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plenty notes as always try and draw these diagrams yourself
this over as many times as you need to make sure you take
just look at as many trade examples as possible so watch
it could mess around and go off so what we can do in that
go and just do yeah real nice slow walk through on the charts
maybe you want to pay yourself right so you can take some
high but not every time we we we get into the trade is it
and it will really help to kind of fill in any gaps in your
leave that there in the next few lessons we're now going to
together paint everything we've kind of learnt together now
when in the latest lessons we start to think about management
of how you can use this concept you know if you're in a trade
Mone would sweep that it would pull back and obviously then
taps into you know the the liquidity that was behind the
when it sweeps it it's likely to have a steep pullback and
whoops we do want to target right we're long down here
ideally right this 4 hour week swing high to get that higher
structure you see a prior high that's when price will break it
I guess I want to add is just remember whenever we get a
in your trading right so yeah you know if you're not
simple as I personally believe you should try and and keep it
knowing what direction you want to be trading in then
were from demand or induced buyers if we're going to sell
hopefully continue so yeah just kind of bear that in mind now
high and that's when we get the pull back right same thing
liquidity just in front of it to induce right sellers if you
identifying your supply and demand zones either via a break
creating equal lows here these equal lows still haven't been
more important is everything came before the the liquidity
yeah hope you guys took some value from that and I will see
knowledge that maybe there that you weren't quite aware of so
and just start to kind of put these pieces of the puzzle
with just that final little tweak with liquidity yeah and
you know bigger double bottom right it'll be more of that
swept but then it's also just creating that larger kind of
then does come down sweeps all of this liquidity taps into
of it okay so even in this case what you'll often see is you
all day you'll you'll never end right because it's it's
concepts into our trading in as many ways as possible so I'll
another demand zone and then we get the real move okay so yeah
know use that to your knowledge that when price pulls past that
know there will be minor demand here right because you know
liquidity is all over your chart you you you'll be drawing
high and this would become our next high low so yeah hopefully
new swing low at that point right and then we'd have our
meantime let's say we're running you know really decent
profits and we see some nice equal highs over here right
which is kind of poorly draw a dollar sign there you may you
going to do that straight away right it could come down lower
reject any demand zones from along here but obviously in
what I mean you know when you're looking at internal
yes we do want to target that you know if we've got long here
sweep of liquidity generally we will get a pull back so that's
know I've ranted about this enough before but just to
orders are building within here some of price comes down into
action here where we we got our entry model and we see these
series of mitigations with all of these lower time frame
demand zones what is that doing well you know what would that
it you know we we could have formed a high low here but more
that demand is then filled and then what's that doing it's
this is where some demand stepped in pivot demand to lead
so one right we see liquid liquidity get taken as it
keep your charts as kind of clear as possible just so you
when you're practicing and you're just trying to get a
near our zone right in front of the zone really that's kind of
what we're most interested in you don't need to kind of go
looking for you know is there some inducement you know quite
identifying if a zone is a sweep zone or not and two just
everywhere it can also be quite subjective in terms of if you
use this liquidity concepts within our trading because like
try and be you know using it in in in very kind of refined
just now and just focus on those two concepts because you
two types of zones even more by just seeing if they took
into them from supply right and that's essentially it you know
these lower highs there's just going to be tons of orders all
yeah on the way down so remember all of this price
below these zones here taps into our you know origin of
be the origin of the move that actually led to that break of
time right anyone is trading this range a lot of people
full of orders some people refer to this as a liquidity
ascending trend line but what that is kind of in reality is
is going to move back up so this movement here is
liquidity right as people starting to sell behind all of
section where there isn't price hasn't moved into yet it's just
again we get the same entry model right failed reaction so
modules right getting your market structure right first
thing happening right and we pull back potentially we have
flip chalk pull back in and then we can start to target
knowing where your true swing highs and swing lows are
it's just happening fractically all over the market but what's
can really be focusing on the price action that is occurring
actually trading the live markets you do want to try and
of the zone even more two we then have inducement in front
that had built up right and now price comes up and it taps into
all of that supply obviously demand is still powerful at
building up above this four hour spring range the entire
which is then again access inducement yeah for the same
again it causes the reaction to fail and then eventually we get
these moves here all of this pull back it's going to
you know it's good to do that but in reality when you're
move and in the theory we can then try and get another high
new swing high and then obviously price could you know
this trend line holding right people look to get long here on
potentially there may be a very minor pullback on the way up
going to then use that liquidity again to trade
structure so this would actually become you know our
our extreme demand zone right because essentially this would
liquidity behind this high we pull back that then leaves a
partial profits off the table pay yourself just in case price
within kind of this whole range right or you know the opposite
I'm going to want to get short and they will sell they will
tons of liquidity building up beneath those demand zones
wider stops it's not just going to be you know one
then facilitate that pull back right using prior liquidity
about the reasons why you know how how we can use those
double top then build equal highs there right price on the
but I just kind of want you to start you you know thinking
again we can talk about management in a lot more later
now is starting to take control as we start to break these
money that's stepping in here in the strong demand zone
trading so yeah that's pretty much it the only other thing I
an equivalent sell order so you know the theory is the big
should then introduce sellers into the market for this large
really do not need liquidity it's just kind of just yeah you
kind of give you that little extra fine tuning to your
lows and they're going to think okay if those strong lows go
know advise you kind of don't worry too much about liquidity
consistent or comfortable with just market structure and
kind of as simple as I can try to explain it and kind of as
going to be full of orders all of this white space is just
trend line liquidity sweeps that minor low there and then
induce sellers into the market right so anyone who's kind of
on this I imagine oops move this off out the way get nice
supply and demand on its own I definitely would kind of you
so this is where that strong swing low should be holding
pull back so again when we come down and we sweep this minor
zone a structural zone and a flip zone this is a kind of our
would have been created from a minor leg alright or it may
break of structure and the failed reaction so it's a sweep
the third bounce but it just breaks down through sweeps that
generally when you are looking at you know this M15 price
we can just increase the probability of either of those
of structure or via a flip zone or ideally both right and then
liquidity when they were created and or if they have
just kind of just so you understand what's going on so
to that break of structure so then when price comes back to
equity sweep for price to pull back or of course potentially
internal range and external range equity it doesn't really
scenarios and those two scenarios are one for
low it facilitates the pull back to kick in and it gets the
exact same thing so as we come down into this four hour sweep
often than not you'll just see a bit of a small reaction as
and then eventually that goes right and then we're off so
feel for for at how price sweeps it and then it reverses
kind of classic horizontal support level that's holding
everywhere right it's behind every single structure point in
around and draw an order this trend line equity of course
have you know a more accurate one would be would be a bit of
the market but more what we try and kind of use this for is we
overwhelming imbalance between supply and demand where demand
the pullback okay so you'll either get the demand zone in
inducement in it so then as price comes down it sweeps that
creates a zone that then you know increases the probability
fact let me just draw it on so you can see exactly what I'm
that's starting to make a little bit more sense of how we
minor breaks and structures to the upside we tap into demand
I said at the start right liquidity is literally
demand to then buy against those sell orders buy into
start kind of using these lines right to draw where you think
there's loads of sell orders in that area which in theory
know within the swing high and the swing low is essential
deadline below it there's just going to be a ton of orders all
liquidity that was built on the way up okay so all of this is
theory that big money to then sell into and continue that
this we've just drawn it with price coming all the way down
to the extreme it sweeps all of the liquidity that had built
right this is you know as good as it gets essentially in
zone right remember it took liquidity and then led to the
look like if we just looked at candles like a bit of an
right as people are getting long and what not right tons of
facilitate the pullback right so literally the minute that
looking to break out on this level so there's tons of
things if not both it will either be reacting to a prior
hour swing high so eventually when price breaks that high we
liquidity up here price will then eventually sweep that and
still have you know stop losses above the highs or people
sweep that external range liquidity right that have been
this point overpowering it and then we eventually get up we
void right and eventually what's going to happen is price
essentially then filling all of the orders within the space
liquidity when it was created and broke demand and structure
price then sweeps a high moving into that supply zone that for
price then sweeps that high and then we get that failed
talking about so we'd rather have say an M-15 demand zone
for example right and also imagine that that demand zone
a 15 -minute low right just like this low here it will most
minor pullback building liquidity above that high as
back for a lower high generally be doing one or one of two
reverse so yeah it's kind of just the difference between
building up in this area right this whole empty bit of price
the change of character creating our flip zone
generally be creating you know some sort of trend line
that weak 4 hour high right and that whole time right all of
tapping into the external arrange liquidity that has been
building up the entire time price has been pulling back
eventually that facilitates that pullback so later on you
jailbreaks it fails to take out the low demand then steps in
we pull back that demand sorry that the supply fails to do its
put their sell stop order on the break of it right so
against but eventually you know there's going to be that
those sell orders right for every buy order there must be
takes that high so we get that change of character right that
below these lows right obviously some people can have
of that there are going to be people who see those strong
don't know when it could literally be a pip and you will
the double bottom right likely to have their stop anywhere
and small there we go so anyone who's say essentially long from
equality being tapped into that's built up here that
more of a minor minor pullback there and then again another
essentially you know external range so internal range is
see this you know even a micro pip it breaks and then it can
are looking to potentially get long or for traders who are
happening of course is if price then sweeps that liquidity
behind the high and the low so after we get you know that
break of structure generally that will be a sweep of
it builds up that by side liquidity for you know in
trying to catch that high low and that protrend move we then
getting long from this double bottom already right if we draw
highest property zone and it's at the origin of the swing move
low there it taps into demand and that will facilitate the
likely be sweeping that low and then that will also facilitate
right there's going to be loads of liquidity building all up
pullback or it will be imagine there was a minor low there or
know when we get that break of structure over here right again
start of the diagram what do we have we have this thick grey
continuing that bearish internal trend and then price
going to be tons of liquidity sitting externally and then
the charts in the next lesson or two so starting off at the
demand zone right in this leg here to facilitate that
action every time we get kind of get that reaction to pull
entire time and then that starts to you know provide that
make a massive difference in term of how you define it it's
of liquidity behind that high and even on the pullback as
look to play that four hour pullback what do we have we
there then we jump down to the M15 right and we can start to
that is broken that is essentially that external range
above the top of this range right at top of top of the four
liquidity and eventually we'll get a pull back so in this case
in this diagram it's obviously a very exaggerated movement
after we get that break of structure obviously there's
everything between the high and the low external is obviously
classified as internal range liquidity and then any
pull back down here now as we're pulling back what can end
up happening is we can start to sweep all of that prior
you can potentially make right okay pretty much wraps up the
potentially blind your retinas with my white charts alright so
second warning to reduce your screen brightness if you are
something to bear in mind as you start to progress and
will create us a pretty decent sweep zone of course when price
then goes on to break structure so we build some more equal
reasonably strong internal low and then what can end up
liquidity behind those swing highs and swing lows is
decent amount of liquidity below this low right for who
internal range liquidity any sort of liquidity that is you
minor well not minor but with that minor high we have a build
structure to the downside and yeah and then again build some
our supply zone right to then facilitate that next pull back
lows here before price actually goes to break structure bit
looking to sell the breakout of that what should be you know a
to the downside there's then inducement in the leg right so
well and all of this acts as inducement for what inducement
for the supply zone which is a sweep zone because it took
reaction and that change of character that break a
the exact same thing right we get an internal lower high
internal structure right so imagine and then price back it
creating a higher high so that means that there will be a
this example price turns back pulls back right with this
for a zone you know below or above it now this concept for
price delivery you know back to the zone it's not super super
where that zone was created that ends up being inducement
forms an internal lower high it then takes that low right
facilitate a pullback right of course we could drop you know
zones when we are in a British trend generally they will
produce and facilitate that pullback now in this case in
previous supply zone what do we know about previous supply
go on to reverse but generally old zones are there to then
we should be you know pretty familiar with this diagram by
pretty much every single listen so far so yes this is your five
theory so what we're going to do is we're going to hop on the
you're just looking for those you know extra refinements that
that you're looking at. However, in that final third
and eventually break down and sweep past it where essentially
right and then that fuels the move to the upside then that
have that pullback into demand price then pulls back up again
correctively then you can see in kind of both of those first
broken generally you will see some form of reaction whether
line as the four hour chart price moves up it pulls into a
it's a full reversal or you know just a pullback. Now one
clear cut trading example before we're going to hop on
concepts that we have just gone over alright in this theory
liquidity behind every single structural swing point in the
now and all we are simply doing is just applying the liquidity
and a lot of the price will then just disrespect the zone
straight back to the zone, not always, but a lot of the time,
mitigated. So these are the types of pullbacks that you
for price to sweep into the zone but then also for to
two examples how liquidity is being built up as inducement
break of structure we expect to pull back why well because
lower high so that's why we always say what happens after a
sweep that and it will start to pull back to then form the next
first initial minor breaker structure to the upside
lesson and we're kind of just looking at a bit more of a
liquidity sitting below the price swing low price will then
kind of other thing to consider when looking at trading from a
infamous price action example that we've been building on
sitting in a dark room because we are of course about to
market and that's why every time any piece of structure is
charts just to look at kind of you know one last thing our
personally wouldn't massively worry about this too much at
all especially when you're first starting out but it is
can you know potentially help to boost your strike rate so I
important but it's just an extra piece of confidence which
price is swept liquidity from the prior swing structure so
created, if price then has a sharp, almost vertical retrace
example, if you see a V-shaped return, where after a large
generally want to see when price is returning to the zone
target for price to then go on to take after the zone has been
this is not a good sign, because there is no inducement,
pulling back to the zone. So always ask yourself how is
price being delivered. If price is pulling back slowly and
impulse in price, you know, where that sort of zone was
particular zone is the nature of price action as it is
trade that countertrend pull back okay so there is literally
now we want to trade away from that and that's why we can then
that so we want to trade the following bearish move so then
1 mapping for true breaks of structure I want to see the
candle closure because that means now that you can
back below inside that bearish swing range so this means that
it was just a wick break and that's why I prefer to use type
started that new bearish trend price pulled back up towards
price could sweep it before the real bearish move started but
the downside to form that swing lower low there will of course
always but a lot of times it can be now remember we always
set up for price to now commence that next bearish leg
desired direction so what does this actually mean in reality
sweeps and do not necessarily you know predict that price
it just a sweep and grab of all of that liquidity that had been
understand what's going on where you just get a wick break
high price then eventually try to break out to the upside but
tons of buy side liquidity building up above that swing
because if you are always anticipating and you just
when it will or won't be used but we can assume however that
if the market is trending, then we just assume it will continue
Liquidity is generated all of the time. We will never know
demand in its way to stock price because most of those
sitting below that trend line to then rebalance price. Now,
their stop losses below that trend line that is now forming
on the daily chart on your dollar that we've been looking
react to this and then you didn't take the next valid
reach the supply zone accepting the risk that you could be
models to get short so in this case you were initially aware
you were happy to take that first short when price first
liquidity and when this happens this is a very high pob ability
structure right if you're using type one it was just a grab of
swing high so what this means is there was no true break of
liquidity pull behind it but like everything it will come
get short but then price ends up pushing higher and actually
the left so that when price comes down and it sweeps that
terms of whether you are happy to trade and get short from a
waiting for liquidity to be swept first then this can mean
supply and demand price will then start to sell off
that then causes an overwhelming imbalance between
when price then you know continues that bearish move
want to trade away from sweeps so when price in this case when
that very often can just be a grab of liquidity of course not
the market when this is happening they will likely have
buy side liquidity and the exact same thing occurs in a
inducing buyers into the market just in front of that new sweep
mitigations right as bullish order flow is holding with
right and there will also be plenty of breakout traders who
this demand breaks up higher pulls back to demand breaks up
demand being respected each time so price pulls back to
bullish market on the right hand side right but we have
building up as big money then stepped in that same day and
there was no true break of structure to the upside right
swept out but then when the sweep does happen you then
the swing high right for quite a number of days price was then
swing structure to the downside this time to then create a
would then be short or looking to get short because they may
because it's grabbed that liquidity to fuel the next move
to the downside so then again you can look for your entry
supply zone alright again for the big money to then sell into
strong sweep zone then after we have that new lower low price
previous internal high but then the big money steps in using
back here that's in the orange circle you see how price pulls
starts to break structure to the downside to form that lower
right on that first pull back a sweep zone is created because
side right where we have this bear structure you'll see how
the internal structural high is swept before the real move
low so again if you look at that first initial swing pull
price pulls back to form a lower high but in doing so
and it targets the sell side liquidity below those equal
from that supply zone to then sell into right as that zone is
swing leg but it doesn't have any inducement in that leg so
inducement concepts when we combine them in the market and
previous minor supply zone now that minor supply zone I
swing range without the candle actually closing above the
take that trade if you of course you are happy to trade
and correctively and it starts to react and sell off from the
was created so now as price starts to pull back to the
this case is now a sweep zone it's a sweep zone because it
of relatively equal highs so there is a lot of buy orders
have been liquidity sitting below the previous swing low to
right continues downside from here and it breaks structure to
zone and inducement this example here is a very typical
course you combine this with all of the other analytical
create a strong supply or demand zone so when you see
will or has to sweep at first before price may move in your
situations so my advice is to always react to liquidity
with time and experience in how you wish to approach these
it's swept to the upside we then want to trade away from
sweep zone very simply it's just a zone that takes
that you will very often end up missing trading opportunities
strong and it will be protected and price will not trade higher
structure and then reverse the other way then breaking down
through structure or you know taking out another zone to then
tapped into and the big money then steps in and and rapidly
being induced above those highs right for then the large money
behind those highs however if price is bearish and that is
highs and utilize the liquidity pool that is then sitting
smashed price back down so that the daily candle then closed
when price breaks up it sweeps the buy side liquidity that was
haven't drawn it on in this case but you can see how there
shopping around just below that swing high which then led to
equal highs just behind that supply zone, obviously, that is
at in all of the previous lessons whereby the daily had
that is structure is far more important than liquidity.
took liquidity so you know if you were to try and define a
to do that. So, in this case, if the market is clearly
setup that presents okay now you may remember this example
this is just another thing that we can look for when those
us that large but also that sustained price movement that
zone price then sweeps those highs taps into the supply zone
creating another supply zone that blue zone there which in
supply and demand is still big enough to cause price to break
utilizing that buy side liquidity to take the other
this is an extremely simple but very very important point and
rapidly moves to the downside it can then move pretty freely
to then move down and sweep all of that sell side liquidity
the orders have already been filled which essentially has
second method that we use to utilize liquidity concepts with
increase their probability and strike rate even more of giving
it needs to have taken out another zone right a flip zone
Sweep zones are essentially just another way that we can
in the market. Now we're going to take a look at the
of those equal highs you knew there was a possibility that
concepts that we have looked at so far so if we now combine you
know both of those equity concepts together both a sweep
types of zones are created is essentially whether or not they
to trade from them okay so again we're still looking for
previous demand zones have already been mitigated right
sell side liquidity building in front of those demand zones now
aggressively to the downside and there will be almost no
then sweep those highs and it can retrace back inside the
from that level right but then what can happen is price can
figure this out with time how you like to trade what works
overview of the theory behind using liquidity for inducement
and the risk that you will need to accept before you enter and
you out of your position that's okay it's just part of the game
sweeping those equal highs behind the supply zone stopping
zones to either break structure or take out another zone right
we can look for in those zones when they are created it to
so these sweep zones here they are still based on structural
well let's say your entry model sets up in the supply zone you
actually cause price to sell off and actually break that
buy side liquidity that had just been built up between that
high to then form another higher high tapping into that
case price then pulls back up and it sweeps that internal
ready to form that swing lower low right they think it's ready
engineered or created for the sole purpose of inducing by or
probability and the strike rate of these zones playing out in
example in the market where you see liquid building in front of
care and the reason why is because what I care most about
sellers into the market, right? In order to create liquidity
supply level like this when you know it has an obvious
now this is something that will be for every trader you know in
supply zone or demand zone right or looking to trade
they should kind of be a minimum a minimum requirement
in my opinion for looking to build a trade idea around the
those are the two main methods for validating strong zones and
lows so here is another common example of sweep zones and
in this case when price is trending so on the left hand
moves down as it seeks more liquidity to rebalance price
the swing high then we can assume that that swing high is
zone whether it be a swing point relatively equal highs or
a trend line either way whenever you can see that there
not a because price could of course want to sweep those
of course we have you know the two main methods for being a
necessarily a strict requirement it may be in your
that I've done on this is that when you actually see such an
to break the low and as this price action is occurring tons
what happens is price only has a short-term reaction it fails
right below the equal lows and above the equal highs so then
would be one right from that minor pullback in that bearish
bullish and price pulls back up to a supply zone, if there are
their favor for a little bit but then it suddenly just you
stops them out of their position before price then
because there will be many instances where traders get
money will be entering the market in those areas to sell
and then when you see liquidity forming just in front of that
where then the big money is then triggered into the market
that is actually the case but to be honest, I don't really
front of a key area where big money is about to step in and
is that these patterns in the market are essentially formed
side of their sell position however the imbalance between
to the downside and take out demand to the downside right
manipulated by the market or whatever but a lot of the
building up just in front of that high time frame supply
cleared out those demand zones so you know when price then
to without experiencing terrible slippage because
a way that we can essentially view the order book but on our
sell at because there are enough buyers for them to sell
level above those equal highs in theory this could likely be
tell us well using that knowledge that there is likely
trending to the upside right it then starts to build liquidity
this manipulation occur in the market when a zone is created
angry, pissed off, and probably confused as to why this has
know rapidly reverses against them and stops them out both of
line so that when price reaches a really strong supply zone
will be looking to get short on bearish breakout of that trend
you know refine our supply and demand zones in the market. So
them or when breakout traders get long right when those equal
we want to see when price reaches these zones and we look
they're the two main ways flip zones or structural zones but
directly off it so it needs to be either a broken structure or
highs and in the final example if you are looking to buy the
against to sell against that buy side liquidity okay so
little bit of profit before price then pulls back just
likely be a ton of buy sides equity building up then that is
also have a buy stop order somewhere above those equal
higher right but anyone who who is essentially still long in
break and retest of those equal highs then you would set a buy
remember again for every buy order there must be a sell
increase the strike rate overall So that's a brief
our actual trading which is something called sweep zones.
plan it may be it may not be in some of your plans right you'll
and liquidity like this in front of a zone it's not
limit order somewhere above those equal highs right for
you are short from that double top you will most likely place
on the breakout so they wait for the break and retest of
same double top, the same equal highs in the market but looking
that is often refer to as a bullflag that some of you may
another common example is where you will get a series of
below a key supply zone you will find that it increases the
a supplier demand zone this does tend to increase the
theory you know the whole school of thought behind this
will be a pool of liquidity a collection of buy orders just
so that means that your stop loss order is actually a buy
right above those highs in the market so in the first case if
highs right and remember if you are short and you have sold
these scenarios lead to those traders placing buy orders
moon and they want to get in long on the breakout as these
might think that if price can actually break up through that
as a strong resistance level and so they would sell and get
take the other side of their trade. So, imagine if we have
structural levels in the market, they formed just in
stop hunt and you know, complain that they were
highs or lows in this case many traders would call this double
let's take a look at some examples to explain how this
amount of volume so a large amount of liquidity to take the
fancy word that you know has been bounding around the
scenarios all have one major thing in common. All three of
zones. So, let's take a look at the first method which is using
to trade it in a different way. However, all of these different
of how, you know, many traders could all be looking at the
then pulls back correctively forming more buy side liquidity
reverses back in their desired direction and moves without
price charts instead and we can start to pieces together with
these the traders are probably then extremely frustrated,
are also bullish but they want a little bit more confirmation
theory can work in the market so one of the very common
and not break higher now other traders would see those equal
the market right so traders would see that price has failed
you will get filled at an unfavorable price level so
at these very obvious points in the market right when everyone
a ton of buy side liquidity sitting right around that price
stop order in the second example if you are looking to
then if you get stopped out you need to buy back your position
who needs to put a huge order through the market you
other side of your trade because otherwise you're very
of your trade. So remember for every buy order there must be
trading space in recent times and essentially all it means is
and the second method is to use liquidity to identify sweep
strong resistance level right so if price can get above that
that level, right? Of those equal highs for them to then
buy at. So, that's just three simple but different scenarios
be aware of and then finally, you may have some traders that
within our trading. The first is a concept called inducement
double top then they think that price is going to go to the
where liquidity will be forming up on either side of the range
be magnetized towards it to seek those pools of liquidity
relatively equal levels in the market so now we understand
identify where it is sitting in the market and why price will
liquidity pools to tap into those resting orders in the
market to then rebalance price so what you can do is you can
into the market causing an imbalance in price and then
relatively equal highs or lows they do not have to be
likely going to experience you know really bad slippage and
highs in the market but they may be bullish overall and they
on but the point is is that it's a pretty obvious level in
patterns that occurs in the market is relatively equal
between supply and demand so when you also have you know
selling a descending trend line liquidity of course will be
in order to rebalance price whenever there are imbalances
to induce or to lead other traders to take the other side
an equivalent sell order and for every sell order there must
liquidity for inducement. So inducement is really just a
know there will be resting liquidity pretty much behind
so how there's you know multiple reasons for why we
always there just behind where that swing point has now formed
on our charts but of course they also come in you know
slight different variations like this where we don't have
the three main types of sort of ways that we identify liquidity
price charts where price will be gravitated towards to tap
to capitalize on and make profitable trading decisions.
more of a momentum shift where liquidity will still be
to rebalance price. So now the question is, well, you know,
but again those are both just based on the concept of
what liquidity is in the market, we've seen where we can
into those orders to tap into that sitting liquidity for
this is where price will then move to seek out those
building up above that trend line then eventually an
of liquidity is now building up on both sides of that range
there will also be orders just resting there behind those
taken into that bearish move and of course the opposite is
structural swing points simply because price previously
back then it forms an internal lower low right so many traders
into price breaking that high to the upside now of course
think that the swing lower high is now in in place and price is
to start to break structure to the downside however in this
the other side of that liquidity right to then
perfectly equal highs or lows but you know what you can call
price to then fill and rebalance itself so those are
diagrams you can think of those as kind of you know like
just listed so traders will have stop loss orders behind
perfectly equal but when you get this such as you know a
them as well as traders looking to play a potential breakout of
focusing on within our price charts so if we look at swing
newly created sweep zone that blue zone it pulls back nice
to take out that swing low and if they wanted price to keep
created you know whether it's a swing high or a swing low more
zone right? So we have zones and we have flip zones and
structure or you know even any sort of structure created in
is. So if you remember what those are that a zone either
took out and swept liquidity behind those equal highs as it
liquidity when it is created so essentially price will sweep
below the swing low, right? So, if they were looking for price
needs to break market structure or it needs to take out another
think of those dotted orange lines drawn on here on these
double top or a triple top for example there will be loads of
orders going to exist for a multitude of different reasons.
going to have their stop loss just below the low and anyone
and flip zones but it's just an extra piece of confluence that
every structural swing point in the market and price may
eventually seek the liquidity behind those structural points
below the swing low or just above the swing high and those
in this case buy side liquidity is building up above those kind
these are often very high probability zones when of
setup that we will very often see in the market so Prices
for you and what doesn't but in general they do definitely
strict requirement for validating what a strong zone
actually tapping into those orders that you know were
are not looking directly at the order book then how can we
reversed and turned away from that swing point without
actually spot where there is liquidity lying in the market
be a very useful tool for us to use in our analysis but if we
and then provide fuel for further market moves. So,
identifying liquidity in the market, you know, can obviously
below that swing low, right? And they'd be looking to get
reality. So, what I've found is with my experience in the
market and the extensive testing and data collection
the desired direction so kind of having you know inducement
is whether or not the actual concept, you know, works in
true as breakout traders would also place a buy stop order
going down, then, they would have their sell stop order just
trade breakouts, they would have their sell stop order just
have no idea or you know, I have zero proof whether or not
for large players to then buy or sell into. Now, I personally
probability of these zones actually playing out now the
other confluences that we use to realize that potentially big
returns to those zones. There is another tool and concepts
magnet for price to be attracted to because after
then happened and you'll often hear people refer to this as a
identified a very strong supply zone right this grey box here
those equal highs that level breaks and prices moving in
times, the reason why is because those obvious
short from a double top and they be running you know in a
order so they need to find buyers to actually sell to so
get triggered in on the breakout to get long you will
structural liquidity in the market that we're going to be
essentially just viewing this process on the order book via
orders may be sitting in the market and where price may
an area that big money is going to want to step in and
price to tag you in so what does this information actually
these liquidity pools to tap into to try to rebalance price
can see these levels where you can see where there will very
that we can then use that to our advantage when price
the market once that market structure has actually been
help us with direction. So whether price is bullish or
equal highs can also look like a very common price pattern
big imbalances in the market, prices then constantly seeking
your stop loss order somewhere up above behind those equal
those huge shifts in supply and demand that have caused those
gravitate and move towards and that is of using liquidity
obviously going to want to do where there will be a large
twice to break up higher above that level so they may see this
be an equivalent buy order. So if you're a large institution
trading this a liquid market let's just say you placed a
an equivalent buy order for a trade to occur so if you were
those huge imbalances and shifts in price and therefore
of the all of the liquidity at the nearest ask price and price
with an equivalent sell order and vice versa for every sell
short because they hope that price will sell off from there
Well, there are two main ways in which we utilize liquidity
top but of course you can have triple or quadruple tops and so
magnets in the market you know there are all areas on your
you know those pools of liquidity they will starting to
rebalance price at a fair value. So The aim of the game
the price action on our charts. So we use market structure to
be building up below the trend line and then when people are
that we are playing by using technical analysis is
bearish if we are trading with or against the trend. You know
overwhelming amount of supplier demand will eventually step
building behind them or we can have you know a range forming
how do we actually utilize these liquidity concepts for us
those levels and the same goes for the trend line as people
show us where large orders have entered the market to cause
where orders may potentially be left sitting in the market so
were using premium and discount tool to help us with that. Then
orders sitting behind them for the exact same reasons that we
are you know buying and ascending trend line so orders
price charts so far, that's what's happening, right? We're
every buy order in the market to be filled it must be matched
the price action, right? Via the candlesticks on our charts.
just above the swing high right if they wanted to get taken in
see those large imbalances between supply and demand in
stop loss above the high. If we're looking at people who
who is sold at the swing high will most likely have their
Anyone who is bought at the swing low, they are most likely
framework to read what is happening on the order book via
concepts. Now, liquidity in the market essentially acts as a
how this all fits together within the multi-time frame
story and how well priced it is within the leg. Right so we
essentially using all of these concepts as a mechanical
available order wherever that may be because remember for
you're asking for the for the house you know they're just not
just going to have that in a briefcase in cash right they're
that we can use to help us identify where large pools of
we have looked at how we can use supply and demand zones to
than likely there will be orders that are sitting just
on our price charts well there are three main types of
So prices moved by that imbalance between supply and
go through but in the FX market a liquid market conditions are
market buy order of $700, 000 you would instantly absorb all
the market when we've been looking at those zones on our
your door ready to buy with the exact you know amount that
demand and it keeps moving to seek liquidity to then
pretty much always be enough liquidity on the other side of
all of your demands had been absorbed by the market So price
housing market you know everyone knows property if you
is constantly seeking liquidity to rebalance price. So when we
would continue to shoot up another five price points until
of an order book in the market so each of these lines
to so that's a pretty good example of an a liquid market
very typical example of an a liquid market would be the
liquid there will be bids and offers at every single price
keep it simple for our purposes in the market. So market
if you're just a retail trader and you're not putting through
you know it can take months at a time to make that transaction
not going to be a willing buyer straight away for you to sell
gapping you know either up or down to fill the next best
broker then it's very likely that you have got instantly
demand at those levels may be you know much much lower so a
little warning. I'm sure some of you are just blindly
crack on with it shall we? So liquidity is a concept that can
without you know severely affecting its price. So this
a market. It is the ease to which a market can be traded
liquidity is essentially the amount of demand and supply in
that solid understanding in the core components of the strategy
exactly what I do not want to happen for you. So, this is
to trading in general and I just think you can end up
order in the market to be filled it must be matched with
pretty much where you're going to very often see price
filled because it is an extremely liquid market will
just that much bit and it really brings the strategy up
limiting your speed of progression which is just
markets there may not actually be any bids or offers at
you know billions of dollars at a time however with a liquid
it's the first time learning the style or if you're just new
just you know standing outside your front door knocking on
to another level but it is not necessary to be consistently
liquidity concepts you know it can help us to refine our edge
much success that you can have keeping the strategy as
just get unnecessarily over complicated. So we're going to
on each level so if you have ever clicked you know buy or
sell with an at market order on say Euro dollar via your FX
represents a price level in the market if a market is very
diagram illustrates what liquidity looks like in terms
put your house up for there will not instantly be someone
certain price levels and all the quantity of supply and
and foremost. Now I'm not saying that to try and insult
think they can just cause unnecessary confusion until you
your order to instantly fill your trade you know especially
simplified as possible. So when we're going to start to add
comfortable with those alone. Okay so you know there's your
level but also with a large amount of volume sitting there
ignoring me and that's cool. So I'll shut up now and let's just
haven't spent the time testing those previous concepts on
you've spent a fair amount of time testing and getting
So, you'll probably remember this diagram from the intro to
which is market structure combined with S and D zones and
why, you know, it's just really imperative that you really have
personally know how powerful just using both market
massively advise you to not really watch this section just
market structure on supply and demand zones, then, I would
and highly profitable. Now, it may be a bit overwhelming if
structure and supply and demand concepts together on their own.
your intelligence. It's just more because you know I
You know I know how just how effective that can be and how
have mastered structure and supply and demand zone first
essentially, if you're not super comfortable and if you
the technical analysis lesson at the start of this module and
yet and the reason why is because liquidity concepts, I
you in the next one.
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