Liquidity: buy-side and sell-side
Stops rest above highs and below lows. Price goes there first.
Buy-side liquidity sits above old highs (stops of short sellers, breakout buy orders); sell-side liquidity sits below old lows. Equal highs or equal lows are the clearest pools. ICT's view is that price is delivered from one pool to the next.
How to spot it
- 1
Mark the obvious highs and lows of the previous day, week and session.
- 2
Equal highs or lows are stronger magnets: retail places stops just beyond them.
- 3
After a pool is taken (a sweep or raid), look for the reversal or continuation toward the next pool.
On a prop firm account
Never put your own stop exactly where everyone else does: just beyond equal lows is where sweeps hit. Leave a few ticks more, and reduce size to keep the dollar risk the same.
Position sizeWatch ICT explain it
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All videos are by Michael J. Huddleston, the Inner Circle Trader, and play from his YouTube channel. Propbook is not affiliated with ICT; this is an independent index.