Original subtitles

What is liquidity liquidity refers to the degree to which a market or asset

or security can be quickly bought or sold in the market without affecting

the assets price dramatically.

We look at price.

It doesn't matter what timeframe you're looking at time is irrelevant for right

now, the specifics about price action, as it relates to liquidity, we as price

action traders, we're looking specifically for reference points where we can hone

in on where there is a high probability of liquidity resting in the marketplace.

Now, liquidity.

As it relates to ICT concepts, it relates to buy orders and sell orders.

It's as simple as that, when we had a swing in the marketplace, as we noted.

In the market trades lower.

Our understanding is, is there someone that went short here, this

position would be net positive or profitable as the market moves lower.

As the market turns around, if those same positions were still held

there, open profits would be roading.

And at some point at this point right here, they would be any losing position.

Our understanding is, is if there's a short position or traders that are

there from the marketplace, if they have positioned a profitable trade here

and moved lower, their stop-loss order would be resting rate above this high,

or generally many times just right at that high, the market tends to find

an interest in going back to work.

Large body of interest or what we call liquidity in the marketplace.

It would be by liquidity as the market finds these lows down here as the market

rallies away, we are our understanding is that there's going to be buyers that have

positions that are net positive or profit.

As it trades higher.

At some point when the market starts to trade back down lower back into

the area in which the buy orders would have originated from there,

open profits would be roading until eventually moving into this area here.

They would be at a net loss position.

So when we look at, when we look at price, the idea is we're not looking for.

Specific patterns for the sake of patterns we're looking at where

existing orders would reside.

So essentially what you do is you're targeting areas at which

the market has already seen a willingness to go higher or lower.

In this case, we see a swing high and the market moves lower.

We view that.

As a smart money trader or as a market maker perspective, we know

that there's going to be buy stock or buy liquidity above that high.

When we look at the lows, when the market moves away from these

lows, we see that as SEL liquidity.

Identifying both of these positions on both sides of the marketplace.

We're going to teach a concept called open float while that's not

going to be covered in this specific tutorial or this month of training.

It's important to understand that the beginning foundations to understanding

liquidity as it relates to buying and selling in the marketplace.

Our first fundamental understanding is, is that there's going to

be liquidity above old high.

And below old lows.

When we understand that we can see that they will eventually target these same

levels, moving price, just above and previous high knocking out the liquidity

that would be resting just above those highs in the form of buy stops.

The low old lows, the market will seek liquidity for the

sell side or the sell stock.

Taking those orders out, understanding this premise when we view price

action, it removes all of the retail minded perspective, but heavily

leaning on indicator based ideas.

When we adopt these principles with study of price, it gives us the most truest

purest view of how price is delivered.

We have no.

Confidence or direct relationship to our directional bias on price relative

to anything except for price itself.

If the market's moved from an old high, we know that there's going to be

liquidity resting above that old high.

If the market's moved from an old low, we know there's going to be re

resting liquidity below those lows.

It's just that simple.

Now there's another concept.

When we understand liquidity, the market has a tendency to run out old highs and

old lows, but it has a very difficult time to do that when the market has conditions

like this, when the market moves higher.

Okay.

Generally we can see a move higher and then it moves lower here.

Now, in the context of this entire move lower, there's a lot of peaks and troughs.

A lot of peaks and troughs did.

The idea is if this is an old high back here for this high to be ran out.

Okay.

Or the seek the liquidity resting above that old high, if this is where the

current market action is right now, or current price at market price for

it to get all the way up there, it has to encounter a lot of resistance in

the form of old lows and old highs.

So you have the old lows acting as standard resistance.

Then you have the old highs acting as buy, stop liquidity.

So even if the market's going to go up, if the market's going to seek

a liquidity above this high, how do we know it's going to stop there?

It could go another level higher for these buys stops and it could

reach for this level of buy stops.

And then maybe this by stop level here.

In the direction, the run, all these buys stops.

It's got to go through a lot of resistance in the form of these old lows, just to

get back up to this old high, when the market presents these opportunities.

And again, this is not specific to any timeframe it's universal, but when we see

the market, give this this very thing.

Area of resistance in case a lot of price action that the market

has to trade through to get back to an old high of significance.

We view this as a high resistance liquidity run.

The market's going to have a very hard time getting through all these

previous lows and previous highs, just the run out the liquidity that

will be resting above this old high.

When we trade, we are not looking for these opportunities while there

are opportunities to trade with.

In mind in other later teachings, it's important to understand that

this is the least probable trading condition until the book for long,

because you have so many levels of resistance and old highs to encounter.

Before you get back to the old, significant high.

We understand that the market has been presenting lower lows and lower highs.

And somebody in this market is obviously would be being profitable.

Those individuals, what stops above this old high, in the form of a fund,

they're actually very highly defended because of this type of price action.

So it's going to take a very, uh, sharp economic market release the

data, kind of like non-farm payroll or FMC, that type of event we'll

knock through all of these levels of resistance to run out that liquidity.

But generally without that type of influence or injection of

volatility, these old highs generally are well-defined.

Obviously the opposite can be said when we see the market maker.

Yeah.

Low of some kind, it could be take a long time, really the form, this, uh,

but the old low would obviously have cell stops below it or cell liquidity.

And as the market makes higher highs and higher lows, if we're seeing price

action right here, we can't reasonably expect the market to just drop straight

down and make a run on the sell stops below this low, without encountering

first, all of these higher lows.

And higher highs as the market went higher.

So to get through each one of these highs, okay, there's going to be a lot of

resistance to just run down out the stops that will be arresting below this low.

Again, just like we just mentioned with the high resistance liquidity

run for old highs, the same is true here for high resistance.

Liquidity runs on an old one.

It's going to be very difficult for price to reach down through

all of this price action.

And the more time it spent in this area, again, the more unlikely it is to make

a market move all the way down to this old low, despite the fact that there

may be really high levels of liquidity resting below that old low, without the

evidence of a significant market driver coming in to play with like the FLMC

interest rate announcement or non-farmers.

Or something that would be completely unexpected in the marketplace and

black Swan events, something like that.

That's generally the only type of thing you see that will cut through

this type of price action to get to the sell side of the liquidity here.

So for shorts, we avoid these types of occurrences.

There are opportunities that we'll learn with trading with this

profile or this market condition for high resistance liquidity runs.

But for now we want to understand that this is the element of price actions that

we want to trade very less frequent in.

Now obviously, uh, there's going to be times when the market really

provides us, uh, uh, an opportunistic time to take action in the market

and trade with price action and have very little resistance in our trade.

And obviously that comes by way of trading in low resistance.

Liquidity runs a low resistance liquidity run would be in the form

of something similar to this now, east crude depictions, while they

are rather elementary in a way that they're being shown here.

The concept is very easy to see in price action as we'll look at.

And when we get done looking at the actual crude diagrams I've shared here, if we

see the market come off the old house.

Okay.

And it comes down rather quickly.

If there is a very sharp or one way type direction, very

little retracements of any kind.

When we see this.

Okay.

Once that market breaks below an old low, from that point at which it breaks

the old low, until it gets through.

A short-term high.

In other words, the market comes down and makes a low here, starts to trade

off, comes down and makes a higher low.

Once it starts running through.

If we get a market breaks through this short-term high, this run here begins.

Its climb back up into the range that's created by this low being

broken to be deemed defined by this level here all the way down to this.

Once it's broken.

This area of price action is deemed low resistance.

Now, every time that a new short-term highest formed before this low is

Retraded to, or retest it as resistance.

Every time there's a new short-term high, what's going to form above that.

Short-term high.

It's going to have.

Stop liquidity.

So buy-side liquidity is going to be above these old highs.

If we get a buy signal after a retracement, we know that there's going

to be very little resistance for that move to go higher, running out the buy

stops just above the short-term highs.

As we get closer to coming up into hitting this low, that's been violated here.

When then we start encountering high resistance liquidity.

So the probabilities fall off precipitously.

Once we get back to the area, which the range is defined in terms of low

resistance, and then it becomes a high resistance liquidity run to make any

higher highs or run on higher highs.

It becomes a lot more resistance to do that because we moved back

into an area where the market has moved in a range, this expansion.

Okay.

That's the easiest part of trading when we can trade inside that range.

So every time we created another short term high in here, if we get a

buy signal that buy signal will have very little resistance to get through

the old high that it retraced from.

And you continuously look for those until you fill in that break on this old one.

Once it gets back to this old, low over here, the market goes into what

is referred to as a high resistance liquidity run anything higher than

this price point here becomes a high resistance liquidity run.

Much like everything else.

I've always taught everything I teach one sided obviously is easily

communicated by using the reverse of it or just turning it upside down.

Uh, this is.

Sell side of the marketplace, low resistance liquidity run.

Uh, we have a consolidation in here.

The market expands goes into expansion.

It breaks above a short-term high.

So at the moment it's short term highs, broken here and market structures bullish.

And then we go into a real quick run up to market.

We'll create a high start to break down, and once the market

starts trading below and.

The market will have a very easy time trading back down into

the point, which the short-term high was broken on the upside.

So all of this one way direction, price action, where all of it

looks, this one-sided for buys only very little retracements.

This is the easiest time to trade in the marketplace, right in here.

It's defined by the short-term high that's broken on the upside here.

That's where you would begin your point, which it's there.

A low resistance liquidity run.

So you're focusing primarily on selling short.

Every retracement is going to find very little resistance going

lower to run out to previous low.

There's going to be what resting below these lows sell stop liquidity.

So the market goes lower breaks below the short-term low here expands

has a small little retracement.

What's going to be forming below the short term.

Bottom chasers folks that want to be long, but we understand that the

market hasn't broken an old high here.

It had real quick sudden price action.

Great little retracements.

So we have very little resistance on the downside.

Getting back to that point, which market structure broke.

So between this point here and where the market breaks down this

low here, this is the easiest area.

In price action, because you have very little resistance allowing

price to just cut through all that.

But you're waiting for a short-term load of form and every time, a short term,

low forms, there's going to be sell stop liquidity arresting below those loaves.

Okay.

So let's take a look at more examples of a high resistance liquidity run

and a low resistance liquidity run.

And what makes those two types of liquidity runs different?

We have an old high back here noted here, and the market starts to move lower.

And we showed this example of price action here with this old high violet

in this old high here selling off these old loads being violated here, and

the market starts to rally up notice.

There was very little resistance in the marketplace.

When in this high events, he traded lower taking out the

liquidity, resting below these loans here, this run from this house.

Taking out these lows is referred to as a low resistance liquidity run because we

have a longer-term high to the left of us.

And the market has shown a willingness to take out a low.

And then we came back above, cleared out a stop above the high

retraced, had an unwillingness to go above these up candle here.

So institutional order flow, as you'll learn more about

throughout this entire mentorship.

Moves back to bearish and expands to the downside, expands down to the downside to

run out these stocks below these lows, the market rallies up again, and fails to get

above this swing high, this run higher.

Is a high resistance liquidity run.

The fact that it's going to have very difficult time getting above this high

is because we've already priced in a longer-term high, the intermediate

term high, and this high is going to have a very hard time struggling.

To get through this.

Heidel it's going to have very difficult time getting through it.

So this rally up, if we were buying long here, we know that there's

going to be a high probability that this is not going to be Ryan out.

The high is going to be in intact.

It's going to be defended and the higher high over here will be defended.

So when price goes back up into this high, this actually becomes a low resistance

liquidity run to see price come all the way back down to take out this low here.

The fact that we keep this old high in place in every low, that

forms has very little resistance as each time it goes through.

It's like a hot knife through butter, very little resistance to talent.

Every time a lowest formed price goes through those lows, this equal lows here,

price trades through those, the short term low here, price trades through it.

These short-term loads here, price trades through it.

So the bias is.

Bearish.

So you want to be focusing primarily on a market rally to take out short-term

lows or intermediate term lows.

The difference between that is every rally is going to be viewed

as a high resistance liquidity run.

It's going to have very difficult time getting above the previous one.

Sometimes it will happen, but generally you're going to find it.

It's going to have a very difficult time doing that, but because that's built into

price action, having a high resistance liquidity run here, it turns into a low

resistance liquidity run pre you just see a move below the short-term lows.

Every short term low is an opportunity to seek liquidity

or the market to expand that.

After a retracement up to take out the stops that rest below the market

place at every old, low, every single low that you see in price.

Once we identify where the market is in terms of high resistance or

low resistance liquidity, we can find old loads to the left market.

Respects it here comes back within.

Now we have a lot of liquidity resting below this low here and this

low here and the market runs racer.

Small little retracement.

There's more liquidity below this low here.

So it's going to expand down through it.

We have all lows back here.

So the market's going to do what it's going to retrace a little bit and then

do what expand down to take out those stocks below this old lower here.

The same thing is seen when the market finds a low in the market,

the market creates a sh a small loan consolidation makes it a longterm.

Rallies up, retraces moves into consolidation rallies through again.

So now we have a lot of price action here.

So this old low is going to be well defended.

The fact that we have a retracement going lower each time, every time the market

retraces, that's going to be in the form of a high resistance liquidity run.

It's going to find very stiff resistance with violating old lows.

The old lows are going to be actually defended and you're going to see

buying coming in the marketplace.

Your focus is going to be primarily on the highs.

Every short-term high is going to have very easy runs through them.

That forms a low resistance liquidity run.

The resistance levels are going to be.

Weak the support or lows are going to be very strong because the market is going

to be capitalizing only on the buy side.

Just the reverse of what we saw over here on the south side, everything's

going to be supporting bearish prices.

So every retracement hire sets up another price like to go lower,

aiming for the lows to be violent.

We've changed the tide here and we made an old low.

So every time the market retraces lower, that sets up new buying opportunities to

take out the short term highs or immediate term highs above the marketplace,

because what's going to be resting above those highs by stops, and you want to

be buying low and selling to willing buyers above the current market action.

And that's what the market makers do.

So every time the market trades down, it's actually just a

new, low resistance liquidity.

To make a run above an old high, and it makes it very

easy to find trades this way.

Market trades down smaller retracement is old.

High will be easily ran out low resistance.

The quarterly run market trades back, and it has a retracement

very little resistance to get back up to this old high.

It runs cleanly through that.

Another retracement here, the liquid is going to be resting above

this old high and eventually the market expands through it as well.

and eventually the market trades through those lows as well.

Okay.

So there's many elements to the things I've sought in this month.

Teaching looking for clean highs, where the levels are just too clean.

Um, when the market shows those types of levels, it's going to

be very opportunistic for you to build the idea that there's

going to be biceps above that.

So any little retracement sets the tone for another drive through that,

the market continues to find an ease of getting back through old highs.

At some point, you're going to look at price action, and it's

going to be very crystal clear.

That the more price action there is around a specific level or a higher, a

low that is indicating a level is being defended on an institutional price model.

So you're going to see very easy trading when you trade away from that level.

And by doing that, you're going to be getting yourself in sync

with the institutional order flow.

Then your trades will find very low resistance.

In the form of profitable exits and very little draw down.