Liquidity Concepts

Liquidity

Market liquidity:

the amount of demand and supply in a market. 

the ease to which a market can be traded without affecting it’s price. 

For every buy order, there must be an equivalent sell order for a trade to take place (vice versa)

Price is continuously seeking pools of liquidity (order) to rebalance the market

Liquidity concepts are an analytical tool we can use to see where potential resting pools of orders may be sitting

Liquidity is a magnet for price to be attracted to as the market seeks liquidity to rebalance and fuel further moves

There are 2 main ways we utilise liquidity to refine S&D zones:

1. Inducement
2. Sweep zones

INDUCEMENT

Inducement -> leading market participants to take the other side of your trade

SWEEP ZONES
Sweep zones -> take liquidity when they are created

INDUCEMENT + SWEEP ZONES

 STRUCTURE > LIQUIDITY 

Always trade Away From Sweeps

PRICE DELIVERY

MTF Market Structure With S&D Zones & Liquidity

Real Life Example

Follow The Money