LIQUIDITY

Banks control market movements, they manipulate it. They run it in order to profit from it. As a result,
their purpose is to move the market's price to where liquidities exist. The markets need to generate
liquidity in order to move up or down. If liquidity isn’t already there, then it will be created. Retail basics
are like support and resistance, double top, double bottom and Trend lines. These areas are mostly
generates liquidity to the markets. We expect the price to be manipulated at and around these areas.

There are several types of liquidity. Knowing them all will help us comprehend price movements and will
allow us to follow the banks. They will mostly assist us in determining the best SnD zone for our entry
and in placing our take profit/stop loss order. All you have to understand is that there are liquidities
above highs and below lows. Price may grab those liquidities by break of structure (BOS). Note that equal
highs and equal lows, and trend lines build more liquidity than a simple high or low. Trend lines liquidities
are simply highs and lows of a trending market.

LIQUIDITY
Liquidity is simply refer to market orders, areas where there are a lots of stop losses/money and areas
where people are looking to take trades. Tons of stop loss = liquidity zones. Smart money will move the
price where there is lot of stop loss, taking them out before moving the real move direction. Liquidity is
what makes the market move, not supply and demand. This is because market moves based on price
manipulations and Price manipulation is in order to obtain liquidity.
The primary objectives of the Market Maker in respect to liquidity is;
 To make a market buying and selling from their own inventory, when public orders are absent.
 To keep the market book of orders, consisting of limited orders to buy and sell
Generally, if you understand these two points, you will know how the MM make fake out and induce retail
traders.
TWO TYPES OF LIQUIDITY

 Buy Stops Liquidity [BSL]: The BSL is a pool of Buy Stop orders with their respective Stop Losses.
When BSL is taken out (Buy Stops activated), the market reverses to the downside (clearing the Stop
Loss orders).
 Sell Stops Liquidity [SSL]: The SSL is a pool of Sell Stop orders with their respective Stop Losses.
When SSL is taken out (Sell Stops activated), the market reverses to the Upside (clearing the Stop
Loss orders).

WHERE TO SPOT BSL/SSL

 Previous Month High/low

WHERE THE LIQUIDITY IS IN THE CHART?

We don't know where the Liquidity is because we don't have the data that the Center Bank has. We can
only expect where liquidity can be found, and there are potential places where liquidity is very large, and
other places where liquidity is low. You have to know that every top and bottom in a market is liquidity.
But to know whether this is important liquidity or not, we must understand that “HTF LIQUIDITY is not the
same as LTF LIQUIDITY” because the larger the time frame, the greater the liquidity, and the more
smaller time frames Weak liquidity

THREE CATEGORIES OF LIQUIDITY

 PREVIOUS YEARLY HIGHS STRUCTURE HIGHS AND The minor Liquidity u can
AND LOWS LOWS ON THE HOURLY found it on The Minutes
 PREVIOUS MONTHLY HIGHS CHART (30min.15min.1min Also) Wee
AND LOWS Use This liquidity on the
 PREVIOUS WEEKLY HIGHS intraday or scalping also and
AND LOWS confirmation entry.
 PREVIOUS DAILY HIGHS AND
LOWS

FORMS OF LIQUIDITY

SWING HIGHS & SWING LOWS

Above every Swing High that has not yet been broken, there will be Buy Side Liquidity in the form of Buy
Stops (once price breaks above, it will go higher). Traders will place these Buy Stops above Swing. Below
every Swing Low that has not yet been broken, there will be Sell Side Liquidity in the form of Sell Stops.
But what will usually end up happening is the market will reverse after triggering those buy stops and
those sell stops. When price does this, we call it a “Stop Hunt”

EQUAL HIGHS & EQUAL LOWS

Traders place Buy Stops above Equal Highs and Sell Stops below Equal Lows. There is so much liquidity
builds up in these areas of Price Action, because traders see those Equal Highs and Equal Lows as a form
of Support or Resistance. So if price breaks through these areas, they once again expect the market to
keep going up, or down. In the case of price breaking above Equal Highs , going down, in the case of
price breaking below Equal Lows going up

TREND LINE LIQUIDITY

Retail traders are taught to buy at a Trend line or wait for the break out of that trend line to go short and
vice versa. This is a very obvious form of liquidity build up for us. With this it creates a lot of liquidity at
these areas that the markets will manipulate to grab liquidity before a larger move in the markets can
take place.
RANGE LIQUIDITY
Support and resistance - This can be classified as a Range. Retail traders are taught to buy at support
and sell at resistance. This will generate a large amount of liquidity above and below these areas in the
market

IDM (INDUCEMENT)

Refer to the liquidity near an OB. I liquidity that les below or above our POI. As the name suggests,
Induce means something that attracts you towards itself and you go with it. This is main reason for FOMO
Entry
Inducement occurs when the market adds liquidity to a supply or demand zone. It might be highs and
lows, equal highs and lows, or a trend line. For example, when a price approached a demand zone but
failed to enter and finally reversed, liquidity is created by generating this swing low. We now have this
swing low as inducement, which leads us to assume that price will seize it and react to the demand zone.
As an inducement, equal lows and highs, or trend line would signal an even stronger zone. We primarily
employ inducement and imbalance to increase the trustworthiness of our zones.
If a supply/demand left and dropped inducement as it made a new high/low that supply/demand should
make a better POI than one that doesn't have inducement. If the inducement is intact still then that POI
has a higher chance of holding. If the inducement is swept and a new high or low was created without
touching our POI the next time we come to that POI the chance of it holding is much lower as the
inducement is no longer intact. The fuel has been used to make the move. Look for inducement when
selecting POI's.
Simple Logic: Remember that algorithms before they take liquidity. Build up Liquidity. Why are they
doing this? They build their future Targets. Follow the structure that price create after they grab liquidity
ENGLQD (ENGINEERING LIQUIDITY)

These are very similar to the internal range liquidity, the only difference is that they are formed before
extreme order blocks, you can understand that when internal liquidity is created, the first recent high is
called inducement and the last extreme one is called Engineering liquidity. And it gives very high
probability setup

SESSION LIQUIDITY

Highs and lows of sessions may also act as liquidity. The idea is that the high and low of a trading
session will have a pool of liquidity above and below these zones respectively, As a result, we might
anticipate a price takes the high or low of the trading session, followed by a movement in the
opposite direction. This concept that can assist us in identifying highs and lows that might potentially be
left “unprotected” (and thus, swept away) or targeted. Also the previous day’s low and high act as
liquidity level.

LIQUIDITY TRANSFARE

Liquidity can be transferee from

EXTERNAL TO INTERNAL STRUCTURE

HTF LIQUIDITY>LTF LIQUIDITY

MONEY TRANSFER:
A change in direction and money become targeting the SSL after it took all the BSL or vice versa: change
from the sell side price delivery to the buy side price delivery. Price delivery change from Bullish to
bearish (From BSL to SSL)

RETAIL LIQUIDITY

Majority of the traders trade based on Retail Pattern Like Trend line, Patterns, Indicators and Support
&Resistance. This is Biggest Reason to manipulate Retail Patterns because Smart Money Traders
(BANKS &INST)trade against traders. Now i am going to explain here that how traders think and then what
happened after that.

SUPPORT AND RESISTANCE

Trend line are big part in Retailers trading method, When you are Looking for Buy or sell after trend line
broken then you need to wait for proper setup as per SMC. when Price Broke upside then think about sell
setup and if price broke downside then think about Bayside as per SMC, But you need to remember some
SMC Based Criteria not only based on Trend line. These given examples will help you a lot to understand
things that how Trend line Traps.