LIQUIDITY

A liquidity zone is a level or area where most of the stop orders of retail traders are located. They use tools such as support and resistance levels, as well as trend lines.

Smart capital accumulates the required volume by triggering the stop orders of retail traders. Considering the large capitalization of the markets, stop orders are located behind every swing, and as we know, price tends to move from one liquidity zone to another.

That’s why smart-money traders enter positions after liquidity is collected Types of Liquidity Formation

To keep it short and not go too deep into the different types of liquidity and ways to trade it, here’s a visual example of how you should work with it.

Just look for a similar situation and trade it the same way.

The result will be as expected