**The ONLY Liquidity Guide You’ll Ever Need — Transcript & Summary | SozAI**
Source: https://sozai.app/transcript/only-liquidity-guide-need/

Comprehensive guide on liquidity, liquidity sweeps, and market confluences to improve day trading success.

## Key Takeaways

- Liquidity is the foundation of market movement and consists of resting orders.
- Liquidity sweeps activate these orders, causing price to move and create trading opportunities.
- Understanding liquidity helps traders avoid blindly following unproven strategies.
- Smart money and retail liquidity differ and must be identified separately for effective trading.
- Identifying highs and lows on charts is crucial to locating liquidity zones.

## What the video covers

- Explains the concept of liquidity as resting buy and sell orders on the chart.
- Describes liquidity sweeps as the activation of these resting orders to move the market.
- Highlights the importance of understanding liquidity to avoid blindly following trading strategies.
- Differentiates between retail liquidity and smart money (hedge funds, algorithms) liquidity.
- Shows how to identify highs and lows on charts where liquidity lies above highs and below lows.
- Uses simple candlestick patterns to define market highs and lows for liquidity identification.
- Emphasizes that liquidity is essential for market movement and trading confluences.
- Discusses how liquidity sweeps occur across multiple timeframes like daily and 4-hour charts.
- Encourages traders to find their own examples on charts to improve skill and confidence.
- Mentions the significance of combining liquidity concepts with other confluences for better trade decisions.

## Chapters

1. 00:00 Introduction to Liquidity and Trading Confluences
2. 02:44 Why the Market Needs Liquidity
3. 05:39 Visualizing Liquidity on Charts with AI Diagram
4. 08:30 Differentiating Smart Money and Retail Liquidity
5. 11:39 How to Identify Highs and Lows for Liquidity
6. 14:06 Importance of Taking Out Highs and Lows
7. 16:56 Liquidity Sweeps Across Different Timeframes
8. 19:32 Advanced Liquidity Concepts and Relative Equal Highs
9. 21:51 Using Confluences to Confirm Market Reversals
10. 24:24 Practical Tips and Encouragement for Traders

Answers

## Questions about this video

What is liquidity in trading according to this video?

Liquidity is defined as resting buy and sell orders on the chart, which the market needs to function and move.

How does a liquidity sweep affect the market?

A liquidity sweep occurs when resting orders above highs or below lows are activated, causing price to move and creating trading opportunities.

Why is it important to differentiate between retail and smart money liquidity?

Because smart money (hedge funds, algorithms) and retail traders have different liquidity zones, identifying them separately helps traders make better-informed decisions.

## Full Transcript — Download SRT & Markdown

00:00

Speaker A

Welcome to Liquidity Explained. In today's video, I'm going to be explaining every single thing that you guys need to know about draws on liquidity, liquidity sweeps, and why this is going to be the biggest and best confluence for you guys to use in your trading.

00:13

Speaker A

trading. Before we get into it on the charts, first thing that I want to do is just explain what liquidity is. Because me personally, when I'm going to use a trading confluence, I don't want to just sit here and blindly follow some

00:24

Speaker A

Before we get into it on the charts, the first thing that I want to do is just explain what liquidity is. Because me personally, when I'm going to use a trading confluence, I don't want to just sit here and blindly follow some

00:39

Speaker A

taking a trade. Why should I personally risk my own personal capital or why should I personally put my funded account on the line off of this confluence? A lot of people just blindly watch YouTube videos that say, "Oh yeah,

00:52

Speaker A

YouTuber that just says, "Hey, bro, this works." And personally, if I'm putting money on the line, if I'm risking my own capital, I definitely want to know why certain confluences are moving the market. I want to understand why I'm

01:02

Speaker A

actually telling you about price action. So before we get into the chart work, I want to explain to you guys what liquidity is. What is liquidity?

01:09

Speaker A

taking a trade. Why should I personally risk my own personal capital or why should I personally put my funded account on the line off of this confluence? A lot of people just blindly watch YouTube videos that say, "Oh yeah,

01:17

Speaker A

The market loves liquidity just like we love cookies. And guess what? Just like humans need cookies to [ \_\_ ] function, the market needs cookies and liquidity to actually [ \_\_ ] function as well.

01:29

Speaker A

this five-minute strategy is going to give you an 80% win rate." And then they just grab that strategy and then go try and apply it and then they lose all their money. And it's because they don't understand what the confluences are

01:46

Speaker A

orders or any sort of sell orders. Okay? And this can happen both on the smart money scale. So the big money, the algorithms and the hedge funds and whatever the people that are actually moving the market and then that it can

01:57

Speaker A

actually telling you about price action. So before we get into the chart work, I want to explain to you guys what liquidity is. What is liquidity?

02:12

Speaker A

the market movers liquidity is because they're two different things and it's very important to understand this. So, if we know that liquidity moves the market, then obviously if it's our goal as a day trader to be able to make money

02:24

Speaker A

Liquidity is just resting orders on a chart. And I know it sounds dumb, but I like to refer to liquidity as cookies.

02:36

Speaker A

activating those orders, whether it's a massive amount of buy orders or massive amounts of sell orders, we need to understand where they fall on the chart.

02:44

Speaker A

The market loves liquidity just like we love cookies. And guess what? Just like humans need cookies to function, the market needs cookies and liquidity to actually function as well.

02:58

Speaker A

lows. Now, you were probably saying, well, it can't be that easy. There has to be some sort of elite special algorithm for us to be able to find where these precious orders are lying in order to make the market move. No, it's

03:11

Speaker A

Every single trade that I take is based off of liquidity. The market cannot move without liquidity. When you hear the word liquidity sweep, it means that that liquidity is getting taken out, activating those resting orders and entering the market into any sort of buy

03:23

Speaker A

advanced does not mean the more better. I trade off of liquidity and two other concepts that help me make literally hundreds of thousands of dollars per month day trading, which is insane to say, but when you simplify things and

03:37

Speaker A

orders or any sort of sell orders. Okay? And this can happen both on the smart money scale. So the big money, the algorithms and the hedge funds and whatever the people that are actually moving the market and then that it can

03:45

Speaker A

So, with that being said, we're going to jump onto the chart. So, I'm going to show you guys number one, how to identify highs and lows within the market because we know that liquidity lies above highs and below lows, but you

03:57

Speaker A

also happen on the retail scale. That includes us as retail traders. Okay? And I'm going to explain why all of this is important and why we need to know where retail liquidity is and why we need to know where smart money or big hedge fund

04:08

Speaker A

smart money, hedge fund, market mover liquidity. and we need to be able to differentiate between the two. So, I'm going to show you guys and give you guys different examples of what that looks like on the chart. And then we're going

04:20

Speaker A

the market movers liquidity is because they're two different things and it's very important to understand this. So, if we know that liquidity moves the market, then obviously if it's our goal as a day trader to be able to make money

04:33

Speaker A

going to see when we get on the charts, it is literally that simple. Liquidity lies above highs and below lows on the charts. So, with that being said, let's jump into the market and I'm going to show you guys a couple examples of this.

04:43

Speaker A

on the market moving, then it would make sense that we would want to be able to identify liquidity on the chart. So, now that we know that liquidity just essentially is known as resting orders and a liquidity sweep is identified as

04:58

Speaker A

liquidity lying above highs, and then a low, and we have liquidity lying underneath lows, we need to be able to identify a high and a low within within the market. So what consists of a high?

05:10

Speaker A

activating those orders, whether it's a massive amount of buy orders or massive amounts of sell orders, we need to understand where they fall on the chart.

05:27

Speaker A

high, again, we're looking for an up candle, then a down candle. We're looking for the highest point of those two candlesticks. So, we're looking for the highest wick of those two candlesticks, and that is going to be our high. When we're looking to identify

05:39

Speaker A

Now, we're going to pop up a little AI diagram really quick, and then actually I'm going to show you guys on the charts exactly where they lie. Now, on this little diagram here, you guys will see liquidity lies above highs and below

05:54

Speaker A

don't know how. Well, I do know how how, but I'm going to show you guys how you guys can avoid getting caught up in any of that. Okay. So, awesome. We've been able that we we're able to identify

06:04

Speaker A

lows. Now, you were probably saying, well, it can't be that easy. There has to be some sort of elite special algorithm for us to be able to find where these precious orders are lying in order to make the market move. No, it's

06:13

Speaker A

So let's think back to absolute basic fundamental lessons of uptrends and downtrends. Right? You guys know what an uptrend is.

06:23

Speaker A

it's literally that simple. Liquidity is probably one of the most simple concepts that a lot of people end up overcomplicating. And that's something that I really enjoy doing when I'm teaching is helping you guys understand. The more

06:39

Speaker A

"Okay, I'm [ \_\_ ] done with this [ \_\_ ] I'm done with this uptrend. I want to reverse." Where is the market able to reverse? Where is the market able to reverse? It is going to be able to

06:52

Speaker A

advanced does not mean the more better. I trade off of liquidity and two other concepts that help me make literally hundreds of thousands of dollars per month day trading, which is insane to say, but when you simplify things and

07:08

Speaker A

that is over here from previous price action. But regardless, the market needs to go up and take out a high. Why?

07:17

Speaker A

get more efficient with these things and realize that less is more, then you are going to become a full-time trader. And you guys are actually going to be able to make a whole lot of money doing this.

07:33

Speaker A

trader and I say, "Oh my gosh, there's a high right here. Then there's a low. Now there's a higher high. Now there's a higher low. Oh my goodness. So, when I push past when we push past this higher

07:43

Speaker A

So, with that being said, we're going to jump onto the chart. So, I'm going to show you guys number one, how to identify highs and lows within the market because we know that liquidity lies above highs and below lows, but you

07:49

Speaker A

I'm going to press buy when we push past this high. Is that smart? Uh, it depends. It depends on a lot of things, but we're not going to get into that today. But a lot of people are pressing

08:00

Speaker A

guys have to be able to identify that on a chart. Now, number two, there's certain types of liquidity. Like I was telling you guys before, there's retail trader liquidity, which is us, the retail traders, and then there's the

08:14

Speaker A

Okay. And where do those sell positions or where do those short trades have a stop-loss place? Where does that trade get invalidated? Above the high. Because they think that price is going to reverse and start a downtrend. Right?

08:30

Speaker A

smart money, hedge fund, market mover liquidity. And we need to be able to differentiate between the two. So, I'm going to show you guys and give you guys different examples of what that looks like on the chart. And then we're going

08:40

Speaker A

So in turn, they are going to have resting buy orders above highs. So there's two sets of retail buy orders that are getting activated when we push above highs in the market. M now we're getting into retail liquidity. So where

08:58

Speaker A

to get into advanced liquidity concepts, which don't get scared. I know I said I just said less is more, but it's just adding on to the very simple concepts of liquidity lies above highs and below lows because that's all it is. You're

09:08

Speaker A

There's two sets, right? When we push above highs, people are entering into buy orders. Why? because they think, hey, we're in an uptrend. We are going to continue higher. Not only that, but the people who thought we were moving

09:21

Speaker A

going to see when we get on the charts, it is literally that simple. Liquidity lies above highs and below lows on the charts. So, with that being said, let's jump into the market and I'm going to show you guys a couple examples of this.

09:33

Speaker A

who are getting stopped out of their trades up here that are pretty much getting forced to press buy. So, there's two sets of buy orders, above highs.

09:42

Speaker A

Let's get into it. Now, before I show you guys the very, very scary candlestick charts, I'm going to show you guys with drawings. Now, just like with the drawings that I showed you guys earlier, where we have boom, a high, and

10:01

Speaker A

traders are going to be able to identify this downtrend and say, "Hey, we're going to continue moving down. Once we push past this low, that confirms that we are in a downtrend. So, I'm going to take shorts." So, there's people

10:12

Speaker A

liquidity lying above highs, and then a low, and we have liquidity lying underneath lows, we need to be able to identify a high and a low within the market. So what consists of a high?

10:26

Speaker A

trades, where do those long positions, where do their trades get invalidated? Where do they have a resting stop-loss?

10:34

Speaker A

It consists of a move up then a move down. Pretty simple, right? It's a two candlestick pattern. Okay? So a high consists of an up candle, then a down candle. And a low consists of a down candle followed by an up candle. Off the

10:50

Speaker A

And in a downtrend, there's two sets of sell orders sitting underneath lows. That is retail liquidity. Now, you're probably saying, "Well, I probably don't want to trade like a retail trader because I know that 99% of traders end

11:04

Speaker A

high, again, we're looking for an up candle, then a down candle. We're looking for the highest point of those two candlesticks. So, we're looking for the highest wick of those two candlesticks, and that is going to be our high. When we're looking to identify

11:17

Speaker A

market movers entering into their orders? Because we just identified where the dumb money is entering, right? It's above highs and below lows. So, where is the smart money entering? Well, if we think back to just basic economics class, let's say I want to buy one share

11:39

Speaker A

lows, we're looking for the move down, then the move up, and we're looking for the lowest point of those two candlesticks. And we're we are looking to identify that. Boom. Super easy, super freaking simple. Believe it or not, some people get this confused. I

11:52

Speaker A

familiar with this, maybe I'm aging myself, but back in the day, if I wanted to buy a share of Apple stock, the stock was on a freaking piece of paper. So, I would have to call up a broker and I

12:02

Speaker A

don't know how. Well, I do know how, but I'm going to show you guys how you guys can avoid getting caught up in any of that. Okay. So, awesome. We've been able that we we're able to identify

12:11

Speaker A

they know that they have shares of Apple. And they say, "Hey, Tim, do you have some do you have some Apple shares?" And he says, "Fuck no, I don't want to sell that [ \_\_ ] to you." Boom.

12:18

Speaker A

that. Now I want to explain why liquidity lies above highs and below lows. And this is when it gets serious.

12:22

Speaker A

And then he calls up Mikey. Hey, Mikey. Do you have some Apple shares that you want to sell? Well, yeah. I'm up a little bit on this position, so [ \_\_ ] it.

12:28

Speaker A

So let's think back to absolute basic fundamental lessons of uptrends and downtrends. Right? You guys know what an uptrend is.

12:40

Speaker A

buy. And all of these new age technology and brokerages, they've all digitalized it for us so we can just press buy and boom, a split second. But what do we need? We need someone willing to sell us a share. Do you see where where I'm

12:55

Speaker A

It consists of higher highs and higher lows, right? And a downtrend consists of lower highs and lower lows. Now, what do we know? Liquidity lies above highs and below lows. Let's say we're in an uptrend and suddenly the market says,

13:07

Speaker A

the downside." And we know that the market needs to move off of a massive amount of orders that need to be filled.

13:13

Speaker A

"Okay, I'm done with this. I'm done with this uptrend. I want to reverse." Where is the market able to reverse? Where is the market able to reverse? It is going to be able to

13:26

Speaker A

the market makers need to do? They need to induce retail traders to enter in the opposite direction of them. And what did we just explain? We explained exactly where retail traders are going to want to be entering into both buy positions

13:43

Speaker A

reverse once we push past a high. If we're in an uptrend, the only spot that the market is going to be able to reverse is above a high. Whether it's above the current high within the uptrend or whether there's another high

13:55

Speaker A

there's also people who are getting stopped out of their short positions when those highs get pushed above. So in turn they know that there's a massive amount of buy orders that are getting filled when we push above a high. So

14:06

Speaker A

that is over here from previous price action. But regardless, the market needs to go up and take out a high. Why?

14:20

Speaker A

Oh my goodness. That's so insane, right? I know I just broke your brain. Okay, cuz when I first learned this, I was like, "No freaking way. No wonder I've been getting stopped out of every single [ \_\_ ] trade. I'm retail. I'm these

14:33

Speaker A

Because liquidity lies above highs. Now, we're going to get down to why. Why does liquidity lie above highs? Well, let's think back to our definition of an uptrend. It moves in higher highs and higher lows. So, let's say I'm a retail

14:47

Speaker A

opportunity whenever a high gets pushed above to be able to reverse price. We know now where retail liquidity lies and also we know how the market makers are able to move the market. So if we're in an uptrend and the market makers want to

15:03

Speaker A

trader and I say, "Oh my gosh, there's a high right here. Then there's a low. Now there's a higher high. Now there's a higher low. Oh my goodness."

15:17

Speaker A

direction. Same thing with a reversal to the upside. If we're in a downtrend and the market makers know that all of these retail traders, they're pressing sell every time a low gets pushed underneath and they know that all of the people

15:30

Speaker A

that are pressing buy on this move up are getting stopped out of their orders.

15:33

Speaker A

in turn having to press sell, okay, to sell their position back for a lower price when these loads get pushed underneath. It knows that there's a massive amount of sell orders that that are getting filled right here, which

15:43

Speaker A

gives them the opportunity to fill their massive amount of buy orders to reverse price in the direction that they want to push it. Now, obviously, us as traders, we want to be on the side of smart money. We want to be on the side of the

15:56

Speaker A

market makers. So, now that we have this information, I'm going to show you guys on the chart how this actually plays out. so you guys can identify it in real time. Now, before we go onto the chart, I would like to preface uptrends do move

16:10

Speaker A

in higher highs and higher lows. Notice when I was explaining when we push above a high, I didn't say the market makers always are going to reverse price. I say that they had the opportunity to reverse price when we push above a high. Okay?

16:25

Speaker A

They have the opportunity to. And there's other confluences that that you guys are going to learn as you guys start looking at my channel to help you guys identify when they actually take that opportunity and when to spot a

16:35

Speaker A

proper reversal. But today, we're just talking about liquidity and how to identify it on a chart. So, we know that the market makers have the opportunity to fill their massive amount of sell orders whenever a high gets pushed above

16:48

Speaker A

within the market. Okay? And the nice thing about all of the confluences that I teach you guys on my channel is that they happen on every single time frame.

16:56

Speaker A

Okay? So, liquidity gets swept on the daily time frame. Liquidity gets swept on the 4hour time frame. Why? Because that's how the market moves. Again, if the market wants to go from a downtrend into an uptrend, what needs to happen?

17:12

Speaker A

It needs to boom, sweep liquidity and then push higher. Where were orders filled? Right here. If it wants to go from an uptrend into a downtrend, what needs to happen? We need to sweep liquidity and then boom, go lower. We

17:24

Speaker A

need to push above this high. Where were the orders filled? Up here. So, if we know that that's how the market moves, we will be able to identify all of these liquidity sweeps very easily. And I'm sure as I'm showing you guys this on the

17:36

Speaker A

chart right now, you guys are already able to start identifying some of these. Okay? And I'll show you guys several examples of this happening on high time frames. Okay? Okay, I'll show it to you guys on the high time frames, then I'll

17:48

Speaker A

show it to you guys on the low time frames and show you guys several examples of this happening happening literally everywhere. We'll start off on the monthly time frame. Remember this move down right here? What did everybody think this was? Everybody thought, "Oh,

18:00

Speaker A

this was scary tariff news, right?" Well, yeah, it was scary tariff news, but what did that give the market makers and all the rich ass people the opportunity to do? It allowed them to fill their buy orders. Because if we

18:14

Speaker A

look what consists of a low within the market, a move down then a move up. So we see a down candle right here and then we see price move up. So this is a low.

18:23

Speaker A

Well, everyone was freaking out about the macroeconomic news of oh no tariffs and the whole world is going to end.

18:29

Speaker A

That's what retail traders were thinking. But what was smart money thinking? Smart money was thinking this is the best buy opportunity of all time.

18:37

Speaker A

Why? because we are getting everybody that are selling their shares to us for a cheaper price so we can buy and look what price has done since then. So that happened on the monthly time frame and what price needed to come down to sweep

18:50

Speaker A

out these lows in order to continue pushing higher. I can show you guys another example. This one right here, remember that scary scary virus that happened in 2020 that everybody was freaking out about? What was that? It was just a simple liquidity sweep. Let's

19:03

Speaker A

scare everybody and say that the world's going to end and everyone's going to die so that we can fill our massive amount of buy orders so the rich can continue getting richer. Holy [ \_\_ ] smokes.

19:13

Speaker A

While everybody in retail traders were selling their positions all the way down here. Boom. While everybody was selling down here, Smart Money was buying and now the NASDAQ is worth three times as much. Absolutely insane. Let's look at

19:25

Speaker A

the daily time frame and let's show examples of this. Let's see. Let me find a good example right here. Oh, look at this. What are these right here? Highs.

19:32

Speaker A

And we have relative equal highs. This is that's uh an advanced liquidity concept, but we'll get into that a little bit later. We can see highs in the market. We get a move up, then a move down, move up, then a move down.

19:41

Speaker A

What does price do? Fake out. Ha. Got you guys. Everyone's entering buy orders. Oh my gosh. We're going to continue going higher and higher and higher. Psych. What does that give the market the opportunity to do? Fill their

19:51

Speaker A

massive amounts of sell orders and then boom, dump it on their heads. And then just like how they were able to fill their massive amount of sell orders, they were able to buy all of those positions back for a much lower price.

20:01

Speaker A

and then do the exact same thing. Once we push underneath these lows, what do we do? We sell on their heads while everyone's pressing buy. Boom. We push underneath these lows. Everyone's pressing sell because they're scared.

20:12

Speaker A

What do they get to do? They get to buy and then boom, push price even higher.

20:17

Speaker A

That is the name of the game. That is how liquidity works. And it happens on every single time frame. Now, let me show you guys that this happening on lower time frames. Okay, what do we see like right here? Boom. Massive move

20:28

Speaker A

down. What do we do? We take out all of these lows. Boom. We took out this low.

20:31

Speaker A

We took out this low. We took out this low. All to do what? All to push price higher. Now, again, I don't want you guys to just think every time the market pushes above a high, we're just going to

20:42

Speaker A

go down. And then every time the market pushes below a low, or else the market would look like this. And that just that's not how it works, right? But the market has the opportunity to reverse.

20:52

Speaker A

It has the opportunity to reverse when we push above a high or below lows. I can show you guys liquidity sweeps on the 15-minut time frame. I can show you guys liquidity sweeps on the 5minute time frame. I'm sure you guys get it by

21:03

Speaker A

now. But look right here. Boom. Okay. What do we do before sending price way higher? We push underneath this low right here. We're able to fill massive amounts of buy orders. Then what happens? Boom. Price skyrocket. Okay.

21:15

Speaker A

Same thing right here. What do we have? We have a set of lows. Okay. We push underneath before moving higher. Same exact thing with why price went lower right here. What did we do? We moved above highs just to move price lower.

21:26

Speaker A

Okay, now you're probably thinking, well, okay, there's liquidity everywhere on the chart. Then how am I able to actually like identify which high or low it's going to push above to end up causing the reversal? Well, that's the

21:38

Speaker A

nice thing. It's going to sound bad, but you don't need to know. All you need to know is that price has the opportunity to reverse when we push above a high or below below a low. And once we know that

21:51

Speaker A

price has the opportunity to reverse above a high or below a low within the market, then we have other confluences that we can add onto our strategy to then be able to say, okay, we pushed underneath this low or let me show you

22:05

Speaker A

guys a little example. And I'm going to start probably using some confluences that might freak you guys out a little bit, but I'm just going to like speedrun this super quickly so you guys can get what I'm saying. Okay, boom. Price

22:17

Speaker A

pushes underneath these lows. When we push underneath these lows, do I think anything of it? Not really. But I'm thinking, okay, maybe there's a bunch of sell orders that are getting activated right here. So, we might be able to push

22:28

Speaker A

higher here. We have the opportunity to. How do I know that the market is actually going to take that opportunity?

22:34

Speaker A

Well, it's going to start a new uptrend out of there, right? So, that's all we need to wait for. All we need to wait for is some level of confirmation. We push underneath these lows. We we get retail to enter into a bunch of sell

22:46

Speaker A

positions. How do we know that smart money is actually entering into buy positions? Do we just blindly press buy when a low gets pushed underneath? No.

22:55

Speaker A

Because if we did that, then we would boom press buy right here and then what would happen? Oh no, we're stuck in draw down forever. We would press buy right here. Oh no, price keeps going down. We would press buy right here and then, you

23:05

Speaker A

know, we keep going down. So what do we wait for? We wait for confirmation. So when we push underneath this low and we have the opportunity to activate buy orders, what do we do? we just wait for confirmation. So for me personally, this

23:18

Speaker A

is exactly what my strategy is built off of. That's why every single one of my trades starts with a liquidity sweep because I'm trying to catch the bottom and the top of every single move. But I'm not just blindly pressing buy when

23:31

Speaker A

we push underneath the low. And I'm not blindly pressing sell when we push above a high. Why? Because I need confirmation. So what does confirmation look like? Well, we can see some right here. Okay, we can see that an uptrend

23:42

Speaker A

gets formed after we take out these lows. So, we take out these lows and we say, okay, what does price have the opportunity to do? Reverse. Because we took out sell orders and we potentially entered into buy orders. How can we

23:55

Speaker A

confirm that buy orders were filled? Well, we just look for an uptrend to form. So, what do we have right here? We have a high. We have a low right here.

24:02

Speaker A

Then we make a higher low. Then we make a higher high. Awesome. Boom. Average entry could be right here. And then boom, price moves higher. We just look for an uptrend to form out of the liquidity sweep. You're probably

24:14

Speaker A

thinking, "There's no way. It's that simple." It really is. It really freaking is. You guys want to see another example of this? The same one that I showed you. Boom. All these lows getting taken out. All these lows get

24:24

Speaker A

taken out. Okay, this could be super spooky, right? Price is moving all the way down here. I don't know if I want to press buy. Well, price is moving all the way down here. Awesome. You don't have to because we don't even know if price

24:36

Speaker A

is going to fill those buy orders. If price wants to, right? Because all smart money has is the opportunity to do it.

24:42

Speaker A

And do we know what the market makers are going to do? [ \_\_ ] no. But what we can do is be reactive to what smart money is doing. And we can be reactive to the chart. So we know that smart

24:52

Speaker A

money has the opportunity to fill its buy orders right here. Okay. So how do we know that opportunity was taken? By looking for an uptrend to form out of it. So what do we see? Okay. We have the

25:01

Speaker A

opportunity to fill buy orders. We push above this high. We make a higher high.

25:05

Speaker A

We make a higher low. Awesome. We know an uptrend is going to get formed. Boom.

25:08

Speaker A

average entry right here and then price moves up. Now, obviously, my strategy is a little bit different than this. And I have actual strict confluences and a set of rules that I'm actually following when I'm looking to place trades based

25:21

Speaker A

off of draws on liquidity. And I have several videos on my on my strategy. I made one like around a month and a half ago that you guys can go watch. But it all starts with liquidity. And if you

25:33

Speaker A

guys can simplify it just down to liquidity lies above highs and below lows. Like look at this. Boom. What did we do? We pushed above this high. Okay, we know there's buy orders that are getting filled right here. We know that

25:44

Speaker A

market has the opportunity to fill sell orders. How do we know that opportunity was taken? Well, we have a high, we have a low, we make a lower high or sorry, we make a lower low, then we make a lower

25:54

Speaker A

high. What does that mean? There's it's a start of a downtrend. Average entry right here and then boom, price dumps down. It is that freaking simple. Again, like I said, there's other confluences that I use to make sure that my entries

26:05

Speaker A

get very exact, but it is quite literally that simple. Now, what I want you guys to do is take a moment, get on your guys' charts, and look for examples of liquidity getting swept and look for examples that you guys can identify of

26:19

Speaker A

this happening, okay? Because it happens literally everywhere. Look right here. Boom. We push above this high. Okay?

26:26

Speaker A

What happens? We have high, low, lower, low, lower, high. Average entry right here. Price moves down. Simple, simple, simple, simple. Let's see. Let's see if we have any other examples. I mean, I could go on and on for this, but I could

26:41

Speaker A

go on and on with this, but it's honestly better if you guys find your own examples on the chart because this is this is going to get you guys better at trading and just better at identifying these things. So do yourself

26:52

Speaker A

a favor and go on like any literally any chart and just start trying to identify liquidity sweeps. Start trying to find identify where price pushes above a high and then reverses. Start trying to identify where price pushes underneath a

27:05

Speaker A

low and then reverses. Now that's just liquidity explained. Now I'm going to get into some advanced liquidity concepts. Okay, there's two types of liquidity. There's low resistance liquidity and then there's high resistance liquidity. And then there's something that's called significant

27:24

Speaker A

draws on liquidity. Okay, so first I'm going to get into the significant draws on liquidity. So significant draws on liquidity, what are they? Well, they're significant draws on liquidity, meaning it's going to be an area that the market

27:38

Speaker A

is probably going to want to seek out. Why? Because there's going to be a lot of liquidity there. Okay, so how can we identify significant draws in liquidity?

27:47

Speaker A

And what do they consist of? Significant draws on liquidity consist of high time frame highs. Okay, high time frame highs and lows. Okay, session highs and lows.

28:01

Speaker A

So that means New York session, London session and Asian session. And then data highs and data lows. So data highs and data lows essentially means like when high impact news comes out, there's typically like big candles that are made

28:15

Speaker A

out of it. So, if we get a big candle up then a candle back down, this would be a day to high off of some sort of news event. That's a little bit advanced.

28:23

Speaker A

That's like advanced advanced. You guys aren't going to be using that all the freaking time. So, I would just stay focused on just high time frame highs and lows and session highs and lows.

28:35

Speaker A

Now, again, because I personally am trading on the low time frames, I'm looking to execute my trades on like the 5m minute or the one minute time frames.

28:44

Speaker A

So obviously if we sweep out high time frame liquidity, this is a great example. High time frame liquidity for me is like 1 hour lows or 4hour lows, right? So this is a prime time example right here. When price moves down, we

28:58

Speaker A

take out this hourly low, we take out this hourly low, right? These are significant draws on liquidity. Why?

29:05

Speaker A

Because they're high time frame lows. We know that there's high timeframe orders, sell orders that are getting placed underneath these lows. we know that there's going to be significant amount of sells that are getting placed right here. So, if I'm entering trades on the

29:20

Speaker A

low on the lower time frame, I'm going to want to take trades based off of high time frame liquidity sweeps. Why?

29:28

Speaker A

Because I know that the moves are going to be a lot larger than trying to take a trade off of let's say like a fivem minute liquidity sweep. Okay? Because if a if a 5m minute high gets gets pushed

29:39

Speaker A

above and then we see like a downtrend form out of that, is that going to be longived? Probably not. So we need to know that the higher time frames hold higher power cuz if some if a 4hour high

29:51

Speaker A

or a 4hour low gets pushed underneath or gets pushed above like in this instance, right? We push above all of these 4hour highs, we know that a high time frame move is going to come out of that. So,

30:02

Speaker A

if I'm trading on the lower time frames and I see boom, we just pushed above a 4hour high right here and a 4 hour high right here and we're starting to reverse off of that, then I know that I'm going

30:15

Speaker A

to be able to get a good entry to be able to catch a massive move down. Okay?

30:21

Speaker A

So that's why high time frame highs and high time frame lows are significant draws on liquidity especially for the way that we trade because we're trying to catch these five minute time frame moves or these one minute time frame

30:34

Speaker A

moves. Okay. So obviously if we take out a high time frame draw liquidity, we know that the move following that is going to be on the high time frame to the upside or to the downside. But because we're entering on the low time

30:48

Speaker A

frame, like let's say we enter into a buy position right here, right? It's going to be able to let us capture the entire move and a large highframe move for that matter. Okay? So that's why high time frame draws and liquidity are

31:07

Speaker A

very important. Now we have session draws on liquidity that are very important as well. Okay, there's three sessions that happen within the market.

31:16

Speaker A

There are New York session which is 9:30 a.m. Eastern time till 5:00 p.m. Eastern time. Okay. Then there's London session which is from 3 a.m. Eastern time all the way until it technically ends at 11:00 a.m. Eastern time. But because it

31:35

Speaker A

overlaps with New York session, I say that it ends at 8:30 a.m. Eastern time, which is when New York pre-market starts. Okay? because we just want to be able to identify when the previous sessions were operating on their own.

31:51

Speaker A

And then there's Asia session. And Asia session starts at 6:00 p.m. Eastern time and goes all the way till 300 a.m.

32:00

Speaker A

Eastern time. So it goes New York session from 9:30 a.m. Eastern time or pre-market starts at 8:30 a.m. Eastern time all the way till 5:00 p.m. Eastern time. Then Asia session, there's a 1h hour gap where it's untradeable, okay?

32:17

Speaker A

From 5:00 p p.m. to 6 p.m. So there's like from like 501 to 559, you can't trade, okay? It's called like spread hour. And then from 6:00 p.m. Eastern time all the way till 300 a.m. Eastern time, that's when Asia session is going

32:34

Speaker A

on. And then London session goes from 3:00 a.m. Eastern time all the way till 8:30 a.m. Eastern time. Okay, now you're probably saying, "Okay, you just said a whole bunch of [ \_\_ ] mumbo jumbo. Why on earth could that possibly be

32:51

Speaker A

beneficial for us?" Well, I'm going to tell you. Let me throw this on here.

32:55

Speaker A

This is This just helps me out. This is just my little session session high and low indicator here. Let me just mark out the sessions really quick. Boom. 1,800.

33:03

Speaker A

So 6:00 p.m. Eastern time. Let's go. 3 a.m. It's London. 9:30. Boom. This is New York. So if you guys don't have this indicator, that's fine. Okay. But I'll just go ahead and mark this. So this is Asia session. This is London session.

33:19

Speaker A

What you guys are going to want to do is you guys are going to want to mark out Asia session high, the highest point that was made during Asia session, and the lowest point that was made during Asian session. And then the same thing

33:33

Speaker A

with London session. The lowest point that was made during London session and the highest point that was made during London session. Now why are these highs and lows important? I'll explain it super quickly. Okay, when Asia session is going on, what is happening? There's

33:50

Speaker A

new Chinese ass money that's coming into the market. That wasn't that racist. It's just Asia. Okay, Chinese money is coming into the market. Okay, Ching Chang and Ching Chong, they're trying to trade.

34:02

Speaker A

That was bad. But they're they're trying to trade, okay? And they say, "Man, [ \_\_ ] [snorts] all of these New York traders. We want to move the market how we want to move, right? We want to move the market

34:13

Speaker A

however we want to move it." Okay? So they boom, all of their money comes into the market. And then boom, they're moving the market how they want to move it. And then guess what? Boom. The London session traders come in and they

34:22

Speaker A

say, "Hey mate, [ \_\_ ] all these Asian folks. I want to move the market how we want to move it." Right? Boom. Right.

34:30

Speaker A

So, we say, "Fuck that. We got all of our money and then we're going to start moving the market." And then New York session comes in and they say, "Man, [ \_\_ ] all these London session guys. We

34:39

Speaker A

want to move the market where we want to move the market." So, there's different market movers in different sessions that are happening throughout the entire trading day. And if you guys remember, liquidity, if the market wants to move a

34:50

Speaker A

certain way, we need to do what? We need to take out highs or lows in order to push the market in the direction that it wants to go. So if we look at Asia session right here, what does Asia

35:00

Speaker A

session do? Asia session doesn't really do do much here. Okay, it moves down, it moves up. Okay, whatever it puts in, it puts in this high, puts in this low. But what does London session do? Right when London session opens, boom, we say [ \_\_ ]

35:13

Speaker A

all the Asians. We say, "Fuck them, bro. What are we doing? We're taking them out." Where do they take them out? Boom.

35:19

Speaker A

Right here, they take out the lowest point of Asia session. And then what happens after that? London session moves higher. Now, let's look at New York session. Right when New York session opens, what do we see? Where are London

35:32

Speaker A

session lows? The New York traders say, "Fuck those guys from London. We're going to stop all of them out so we can move the market where we want to move it." Price comes down and sweeps out these London session lows and then makes

35:45

Speaker A

the move for the day. That is not a coincidence. This happens almost every single day. I'll show you guys other examples of this. So obviously this is a significant draw on liquidity because we know that when especially when we're

36:00

Speaker A

trading these US indexes, I personally only trade during US market open, during New York market open because I'm trading a US index. It would be stupid for me to be trading a U index during Asia session or during London session. The US index

36:16

Speaker A

is going to move during the New York open because that's when the actual stock market is open, right? for these indexes to be moving properly. Okay. But so when we come into New York market open, what am I going to want to do? I'm

36:29

Speaker A

going to want to mark out all of these previous session highs and lows. Why?

36:33

Speaker A

Because there's significant draws in liquidity. And these New Yorkers are going to say, "Man, [ \_\_ ] all those other sessions. We need their liquidity to be able to push price in the direction that we want to go." Just like how we saw

36:43

Speaker A

today where price comes down, takes out these London session lows and then moves up to take out boom this high, Asia session high, previous day high. Boom.

36:52

Speaker A

That's trade completed. Okay, I'll show you guys other examples of this. This happens almost every single day. Look at this. Okay, this is New York market open. Pre-market is right here. Okay, London session. Boom. From 3 till 8:30,

37:09

Speaker A

right? Cuz that's New York premarket. What do we see? We have boom. This is the high of London session. This is the low of London session. Right when New York pre-market opens, what happens?

37:20

Speaker A

[ \_\_ ] them. Boom. We take out London session lows. And then what does New York do for the rest of the day? Trends higher. It is not a coincidence. I just showed you backtoback days. This [ \_\_ ]

37:30

Speaker A

was not planned. This was literally the last two trading days where New York session opens, we take out London session low, and then we end up going higher. It is not a coincidence. These are very very very key levels of

37:44

Speaker A

liquidity that need to be understood. Now again I would like to preface just because we take out London session lows and just because we push underneath these lows does that mean you should be blindly pressing buy? No. We need to see

38:01

Speaker A

confluences out of that. Okay. We need to see confluences that an uptrend is actually forming out of that. Right? So in my case, I would just look on like some sort of low time frame, right? We see, okay, awesome. Boom. London session

38:16

Speaker A

lows get taken out. Okay, we have a low, we have a high, we put in a higher low, we put in a higher high, we put in a higher low, average entry right here, and then boom, price ends up moving

38:25

Speaker A

higher. It's obviously a little bit more advanced than that when we get into all of my other confluences, but today we're just focused on liquid on liquidity.

38:32

Speaker A

Let's go over to Monday and see if the same thing happened on Monday. Okay, do you see what I see? What are we saying to the London Blok? What are we saying to them to their lows? What did we say

38:43

Speaker A

to their highs? Look, London session high. London session low. These are significant draws on liquidity for a [ \_\_ ] reason. I think my point has been proven. This is New York market open. Right when New York market opens,

38:58

Speaker A

boom, nutshot. Right over London session high. Then what does New York market do? Bang. Nutshot again right underneath London session low. Then what happens?

39:12

Speaker A

Boom. Drake's [ \_\_ ] dick appears and the market moves higher. These are significant draws on liquidity. London highs, London lows, Asia highs, Asia lows. The market is actively going to seek out these draws on liquidity and try and take them out to push price in

39:30

Speaker A

the direction that it wants to move. So remember th remember those time frames that I told you. Now that we understand significant draws in liquidity, we showed examples of how high time frame highs and lows have an impact on the

39:40

Speaker A

market and we showed how session highs and lows have an impact on the market.

39:45

Speaker A

We need to get into what low resistance liquidity is and high resistance liquidity is. Okay, cuz it's important as well. What is low resistance liquidity? Low resistance liquidity is a bunch of cookies. Okay, so what do we have right here? High high high.

40:03

Speaker A

Remember what I said? We like cookies. Okay, there's a bunch of these stacked up highs. Low resistance liquidity is when we have a bunch of stacked up highs or a bunch of stacked up lows that have not been swept out yet. Boom. So, we

40:19

Speaker A

have a high. Has this high been swept? No. We have another high that's really close to this one. Has this high been swept? No. We have another high that's stacked up. We have another high.

40:28

Speaker A

Another high. Another high. And none of these highs have been swept out yet. This is what we call low resistance liquidity. On top of that, let's look over here. We have a low. Has this low been swept out? Nope. And then we have

40:39

Speaker A

another low. Has this have both of these lows been swept out? Nope. We have all of these lows that haven't been swept out yet. Some people call this low resistance liquidity or some people call it trend line liquidity. Whatever it is,

40:52

Speaker A

it's just stacked up liquidity. Okay, trend line liquidity, low resistance liquidity. But whenever the market has all of these highs stacked up that haven't been taken out yet and all of these lows stacked up that haven't been t taken out yet, what is the market

41:07

Speaker A

thinking? What are the market makers thinking? They're thinking, oh my goodness, I've got two sets of buy orders that are going to be filled when I push above these highs. But then, oh [ \_\_ ] I have another two sets of buy

41:20

Speaker A

orders that that are going to get filled when we push above these highs. Then I have another, then another, then another, then another. So, if we can sweep out all of this, imagine the sell orders that we can fill. Imagine if we

41:33

Speaker A

take out all of these buy orders all at once, we can get quite the reversal off of that. That's what the market makers are thinking when they see all of those highs stacked up. They are going to want

41:42

Speaker A

to actively seek out and take out all of these highs. Same thing with these lows.

41:48

Speaker A

When we have lows stacked up, the market makers are thinking, "Oh my goodness, all of these retail traders are going to be pressing sell when these lows get pushed underneath." What is that going to give us the opportunity to do? Fill a

42:00

Speaker A

massive amount of buy orders to push price in the direction that we want to go. Let's show examples of this on the chart. Look at this. This combines a couple examples. Look at this. What What is this trend line liquidity? Right? You

42:13

Speaker A

can literally just toss a trend line on there and just say, "Yep, that's trend line liquidity." Boom. We have a low right here. Then another low that hasn't been swept. Then another low that hasn't been swept. then another low that hasn't

42:26

Speaker A

been swept and then another low that hasn't been swept. What is price going to want to do? It's going to want to actively seek out all of these lows, fill its buy orders, and send price higher. That's exactly what price did.

42:40

Speaker A

Okay, let's find an example to the upside. Currently, we actually have good good high resistance liquidity to the upside. Look at this. We have boom, a high right here. Boom, a high right here. Boom. A high right here. Boom. A

42:56

Speaker A

high right here. We've just got all of these highs all stacked up, right? This like the market is looking at this and it's saying, I can't wait to take all of this out. Right? And I'm not saying to

43:06

Speaker A

take all of this out to then push price lower. But draws and liquidity can also be used as a target. Okay? Because just like how the market needs liquidity to be able to push price in the direction that it wants to go, it needs to when it

43:20

Speaker A

fills all these orders down here, when the market is filling all these orders down here, where does it need to empty out all those orders? Because if it's entering into a bunch of buy positions right here, it also needs to be able to

43:31

Speaker A

sell those positions cuz they need to make a profit, right? So, if it needs to sell all those positions, what do they need to do? Just like how they needed to sell orders in order to enter into their

43:42

Speaker A

buy positions, they need to find people who are willing to buy when they want to sell all of these orders that they filled. Where are people willing to buy?

43:53

Speaker A

Above all of these highs. So, when we end up pushing higher past all these highs, what does it give the market makers the opportunity to do with all of these buy orders that we filled down here? It allows them to exit those buy

44:07

Speaker A

orders to be able to take a profit. So that's why you'll frequently see price if we have stacked up highs like this, price will actively go and try and seek it out. Why? Because if we just made a

44:18

Speaker A

move down whatever to come down, sweep out a draw on liquidity and then we have all of these stacked up highs. That's where market's going to want to go go.

44:25

Speaker A

Why? So it can liquidate those orders. Let's find an example of a bunch of highs stacked up and then a reversal off of it. Like this is decent, but it's not the best. It's only two. I already showed you guys this one, but uh

44:36

Speaker A

actually there's a couple. Did we take this one out? No, but we took these out.

44:40

Speaker A

So, this we have a couple highs that are stacked up, right? We have a high right here. Hasn't been swept. High right here hasn't been swept. High right here hasn't been swept. What does the market do? Boom. Pushes up. Says, "Thanks for

44:50

Speaker A

all the liquidity. Thanks for all the low resistance liquidity. I'm going to use all of that and I'm going to push price lower." Simple. That is low resistance liquidity. Same thing here, right? We have all of these lows that

44:59

Speaker A

are stacked up. Low right here. Low right here. Low right here. Low right here. Low right here. Boom. we come down and then we're able to make a move up out of it. That's low resistance liquidity. What is high resistance

45:08

Speaker A

liquidity? High resistance liquidity is just this. Okay, it's the most recent or a liquidity sweep that price is currently trading away from. Low resistance liquidity is liquidity that price is going to want to actively trade towards. Why? Because there's a bunch of

45:25

Speaker A

stacked up highs right here, right? So price is actively going to want to take that out. Why? So it can push price lower. But then once it takes it out and then once we see that price is pushing

45:34

Speaker A

lower, this becomes high resistance liquidity, meaning it's going to take a lot for price to want to go back up again. Low resistance means easy for price to want to target. Why? Cuz all of these highs haven't been swept yet.

45:49

Speaker A

Stacked up. Great, right? There's going to be a whole bunch of people pressing buy right here so the market can press sell. But once we take that out, this becomes high resistance liquidity. This high right here. Why is it high

46:00

Speaker A

resistance liquidity? Because why would price or why would the market makers want to sweep out all these highs, push price lower, and then go back up to target these highs again? It makes no sense, right? It needs to go back down

46:13

Speaker A

to take it to take profit, right? It needs to target lows for price to take profit at. So, this turns into high resistance liquidity. High resistance liquidity is essentially just a liquidity sweep that we see active reversal off of that price is not

46:27

Speaker A

actively going to want to seek out at least for the time being. Okay, so we want to trade towards low resistance liquidity. Why? Because we know that the market is actively going to want to seek that out and we want to trade away from

46:43

Speaker A

high resistance liquidity. Why? because we know that the market just swept these these highs up here and it's currently going to trend lower and it needs to take out these lows first in order for us to even consider looking for longs

46:58

Speaker A

again to then target these highs. Okay, let me show you guys another example. This is a good example right here, right? We have all of this low resistance liquidity right here. What does price do? Price wants to actively

47:09

Speaker A

do what? Seek it out. And then once that has been swept and price gives us a clean reversal off of it, this turns into high resistance liquidity and we want to trade away. So when we're looking for positions to take, we're

47:25

Speaker A

going to be looking to trade away from high high resistance liquidity and then towards low resistance liquidity. So look at this. We have stacked up highs right here. Okay? And then all of these highs over here. We got all of these stacked

47:40

Speaker A

up highs right here. So when we come down and sweep out these lows and then we get confirmation that we're going to move higher off of that, we can say this is high resistance liquidity. What do we want to trade towards now? Low

47:52

Speaker A

resistance liquidity. Low resistance liquidity stacked up highs and lows for us to be able to target. That's honestly it boys. That's honestly it. Now, I know I didn't go in depth on actual strategy because there are other confluences that

48:06

Speaker A

are involved when trying to place trades within these markets. Not just everything is just plain and simple, just based off of liquidity sweeps. My entire strategy is based around liquidity sweeps, but there's other confluences that I use to get

48:20

Speaker A

confirmation, to understand where I'm going to want to place a trade, why I might want to take a trade or why I might not want to take a trade, okay?

48:28

Speaker A

And all of these other confluences are just as important as liquidity sweeps. So if you guys haven't seen any of those other confluence confluence videos, I highly recommend you guys check them out. It's going to be break of

48:40

Speaker A

structure, fair value gaps, and inverse her value gaps. Those are by far some of the best confluences that you guys can use within the market along with liquidity. Again, liquidity is just one piece of the puzzle. Hopefully this gave

48:53

Speaker A

you guys a whole bunch of clarity on what liquidity is, how to identify it on a chart, and then also how you guys can start trying to look for trades based off of liquidity sweeps within the market. If you guys enjoyed this video,

49:03

Speaker A

drop a little sub. I love and appreciate you guys. I'll catch you guys in the next one. Peace out.

Topics: liquidity liquidity sweeps smart money trading confluence day trading price action market movers hedge funds trading strategy chart analysis


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