Dangstrat
@Dangstrat
29 Tweets • 2023-03-26 • See on Twitter
rattibha.com
Thread on Liquidity and Types of Liquidity
Keep it simple. Price moves towards liquidity or
imbalances in the market based on time. Trading
nowadays almost all of it is fully automated with an
algorithm and for algorithms to work it has to run on
time first because you have to tell it exactly when to
buy and sell.
Liquidity is where people have their buy and sell stops.
When you look at a chart the first thing you should ask
yourself is "Where is the largest pool of liquidity?"
Large pools of liquidity tend to have EQH/L. You also
have trendline liquidity which can make it a Low
Resistance Liquidity Run (LRLR) environment. For
#TheStrat traders this is your Pivot Machine Gun
(PMG) setup and the top & bottom of the broadening
formation is BSL or SSL.
Because smart money institutional funds will always
draw towards the largest pool of liquidity. That is why
90% of traders fail, because you have to think like
them that you are either taking out liquidity aka, you
hitting TPs or you are the liquidity aka your stop is
getting hit
Because we are not part of the algorithm no single
traders knows 100% where price is going to go all the
time but that's okay because all you need is 50% Win
Rate with 2r system to do very well in this business.
But as traders we are natural born competitors so the
goal is always to get better each day to improve WR
and RR over time.
There are different types of liquidity.
Buy stops = Buyside Liquidity (BSL)
Sell stops = Sellside Liquidity (SSL)
This is based on where price is currently at so BSL is
above current price and SSL is below.
cont..
Liquidity on charts are the highs and lows that you see
form. BSL are the highs and SSL are the lows. With
these highs and lows that form it creates External and
Internal Liquidity and this will depend on the timeframe
that you're looking at.
There are 3 different types/levels of liquidity.
1. Major
2. Medium
3. Minor
Major Liquidity is buy & sell stops that form at the
highs and lows of each session, day, week, and
monthly timeframe charts. Use the weekly, monthly,
quarterly, and yearly charts to build a HTF bias and
look at daily for where you think the largest pool of
liquidity is.
Medium Liquidity is buy & sell stops that form at the
highs and lows on the M15, H1 charts. These two
timeframes are also the best in my opinion to look at
when it comes to market structure for day traders. I
dont use M30, H2, H4 charts as much as M15, H1.
Minor Liquidity is buy & sell stops that form at the
highs and lows on M1-M5 charts. The M1-M5 LTF
often has 'fu' stop hunts after medium or major liquidity
is swept, raided or whatever you wanna call it. Once
liquidity is taken you're then looking for the market
structure shift.
Thread on Market Structure and Market Structure Shift
will come soon so follow and turn on notifications!
Entries for me don't happen without a raid on BSL or
SSL liquidity or raid on a Fair Value Gap or Orderblock
which I will discuss those two in a different thread as
well. After the raid there has to be a market structure
shift before I look at the different entry models.
And BEFORE you even enter the trade you need to
have already established where you think the next
largest pool of liquidity is, and if price will draw there
today or not.
So if I know where the next Draw on Liquidity is, my
Take Profits are placed at either External/Internal
Liquidity or at Fair Value Gaps along the way of the
DOL is and I make sure I place my stop correctly. I will
also do thread on SL placement.
Before SL and TP is placed I check to see if the RR is
2r or higher. If it is then my limit order is placed. If the
setup is less than 2r I check one more time to see if I
can adjust entry to make it a 2r setup. It's better to
have a tighter entry rather than a tighter stop.
Make any adjustments if needed and if it's still not 2r
then I dont take the setup. There will be times where I
know where the draw on liquidity is but it doesn't give
me a 2r setup so I wont even bother looking at it
because it doesn't fit my system.
So for this example EQH @ Old Daily Highs was a D
TF fu raid on BSL for major liquidity raid. That M15/M5
fu raid is a medium/minor liquidity raid. Then you get
MSS and M5 IOFED to sweep internal SSL at London
low. PDL was External DOL. Price went quickly to it
because LRLR + EQL
If this thread helped and brought value to you please
like and retweet for more education threads and for
others to see. Thank you.
Here is more educational content that I have made:
If you're interested in following along closely to my
trading journey here is a link to my Discord:
https://launchpass.com/dangstrat/gold
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