open Killzone and we have reached liquidity area.. on this case we expect price to reverse and we look for a confirmation (in this case a "Fair Valie Gab").. Note that: I recommend using 15-min chart to spot liquidity area and for looking at how price is performing.. And once we get into a liquid area, we should go lower (5-min_1-min) charts to look for FVG.. Hope you find this helpful 😃 Let me know your thoughts in comments I would be happy.. Be Well All!
Education
by MST_Trader
1
Educational Series - Smart Money Concepts ( Liquidity )Hi there guys! I will be doing a short tutorial on Smart Money Concept's liquidity. What is it? - Liquidity acts as a driver to move the market in a specific price range. - We can find liquidity in areas where many people place stop losses and buy/sell stops. - Market makers will manipulate the price in order to break through these obvious zones and seize the liquidity. How to look for them - You will be looking for areas where price are of relative equal highs/lows. - Areas where price has not gone to swept the "stop losses" Why is it useful? - Helps to forecast where price might potentially head to - Potential areas for take profits upon clearing of liquidity - Avoid placing your stop loss at liquidity areas It takes some time to learn how to spot liquidity. If you do enjoy this tutorial, feel free to follow me and boost this post! :) Regards, Chen Yongjin
OANDA:XAUUSDEducation
by DogeStonks
4
Sell Entry example - Supply and DemandHere is a sell entry example i have put together to show you what i look for in the market when looking for a continuation entry After an impulsive move in either direction we would expect to see a correction, then another impulsive move. The initial impulse move shows us that a lot of volume has entered the market and for this example that the sellers are in control. When this happens we want to capitalise on the next move down and the best way to do this is to be patient and wait on a correction forming so we can get a good high probability entry. This can be applied to all time frames as well as buy or sell
Education
by TradingElements_
Bites Of Trading Knowledge For New TOP Traders #16 (short read)Bites Of Trading Knowledge For New TOP Traders #16 ---------------------------------------------------------------- What is liquidity and what is its significance? - Liquidity refers to the availability of a product and ensures market participants have the ability to buy and sell easily. A liquid market increases the likelihood for finding a counterparty when entering or exiting a trade. What is volume a measurement of in trading? - Volume in trading refers to the total number of contracts exchanged between buyers and sellers of a market during trading hours over a given period. Higher trading volumes are considered more positive than lower trading volumes because they indicate the availability of orders in the market allowing better order execution during the trading session. What is open interest in the derivatives market? - Open interest is the total number of outstanding derivative contracts, such as options or futures that have not been settled for an asset. Open interest equals the total number of bought or sold contracts, not the total of both added together. Increasing open interest represents new or additional money coming into the market while decreasing open interest indicates money flowing out of the market. RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS - Common application of financial market instruments for managing risk and opportunities. Diversification: Futures Spreads with Currency Futures A futures spread is usually created when one futures contract is sold simultaneously to the buying of a second related futures contract in order to capitalize on a discrepancy in price. Currency futures spreads combine the use of different currencies usually paired to the U.S. Dollar with the same contract month to express a relationship between the two currencies usually taking into account their strength or weakness relative to each other. For example, the Singapore Dollar (USDSGD) may be seen to be strengthening (price movement is downward) while the Chinese Yuan (USDCNY) may be seen as being very weak (price movement is upward). To take advantage of this observation, we would want to buy Singapore Dollar (sell the USDCNY future) and sell the Chinese Yuan (buy the USDCNY future) and as a result eliminate the U.S. Dollar. However, it must be noted that not all currencies are quoted in the same way like the Australian Dollar futures is quoted “AUDUSD”. It means then that to take advantage of a strong Australian Dollar and a weak Chinese Yuan quoted as “USDCNY”, an investor would need to buy both the AUDUSD future and the USDCNY future. TRADDICTIV · Research Team -------- Disclaimer: We do not provide investment advice, nor provide any personalized investment recommendations and/or advice in making a decision to trade. Before you start trading, please make sure you have considered your entire financial situation, including financial commitments and you understand that trading is highly speculative and that you could sustain significant losses.
ICESG:SDX1!Education
by traddictiv
Smart Money Manipulation 🥊Alkaline is back baby! 💣 As smart money concepts gain popularity, liquidity increases. I have taken a month away from trading to study the new forms of market manipulation and have been pleasantly surprised by what I have found. Here is my discovery: 1) The market is currently focusing on taking liquidity from breakeven positions over fixed stop losses. This is because emotional traders put their stops to BE quickly to avoid pain, especially during indecisive markets. 2) Order blocks are the perfect manipulation areas. If you take time out to backtest significant order blocks, you will notice price will tap and lure or simply sweep above/below the zone before going in the intended direction. 3) That tight stop loss you are using is doing more damage than good. Scale into your positions, trust me when I say this will reduce your emotions and give you a more relaxed trading style. 4) Use your brain, even if you are in denial. If the majority of traders lose money, and the majority of traders now use smart money concepts, do the maths. It feels good to be back after a long month of studying, I have lots of new things to teach and share. I will be taking on new students shortly, have a great weekend everyone 👋
Education
by AlkalineFX
24
A Dive Into My Swing Trading Approach (+setup) This video was a short synthesis of my swing trading approach. For the amount of information I presented, I'm not expecting to successfully being able to convey my means and ways in one short video, but I'm glad if I could at least show a different perspective. Some important things I forgot to mention: - The tolerance for identifying a visual weak liquidity pattern is 2 ticks, 3 ticks during highly volatile days (for the ES). This can change from one market to another. Anything more than 2/3 ticks is considered a move of conviction supported by strong liquidity, a market that has the confidence to see what's beyond a certain point to then either sharply reverse or move forward. - Using this method I CANNOT know what the market makers are exactly doing, there is no way to know, they will always be a step ahead of any brilliant retail trader. However, we can understand their logic and the weak traders' logic, the latter is the type we want to trade against. SETUP As I said, I favour a short trade, but as of today I have to remain on the sidelines. During this times is important to be flexible and change ones bias if that's what the market is suggesting. I will post my set up (if any) in due course.
CME_MINI:ES1!Education
by LionLazzari
Sell & Buy Side Liquidity ✅✅✅✔️ The FOREX market is a zero sum game, which means that for a trader/institution to buy/sell 1 currency pair it's necessary that there is another trader/institution with an opposite position. If Smart Money (Banks) want to buy a currency pair they will need sellers in the market, the existing facility to place these positions In the market is called LIQUIDITY. ✔️ The Liquidity is defined by Stop losses, where the Stop losses exist is where the liquidity also exists, Smart Money need to activate the stop losses of existing orders in the market so that they can place their positions in the market. ✔️ In the FOREX market there are two types of liquidity, which are: 1. Buy Stops Liquidity ( BSL ) - The BSL is originated by Stop Losses of sell orders, after the BSL is taken, the market reverses to the downside, because banks use the BSL to place sell orders in the market. 2. Sell Stops Liquidity ( SSL ) - The SSL is originated by Stop Losses of Buy orders, after the SSL is taken, the market reverses to the Upside, because banks use the SSL to place Buy orders in the market. ✔️ PMH & PML - Previous Month High & Low PWH & PWL - Previous Week High & Low PDH & PDL - Previous Day High & Low HOD & LOD - High Of Day & Low Of Day OLD HIGH & Low - Swing High & Low EQUAL HIGHS & LOWS = Retail Resistance & Support
Education
by Snick3rSD
2
🤓 🤓 MARKET STRUCTURE SHIFT! SMCMarket structure in Forex trading or price action is how many people take advantage of the markets. No indicators, and no volume. Because the market does not have a centralised exchange. Forex traders often swing trade the market based on the structure to take advantage of the opportunity. Structural market change is broadly defined as a shift or change in the way in which a market or economy functions or operates. I have tried my best to show you in the easiest possible way to look out for. Save this to your notes for future reference.
OANDA:SPX500USDEducation
by benoc_
12