VOL NO.

01

LIQUIDITY

WHAT IS LIQUIDITY ?

In this volume, we will discuss what is liquidity, which is

THE most important concept you will ever learn in
trading.
Liquidity is what runs the markets. Liquidity is what allows anyone to
buy or sell for a profit or a loss. It is what creates opportunity in the
markets.

To a common trader, it does not carry a lot of meanings. However, to

a big player, it means everything. A big player MUST consider the
liquidity in order to be able to execute a position.

So, why should I, as a common trader care about liquidity ? Let's

begin with some statistics. Over 90% of Retail Traders lose money.
Trading is a zero sum game. Money isn't created. It is taken. It is
taken from the losers and handed to the winners. We must
understand who the winners are, so we can make sure that we are on
the right side.

If you understand that the losing party in trading typically consists

of common retail traders, and that the winning party typically
consists of bigger, richer players, then you will want to understand
what is liquidity.

The more time passes, the richer the winners of these markets will
get and the poorer the losers will become. It is a gap that is
perpetually growing due to simple logic. Losers give their money to
the winners, so winners become richer, losers become poorer.
The richer a player is, the more carefully he must pay attention to
the liquidity. Why though ? What even is liquidity ?

Great question. To start, I will begin by explaining where the word is

derived from. Liquidity is derived from the word liquid. Liquid is
something that flows. Water flows into the ocean. In the economical
context, liquidity means asset that flow. Assets that can easily be
exchanged, those would be considered "liquid assets". For example:
if you own a house, you're not considered very liquid as you can't
buy many things with a house. However, you can become more liquid
by selling your house for cash. Hence the word liquidating. To
liquidate your portfolio, you exchange your house for a more liquid
asset... CASH, which is the most liquid asset. Hence whenever
someone is liquidating, he is exchanging something for cash.

So, now you understand what liquidity means in the economical

context, what does it mean in the realm of trading ? In the realm of
trading, liquidity refers to stop orders. Why stop orders ? Because
whenever a stop order is triggered, a position is exchanged for cash,
or in other words, it is liquidated.
The process of exchangin a position for cash is the same as a
liquidation of an asset. The position is an asset you own, and an
asset you're exchanging for cash when you close it. A stop order can
be a take profit, or a stop-loss order.

Now that we understand what liquidity is,why does it matter so much

to the big players ? When you play with thousands of dollars, you can
buy anything you want, whenever you want, and there's pretty much
always going to be a seller on the other hand waiting to be the
counter-party to you.

But when you play with billions of dollar, there's not always someone
on the other end. You need to accumulate your position throughout
long periods of time. You need to create the seller who is going to
be selling to you at a low price. Now this is when the manipulation
comes in.

You have to manipulate another player into doing something which is

not natural. Sellers will naturally be more inclined to sell at a higher
price, while buyers will naturally be more inclined to buy at a lower
price. The only time they diverge from those natural habits, is when
they are manipulated through emotions. Good old FEAR, GREED,
PANIC, EUPHORIA ... Through these emotions the bigger players
manage to manipulate the common retail trader to buy at a high
price and sell at a low price.

Now, you may be thinking I'm out of my mind. You may be thinking
that this is crazy. I understand that. Let me tell you a brief story, and
maybe through that I can change your mind that this is not such a
crazy thing to believe.

You wake up. You are an extremely wealthy and sexy man. You go on
about your day, until the sun sets. Interstingly enough, a common
man approached you and pitched you a bet. He said "The sun had
just set , and I don't believe it will rise again ! I will bet you 100$ on
it !". Now you obviously don't care about 100$ enough too go through
with it.. However, you are a business man, so you see potential.

Bill gates doesn't care about your 7$/months Amazon prime

subscription. The only reason he might is because collectively, it
becomes a larger number than that.
Thus, you notice the potential if one man is willing to bet his hard
earned money on the fact that the sun is not going to rise tomorrow,
maybe it's a formula that other common men will follow. So you
decide to go through with the bet, not only do you go through with
the bet, you also collaborate with your rich friends to get him option
to leverage his money to 1,000x . Not only that, you also bribe some
news outlets to push forward the narrative that the sun is not going
to rise again. Not only that, you bribe up very well-known scientist
and researchers to bring up facts that support this theory. All in an
attempt to fool the collective consciousness to bet against you. And
the only reason you had to go through all that effort was because
the amount of money you wanted th bet is so large, that you had to
CREATE the other end of the deal. Up until the moment you
manipulated the collective consciousness, nobody was willing to bet
against you apart from one man and his 100$ that frankly, you don't
care about.

If at that point you don't see how likely it is that there are very
wealthy people who are wealthy because they have been dominating
these markets for decades, and that they understand every mecanic
to this game, and they manipulate it to benefit them, then this
bootcamp is not for you.

However, if the idea does make sense to you, or you think it is likely
true, you're at the right place.

Liquidity is something that must be considered by the big players.

They must create their opportunity.

Now that you understand the concept of liquidity, let's continue. We

will be covering the core principals of liquidity, alongside the logic
behind them.