The Liquidity

Liquidity is the open interest of buyers and sellers in the market. During trading, traders create liquidity by opening positions and placing pending orders.

Liquidity is money and is measured by stop-losses. Smart capital is always in search of liquidity in order to fill their buy or sell orders.

Small traders (retail) are not the main target for large capital, as they are a small percentage of the total market volume (approximately 5%).

Types of liquidity

Buy Stops Liquidity (BSL) - stop losses of traders who opens short positions. Banks use buy stops to place sell orders.

Sell Stops Liquidity (SSL) - stop losses of traders who opens long positions. Banks use sell stops to place buy orders.

How to find Buy Stops Liquidity?

Above each swing high, there are buy stops. The largest accumulation of orders will be above the significant highs and you should focus on them first.

• Previous Month High (PMH) - The maximum of the previous month;

• Previous Week High (PWH) - The maximum of the previous week;

• Previous Day High (PDH) - The maximum of the previous day;

• Old High;

• High Of Day (HOD);

• Equal Highs (EQH);

• Downward Trends.

• use Smart Money Concept [MICAlgo]

Buy Stops Liquidity

In the first example, Swing High is designated. This could be PMH, PWH, PDH, Old High, HOD.

In the second example, equal highs. Do not look for perfect EQH at the same level, they may be near each other

Note

After the BSL is activated, the price will reverse in a downward direction. It is important to consider the context in which the activation of stop losses occurs.

For greater efficiency, pay attention to significant pools of liquidity, which are in front of the resistance zone in the premium zone.

Taking liquidity will not be taken into account if the price rises above the high by only a few points.

How to find Sell Stops Liquidity?

• Previous Month Low (PML) - The minimum of the previous month;

• Previous Week Low (PWL) - The minimum of the previous week;

• Previous Day Low (PDL) - The minimum of the previous day;

• Old Low;

• Low Of Day (LOD);

• Equal Lows (EQL);

• Upward Trends.

• use Smart Money Concept [MICAlgo]

Sell Stops Liquidity

In the first example you can see a Swing Low. It can be PML, PWL, PDL, Old Low, LOD.

In the second example, the equal lows. Do not look for perfect EQLs at the same level, they may be near each other.

Note

After the SSL is activated, the price will reverse in an upward direction. It is important to consider the context in which the stop loss activation occurs.

For greater efficiency, pay attention to the significant pools of liquidity that are in front of the support zone in the discount zone.

Taking liquidity will not be taken into account if the price falls below the low by only a few points.