Liquidity Trading SIMPLIFIED (Step by Step Course)

0:00 the ability to identify liquidity and an understanding of how to use it in your trading is incredibly valuable when you can identify where liquidity sits in a market you basically understand the magnet areas that price is going to be drawn towards which means you can take great trades with clear targets you can identify reversal points and most importantly you can avoid taking a lot of losses that you'd usually get caught up in if you didn't understand liquidity so in this class I'm going to run you through the three forms of liquidity that you need to understand I'm going to break down what liquidity is and by the end of this lesson you will be able to trade liquidity at a very high level so without further Ado let's get into it the first thing you need to understand is what liquidity actually is and in its simplest form liquidity refers to orders or money markets move based on the flow

0:45 of orders so when there's more buying than selling the markets go up when there's more selling than buying the markets go down and in order for significant buying or selling moves to happen the market needs to come into an area with a significant number of orders markets will trade freely through ranges because no one is buying or selling mid-range or if they are it's happening in very small numbers but when we sweep swing lows and swing highs you will begin to see the market forming significant reversals like this down here and this up here the reason this happens is that above swing highs and Below swing lows we have a lot of liquidity or orders anyone selling from here is likely to have stop losses over the swing high they may also be taking profits down here anyone who bought down here we'll have stop losses here and

1:32 we'll likely be taking profits here so when the market reaches these areas of take profits stop losses sell stops or buy stops for the upside there is a whole load of orders there for the market to react to and this is what actually causes these reversals and reactions to occur in the market so liquidity in the context of a market is simply orders at highs and lows and around different ranges that the market comes into and then reacts from and as I said before there are three ways that we can identify liquidity clearly so that we can start to use it to our advantage without loads of confusion and these three forms of liquidity are number one equal high and equal low liquidity I pair these together because they're practically the same Trend liquidity and range liquidity now the most common forms of liquidity that you will see and

2:17 the easiest to actually identify and trade are equal high and equal low liquidity so for this class I want you to put your focus on these two primarily and then obviously taking the information I give you on these ones but this will be the core of your liquidity trading so as I said before markets react to orders so our goal when identifying liquidity is just to determine where the majority of the orders are going to be placed now in the context of equal high or equal low liquidity we are essentially looking at resistance or support because we have either equal highs which is a resistance level or equal lows which is a support level and basic trading education which many many people still subscribe to suggests that when you you have a resistance you put a stop loss above the high so that we know there's going to be

3:04 a lot of stop losses above equal high levels also you put a stop loss below support if you buy support which means there's going to be a lot of liquidity beneath equal lows and above equal highs now we also have additional forms of liquidity we may have Traders looking to buy breakouts if the market was to push above a level which means we'll have an extra layer of liquidity here in the form of buy stops for breakout traders who are expecting to buy if the market breaks out the same goes for support flaw or equal low liquidity we will have sell stops here from Traders looking to sell once the market breaks these equal lows so what the support or resistance actually does here is formulate a lot of liquidity or orders above or below the level which means we can use equal lows or equal highs for two different things number one we can use them as solid

3:50 targets if we found a buying opportunity in the market here we could use the equal highs as a Target because we know the market is very likely to trade back towards these equal highs and trade through into the liquidity the same is true for the sell side if we have a pool of liquidity down here it's likely the market will trade into it so if we use this area for a target for cells that would be a high probability Target with a pretty high likelihood of being filled but the more interesting thing about liquidity is not just using it for targets but actually the consideration of entries now when we see equal High liquidity for example we know this is a resistance so a lot of Traders will be looking to sell here now the first thing you should do is not join them don't join traders in selling equal highs if you see equal highs in the market the

4:35 last thing you want to do is try and sell it because it's likely the Market's going to push through to react to the liquidity instead now this is where the term stop-loss hunts comes from because sellers sell at resistance they have stop losses above and the market seemingly hunts their stop- loss by trading through that level and then it moves in the right direction without the trader Who Sold resistance because they've now been stopped out all that is is theet Market reacting to the orders we need a large amount of transactions in order to get significant reversals we know there's a huge amount of transactions waiting to be taken up here all of these sellers will have to buy back contracts for a loss which provides a lot of buy liquidity that someone can then sell to so if you had a massive amount of money that you wanted to get into a position and you couldn't get it in just at one set level without moving

5:20 the market instead what you can do is wait for the market to trade into an area of liquidity and when all of these sellers have to buy back you can jump on the other side of their trade and sell back to them so this is where the context of institutional versus retail Traders comes in retail Traders everyday Traders like me and you we only make up around 5% of trading volume the other 95% is from institutional trading participants with huge sums of money to trade with and they can't always get into a trade straight away so they need to reach for areas of liquidity in order to get into positions that is why once the liquidity is filled we get these more significant movements because it's a large influx of money into the market either on the sell or the buy side so how can you use this to your advantage then well first of all don't sell resistance because if you do you're

6:07 likely to be stopped out on a stop hunt before the market moves in the right direction but second of all we can actually use this sweep of liquidity as we would call it to get into positions and the same goes for equal lows we can use them as targets but more importantly we can number one avoid buying a support floor because we know there's a lot of liquidity below and number two we can actually use the sweep of the liquidity and the sweep of the support floor to get ourselves into positions so equal high and equal low liquidity is good for targets getting into positions and avoiding silly losses now let's go over to audusd and I'll show you a recent example that brings equal high and equal low liquidity into the picture when you look at this chart what do you see the first thing that I see from a liquidity perspective is this collection of equal

6:52 lows so we have an area here which acts as an obvious support where the market is trading into this level and pushing away multiple t this formulates equal lows now if we know that there are buyers buying this support floor we also then know there's going to be stop losses or orders and potentially even sell stops for breakout Traders sitting below so below this equal low level becomes an area of liquidity now how do we use this to our advantage well as we just said number one we avoid buying once again when the market comes down to this level and instead we wait for a sweep of this level where we could then expect the market to stop pushing up because we will react to the orders and transactions that are waiting under this level now we know because there's not going to be a lot of orders mid-range

7:39 because most people are buying and selling or looking for breakout positions from the swing highs and swing lows in the market there's not going to be much resistance here in the way of buying so number one we could potentially if we found a short opportunity use these equal lows and use this support floor as a target for any short positions and then once the market reaches this area we can anticipate a reversal could likely be underway because we will have swept an area of liquidity and the market could then react to those transactions and start moving in the other direction now there's one more thing that you should take notice of on this chart and don't worry when you go through the charts you will start to build experience in identifying equal highs and equal lows it's very simple you are literally looking for an area with multiple highs or lows at the same level now what we

8:24 can also see then is just up here we have an area of equal highs so we have one 1 2 3 4 perfect touches of a resistance level then we have 5 six 7 so three more additional relative equal highs now these are not a perfect retest but they do also add to the fact that the liquidity is situated Above This level anyone selling at this point is going to have stops over the highs anyone selling at these levels is going to have stops over the resistance level so now we have two areas of liquidity we have an area of liquidity just below in the form of those equal lows and all of the orders that will be waiting below and then above we have more equal High liquidity this time where we know there's going to be orders stop losses buy stops waiting Above So now we've essentially formed a range with

9:10 liquidity below and liquidity above and let's go step by step through the process of how you would look to trade this so first of all if you had a selling opportunity using the equal lows as a Target would be solid and as you will see the market runs through quite nicely trades into that level but does not react from the equal lows instead it pushes through to the liquidity now you'll see once those orders have been retested the market shifts we get this new push of strength because there's been a whole lot of take profits stop losses and sell stops executed at this level which has kind of shifted the market no transactions taking place throughout this range here major transactions taking place down here which gives the market a new Direction so how can we use this now well we've seen the market start to shift after

9:56 trading into that area of equal lows so we swept the lows and now we've had a big push in momentum indicating that we may be getting a change in the trend so what we could do is look for buying opportunities to follow this new sense of direction and the new momentum that we're seeing in the market so if we wanted to we could take a trade and what could we do here well as we know liquidity equal highs in this format is going to act as a pretty solid Target so we could use the equal highs for a Target and we would look to actually trade up from this sweep of liquidity into a new sweep of liquidity so equal highs and equal lows are good for reaction points and reversals and also for targets for positions so let's see how this trade plays out now you can see we traded in retested started pushing up

10:42 from this demand Zone and the market will make its way upwards towards this equal High liquidity now we do start to get a slight reaction at this level and why does this occur because once again new transactions have been filled as we traded Above This obvious resistance level so because we know there's a mass of orders up here and because we know there's not going to be a significant amount of orders within this range the market was able to freely move through the range and only when it reacted to new orders did we start to get a slow down and potential reversal in price so that's equal high and equal low liquidity let's move on to Trend liquidity with Trend liquidity the concept stands true pretty much what we're looking for in any format of liquidity including Trend liquidity is just an area where we know there's going to be a lot of orders and the best way

11:28 to identify those is to consider the most common trading Concepts used by retail Traders today such as support and resistance and trend lines because we know that these are going to have a lot of sell stops buy stops stop losses all around them so the traditional way to trade a trend line is to wait for a retest and then sell or wait for a break in the trend and then actually look for a retest to buy from now the reason that Traders subscribe to this idea and this methodology is because they believe that a trend line forms a change in the trend however when we look deeper into the price action so the actual movements of the market price we will see that this is not 100% true now you can see we had a little change in trending structure at this level bringing this to be our high and this to be a lower low then we

12:13 pulled back up and we formed a lower high then we came back down and now we formed a lower low so the trending structure in reality looks like this now that would mean unless we were able to break Above This High here the trend wouldn't shift and we would remain bearish regardless of whether or not we swept the trend line so a trend line break doesn't actually mean much in the way of a trend reversal because until we break this High there hasn't actually been a change in the real Trend so with that in mind what we can do is look to follow the trend and then anything that happens regarding the trend line between where we are now and an actual break of structure simply just becomes context for liquidity so what do we know then well we're going to have sellers at this level that is layer one of liquidity

13:00 because we know any sellers there are going to have stop losses over the trend line now we also know there's going to be breakout Traders so people looking for the push up like this that's a second layer of liquidity because we know there's going to be buy stop orders waiting here and the third layer of liquidity in the context of a trend line will be from manual execution buyers who are looking for a break retest of the trend line so we also know once we break out there's going to be more buying here by limits so the area above the trend line now becomes a pool of liquidity essentially but it doesn't actually indicate any changes in the trend so what's likely to happen and what you're going to see happen a lot is rather than actually conforming to the trend line the market will push the trend line

13:45 sweep the liquidity and then start a movement back to the downside liquidating once again all of the buyers who buy after the breakout so the sellers looking to sell the retest lose and the buyers looking to buy the breakout are also going to lose so how can we use this to our advantage then number one don't trust trend lines make sure you're looking at the real price action such as the highs and lows in the real price numbers I've showed you now that a trend line doesn't actually indicate the trend at all and all it does is formulate some obvious liquidity around the level that will essentially work against you and trap you into losing positions so to actually trade trend lines and Trend liquidity we need to consider the structure as we've said we already looked at the structure and we know that un less this High breaks the trend is not reversing well we can

14:32 also see there's a supply Zone here and if you don't understand supply zones I got a video on it there'll be a card somewhere at the top of the video now to take you to that but we have trending structure and we have a supply Zone which just for the record is a area we would look for bearish reversals now by looking at this structural picture if we were to remove the trend line for a moment we can quite clearly see the Market's downtrending and there's a high probability reversal point so without the trend line in picture it's a pretty obvious place to sell now bringing the trend line back into it we can also consider all of this liquidity which is buy liquidity so sellers will be stopped out and have to buy back contracts at a loss buy stop and buy limit Traders will be buying in providing even more buy liquidity and what is the opposite to buy well it's sell which means if

15:17 there's a huge amount of buying taking place in this level if an Institutional Trader or multiple institutional participants want to get into big sales they have the liquidity or the conflicting orders to actually get into that position which means rather than getting a clean retest we're likely to sweep for liquidity and rather than getting a clean retest and push away on the other side we're likely to just sink straight back down we have bearish structure we have a high probability reversal point and we have all of this liquidity that institutional participants can take advantage of to get into trades conflicting to what retail Traders are looking at so now let's just watch how the market plays out and as you will see rather than reacting well to either side of this we just swept out stopped out all the sellers traded into the meaningful area

16:03 for reversals and then sold back down stopping out all the buyers so if you were to trade a trend line in a traditional sense you would get chewed up and spat out by the market here but if instead you considered this in the context of liquidity and remembered all the orders that are situated around it and what that may mean for the market then you would be able to take advantage of this trade by selling from the high interest Supply area above the trend line disregarding the actual trend line for trading opportunities and instead viewing it through the lens of liquidity now Trend liquidity can also be useful on the context of targets as well so it's not just for entries we can also use it to add confidence to targets for positions in the context of using Trend liquidity for targets it's not something that we're going to be using on its own but it can definitely add extra confidence and Clarity to where the

16:50 market might go so this is a position that I took and sent out to my Trading Academy students and there's the screenshot just now and when I was looking for this short position I was considering do I take profits at the first area here the first area of demand or could we look to stretch this trade out towards this imbalance demand as well well this is where the trend liquidity came in because I saw an area here where we had one two three retests and below this we would see that there's going to be within this range a lot of liquidity because by looking at this chart I can see there's one two three retests of this trend line which tells me there are going to be buyers on these retest points which means there's going to be a lot of stop losses and orders situated within this range sitting beneath these mini swing lows so knowing that this liquidity and these orders

17:36 were likely to be filled and traded into I was confidently able to extend my target down towards the second area and as you can see by trusting in that trend line liquidity to be swept we managed to extend the trade out to over double the size that it would have been in fact if I had to Target this first demand it's not a trade I would have taken but because I understood the trend liquidity was likely to be swept it became a viable opportunity providing 3.4 R meaning I can take this trade and I can take it with confidence CU I know all the orders waiting under this trend line are very likely to be swept and the final form of liquidity is the range liquidity and this is liquidity that formulates around ranges or around swing highs and swing glows so as you can see when we look at this Market we can see after it forms a low we generally are going to get a sweep of that low before

18:22 the market then makes a meaningful reversal so just dialing in on this smaller range then we have a low here in fact we have equal lows the market sweeps these equal lows then we have a pushup which sweeps these highs so we get a sweep of the lows followed by a reversal and a sweep of the highs followed by a reversal to the downside a sweep of the low here then we have a push up and we sweep the low here then after that sweep we have a reaction we sell back down and we sweep the low down here now all the while we have larger range liquidity above this swing high as well which has been out too and of course that first considered point just down there so why does this happen why is the market constantly pushing for highs and lows and how do we use this to

19:07 our advantage well the reason that the market is doing this is simply as I said before because the transactions are waiting at swing highs and swing lows so we know that the buyers here are going to have stops under their swing low and this would be a lower time frame Trend but it stands true we know then that any sellers here are going to have stops and orders waiting above the high once again below the next swing low any buyers that have bought here will have stops there and above this swing high or both of these swing highs in this example there are going to be orders transactions liquidity whatever you want to call it waiting in that area so within the ranges in the middle of the ranges there's not a whole lot of buying or selling there's not a whole lot of stop losses buy stops and sell stops waiting in the middle of a range those

19:52 orders are going to be waiting at breakout points below or above swing lows and swing highs which means the market is isn't going to reverse too often within a range not significantly at least instead the market is very likely to trade towards an area of significant orders and then formulate its reaction this is why we constantly see highs and lows swept out in the market before significant reversals take place so there's two very simple ways to actually use this to your advantage number one is not too exciting but that is simply to avoid taking positions if you're in a market that is scrambled and doesn't make sense to you if you're just seeing sweep sweep sweep sweep and you can't make sense of the market then don't trade it because you're likely going to be one of the people getting liquidated by the market movements so that's the boring but safe way to use range liquidity to avoid taking losing

20:40 trades but the other way that we can use range liquidity is to wait for a sweep of the liquidity followed by a change in the trend and then lead into a buy or a sell in line with that just like we did in the audusd example for equal low or equal High liquidity so just like equal low and equal High liquidity swing high and swing low low liquidity can be used to formulate reversals for entries and also to be used as very clear targets now let's imagine you bought down here where would be a safe Target well you could simply Target the liquidity at the high of the range and you're pretty much locked in with a win because the market is highly likely to trade freely through the range to tackle liquidity and in terms of using liquidity for entries we saw a sweep of liquidity here followed by a push-up in momentum then we had a

21:25 break of structure at this level here we pulled back down trade Tred into demand then we got a push away and trade it all the way back up to the highs here so you could actually take an entire position based purely of liquidity a liquidation of the low break in the trend structure you would then buy from a meaningful point of interest for me that's going to be demand zones and you would Target the next point of liquidity which is going to be this swing High just here and that would actually lock you in a very simple safe trade with nothing other than liquidity as the context behind your position obviously considering the stru and the supply and demand for entries but liquidity formulates the entry area reversal area and the target area as well I actually have an entire system built around range liquidity that I've used to take trades like this this and

22:11 this and that my students have used as well to take trades like this and this and get funded and make money and because it uses primarily liquidity as its entry context it's a super simple system to use so yes liquidity alone can be incredibly powerful for your trading now if you're interested in learning that strategy as well as the other system systems that I use to trade then I will walk you through the exact systems that you can use to become a profitable Trader get funded and start making money from Trading if that sounds good to you hit the top Link in the description and join me inside of the academy we have a 5-day boot camp happening too soon which you can get involved in if you don't want to do that that's fine but I do recommend you continue the learning by watching one of my other videos or check out the links in the description there's a free course in there that could be useful for you so thank you for watching this video all the way through to the end I hope you've enjoyed it if you have please drop a

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