Hello, These levels occasionally confuse me. Please see that I market Pin 1 Level first and wait for the Liquidity sweep, and when the Price Sweep that Level, is that Pin 2 Level still valid for Liquidity, or do I need to wait for the sweep? Because Pin2 has already completed the Pin1 Level? Please assist me in understanding. Thank you very much.
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But firstly, is this liquidity sweep business an essential element of a highly successful trading strategy?
Sounds like ict jargon.
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Liquidity sweep is real. But, as not because of the larger player “stop hunting” retail traders as we think of.
Remember, larger players have a very large orders so their problem is that they can’t get filled easily (in one shot order). So they have to do it in pieces. We as retail traders, we’ll get filled easily. Be it 1 to 2 lots or even 1000 lots still consider small. We’ll get filled instantly. Unless, you’re in a penny stocks or something. If you’re in forex market, no problem.
So, I’ll just use your chart to illustrate so that maybe you can understand better. Pin 1, larger player order has slipped because they hit a bit too hard at that area. They still have lots of orders that needed to be filled. Between Pin 1 & Pin 2, retail traders noticed that this is actually a downtrend and so on. They’re now hit it too thinking that this must be a sell otherwise they couldn’t buy their Ferrari (LOL). They use whatever trading strategy such as Fibbonacci retracement, S&R, SMC etc. You see, during this time, the price is unable to make a new low because the larger player is not filled yet and only they can move the price lower. Always remember this. Between this ranging Pin 1 & Pin 2, the retail traders is holding the sell right? Can you guess where their stop losses are? Some of it is at the recent high of the range and some slightly above Pin 1.
The larger player is going to take a chance at this point. They going to buy to make the price slightly higher than the recent high to liquidate SL in that area. When your sell order get stopped out, it became a buy order to liquidate the order. At this point, the price surge further up because the SL buy order has fueled it even more. As the price goes up to the Pin 2 area, suddenly the total amount of buy orders double, triple, quadruple because the sentiment now changed to, " the market has been going for a while now, it won’t go down forever." and as the price goes up slightly higher than Pin 1, the breakout traders now also activated their buys. Now, the larger has ALL THE ORDER TO BE TAKEN! They immediately contact their brokers fill up every single order that is available in the market. The price eventually tanks thus make brand new low and they still couldn’t fully filled their orders at this point.
The conclusion is, to us, it made us feel that the larger player is evil because they always wanted to stop hunt us retail traders. But, to them, those are their orders to begin with but they cannot get filled yet. They are the one who really need it because they want to book those rates to buy a factory or something in some other countries let’s say (I’ll just assume you’re a FX trader since you’re in Babypips). We snatched their orders because we don’t have order filled issue. Now, they want to get back their orders. IF THEY WANT IT, THEY’RE GONNA GET IT.
I hope this is make sense. I’m sorry for the long essay LOL.
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Need to wait for what? To enter? To exit? More details about what options you’re looking at.
It depends on your trading strategy, and what kind of trade you are trying to enter. While watching this particular chart, the price movement does not indicate a clear downtrend. Anyway, If we assume that the price is ranging, then you should wait for the price to hit the Liquidity sweep zone to enter a short trade, and take advantage of the ranging market.
If we agree that the price already has started its downtrend, then you should not wait for the price to reach the zone.