Core Concepts
Liquidity
Clusters of stop losses waiting to be triggered at key levels
In entry selection context, liquidity refers to clusters of stop losses positioned at predictable levels. Above supply zones you find buy stops (shorts' stop losses), below demand zones you find sell stops (longs' stop losses). Understanding where liquidity sits helps determine entry type.
✓How to Recognize
- •Buy stops cluster above supply zones
- •Sell stops cluster below demand zones
- •Stop losses tend to be at obvious levels
- •Liquidity pools attract price before reversals
⚡How to Avoid
- →Placing stops at obvious liquidity levels
- →Entering before liquidity is addressed
- →Ignoring where stop losses cluster
- →Trading against liquidity sweeps