Liquidity

Question 1

How do we view LQ?

Answer 1

We view LQ as passive orders and don’t expect them to be swept - but we react to the sweep and trade away from it.

Question 2

Can we expect a run on LQ?

Answer 2

No. We can’t expect LQ to be swept but we can react to it. If a demand zone is swept, and then structure is broken to the upside, the candle/wick that swept the LQ becomes a strong new demand zone to trade from. But we can not anticipate this sweep and have to accept the possibility of taking a loss (as always).

Question 3

What are the 4 types of LQ?

Answer 3

1. EQL/EQH
2. Trendline
3. Structural
4. Range built LQ

Question 4

If we can’t anticipate LQ sweeps for our entry, how can we use it?

Answer 4

1. We can use LQ as confluence for our S/D POI’s

2. We can use LQ as confluence for our TP’s since it aligns with structure