LIQUIDITY

“IF YOU CANNOT SPOT THE LIQUIDITY, THEN YOU ARE THE LIQUIDITY“

ADITYA SIDDHARTHA ROY

@Adityaroypspk
 DISCLAIMER
• The Information contained in this material are produced for investor
education purposes only. They do not constitute investment advice in any
manner whatsoever or have any regard to the specific investment objectives,
financial situation or individual needs of any particular person receiving
them
• Examples are used for illustrative purposes only and do not constitute
investment advice
• We make no guaranties or take any responsibility for any profit or loss
• Do you know how Whales catches their prey [large group of fishes]??

o Whales doesn’t go and attack the group of the fishes; they make the fishes
to come to them
o Whales opens their mouth half out of the water to make small artificial
ponds, many of the fishes mistake the artificial pools as refuges (thinks like
the original pool)
o Once enough fishes have gathered in whales’ mouths, the whales clamp
their jaws shut on an easy snack

o Similarly in trading Big Institutions, Banks etc. are whales & their prey /
food are large number of retailers
o 60% - 70% Liquidity for the market is provided by Market-Makers [whales]
o Around 30% - 40% of the market liquidity is from Retailers
o The Stop-Loses of the Retailers are the food for the Market-Makers
o 1st Understand how retail works then only you can understand how the
market-makers think

• How to survive from whales???

o Always don’t go opposite to the whales / sharks they gonna hunt you down,
instead just follow their footprints
o You should know where the trap is set i.e., you should know where the
liquidity is present
o Do opposite what retails do that’s how you will find where the liquidity lies
o So, unlike us as average traders, we can buy and sell at any price at any
time, we really want, and that’s due to the facts of our position sizes. But
this is not the case for large banks, and large institutions who have huge
amount of money, they need a reason to buy and sell & that reason is to
grab retailers’ liquidity
o In order to find the liquidity [retails SL], then you need to understand the
concepts used by retailers / breakout traders & you need to understand
their Entries, Exit & Mainly their Stop-loss area

o Retailer concepts used for trading

-Support & Resistance
-Trendline
-Double Top Chart Pattern
-Double Bottom Chart Pattern
-Triangle Patterns
-Head & Shoulder Patterns

• Retailers Support & Resistance Entry & Stop-Loss area

-Support & Resistance can also be defined as Range movement

-During this Range movement, some Retailers buy at support & sell at
resistance, some do vice versa
-Buyers Stop-Losses gonna be below [20-30 pips] Support
-Sellers Stop-Losses gonna be Above [20-30 pips] Resistance
• How Market-Makers Trade the Support Resistance???

o When the Price ranging between the support & resistance, some Retailers
buy at support & sell at resistance, some do vice versa
o This generates the large amount of liquidity above the Resistance area &
below the Support area, that’s the food for the Market Makers i.e., their
aim is to hunt the Stop-Losses at those areas
o This Ranging movement of price is called ACCUMULATION i.e., Market
makers are accumulating their orders to liquidate
o The longer a “Support & Resistance” / “Accumulation” has been holding,
the More Liquidity above Resistance & below Support builds
o After Accumulation Market-Makers gonna grab the Buy Side Liquidity / Sell
Side Liquidity
o Market-Makers gonna grab any one side liquidity 1st either Buy Side or Sell
Side
o That Phase of grabbing one side of liquidity is called MANIPULATION

o After Manipulation we might see a price moving towards another side of

the liquidity to grab that phase is called DISTRIBUTION

o Here the example on ETH which I took in April month on 15min TF

• Retailers TREND-LINE Entry & Stop-Loss area

o As per my knowledge most of the Retail traders / Break-Out traders tends

Sell / go Short at the Trend-Line Support Break-Out with Stop-Loss Above
the Trend-Line Support Level
o Similarly, most of the Retail traders / Break-Out traders tend Buy / go Long
at the Trend-Line Resistance Break-Out with Stop-Loss below the Trend-
Line Resistance Level
• How Market-Makers Trade Trend-Line Break-out Levels??

o In this Fig you can see how Market-Makers Trade against Retailers
o After the Breakout of Resistance Retailers enter for longs, price starts
pumping & retailers believes in this pump, their SL gonna be below the
resistance area
o But the Pump which has seen by retailers is made by Market-Makers which
is a manipulative move to Fool the retailers
o In the next movement we can see a huge drop back to Trend-Line area to
grab the Stop-Losses of the retailers
o Vice-Versa for Support Break-out trading
Eg: ETH = May 6th

o Even Retail Traders do Buy / go Long at the Trend-Line & their SL gonna be
below the support level
o Retailers do Sell / go Short at the Trend-Line Resistance & their SL gonna be
Above the Resistance level
 • How Market-Makers Trade Trend-Line Support & Resistance Levels??

o Retailers Stop-Loss lies Below Support & Above Resistance, Market-Makers

Aim is to hunt those Stop-Losses as shown in the above fig

Eg: BNB
• Retailers Double Bottom / Triple Bottom Entry & Stop-Loss area
o Double Bottom / Triple Bottom can also be considered as Equal Lows &
some times Triple Bottom is considered as Support also

o Retail Traders place Buy order at the Neck-Line Break-out & their SL gonna
be below the Double Bottom / Triple Bottom
o Some Retail traders place buy order Exactly at the Double Bottom / Triple
Bottom after conformations & their SL gonna be below the Double Bottom
/ Triple Bottom
o So mainly we need to concentrate on the SL below Double Bottom / Triple
Bottom / Equal Lows

• How Market-Makers Trade Double Bottom / Triple Bottom / Eql Lows??

o Retailers Stop-Loss lies Below Double Bottom / Triple Bottom / Equal
Lows, Market-Makers Aim is to hunt those Stop-Losses as shown in the
above fig, after hunting stop-loss we can see price moving impulsively
o Eg:

• Retailers Double Top / Triple Top Entry & Stop-Loss area

o Double Top / Triple Top can also be considered as Equal Highs & some
times Triple Top is considered as Resistance also
o Retail Traders place Short order at the Neck-Line Break-out & their SL
gonna be above the Double Top / Triple Top
o Some Retail traders place short order Exactly at the Double Top / Triple Top
after conformations & their SL gonna be above the Double Top / Triple Top
o So mainly we need to concentrate on the SL above Double Top / Triple Top
/ Equal Highs

• How Market-Makers Trade Double Top / Triple Top / Eql Highs??

o Retailers Stop-Loss lies above Double Top / Triple Top / Equal Highs,
Market-Makers Aim is to hunt those Stop-Losses as shown in the above fig,
after hunting stop-loss we can see price moving impulsively
• Buy Side Liquidity [BSL]
o The BSL is a pool of Buy Stop orders with their respective Stop Losses.
o When BSL is taken out, the market reverses to the downside (clearing the
Stop Loss orders)

• Main Buy Side Liquidity [BSL] Areas

•Previous Month High [PMH]

•Previous Week High [PWH]
•Previous Day High [PDH]
•Day High [HOD]
•Week High [HOW]
•Swing High
•Equal Highs
• Sell Side Liquidity [SSL]
o The SSL is a pool of Sell Stop orders with their respective Stop Losses.
o When SSL is taken out, the market reverses to the upside (clearing the Stop
Loss orders)

• Main Sell Side Liquidity [SSL] Areas

•Previous Month Low [PML]

•Previous Week Low [PWL]
•Previous Day Low [PDL]
•Day Low [LOD]
•Week Low [LOW]
•Swing Low
•Equal Lows
o Liquidity concept is the main ingredient of trading, but without other
ingredients Liquidity also doesn’t work
o Other Ingredients are
-Market Structure
-FVG
-Order Block
-Order Flow
-Premium Discount Array
-Supply & Demand
-POI
-Entries

o My Aim is Teach & Educate my people whatever I learnt & whatever I’m
learning

o In my next PDF I’m gonna share a Trading View Indicator Script which gives
Buy & Sell Signal, Which works good for swing trading with success rate of
70%+
THANK-YOU

HAPPY TRADING